Why Insurance Companies Hype Climate Change

Swiss Re, one of two global re-insurance titans, yesterday issued a report, “The hidden risks of climate change: An increase in property damage from drought and soil subsidence in Europe,” suggesting that global warming could “magnify” the risks of property damage caused by soil subsidence. In 2010, the other global re-insurance titan, Munich Re, concluded that, “The only plausible explanation for the rise in weather-related catastrophes is climate change.”

The above claim made by Munich Re is a favorite of global warming alarmists. For example, it was cited by former Vice President Al Gore in a high-profile Rolling Stone article published two weeks ago. No doubt, yesterday’s Swiss Re study also will prove to be an oft-mentioned talking point for green special interests. Environmental extremists  dismiss virtually all science that is skeptical of catastrophic climate change as being “industry funded,” so it is interesting that they are quick to embrace “evidence” produced by insurance companies, for which there is a clear profit motive at stake. After all, insurance is the business of pricing risk. Swiss Re and Munich Re therefore have an incentive to incorporate into their assessments an allegedly significant, yet amorphous,  source of risk like global warming. By doing so, they can jack up premiums and make a mint.