The Ultimate Cimate Change Gauge: Money

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Some people I know are climate change deniers. To them it’s all a hoax, it doesn’t exist. The wildfires, draught, extreme weather, flooding, landslides etc. – it’s all natural. Which is fine – everyone is entitled to their own opinions. The problem is that we’re in the same boat. And to put it bluntly, it’s sinking while we’re unable to have a meaningful discussion about survival. It seems hopeless, but help is on the way – from a surprising source: The insurance industry.

To many of us, climate change deniers and flat-earthers have a lot in common: Reality denial or even simpler – creating and believing in an alternate reality, one that fits that particular group’s goals/ambitions/desires etc., more often than not declaring non-believers as ‘the enemy’, a threat.

You have probably pondered the question – how can they be ‘converted’? Is it even possible? It is – not all but many. Some are so heavily invested in their made-up reality that they cannot escape. Or don’t want to. The rest are ‘convertible’ – and here’s the good news: It may happen ‘real soon now’, and the ‘medicine’ is as old as it is familiar: Follow the money – which leads us to insurance.

Insurance has been around for 700 years. For the last 100 or so, an integrated and important part of society. As defined by Encyclopaedia Britannica (excerpt):

” … a system under which the insurer, for a consideration usually agreed upon in advance, promises to reimburse the insured or to render services to the insured in the event that certain accidental occurrences result in losses during a given period. It thus is a method of coping with risk.”

Early on risk was estimated, later calculated, recently by advanced computer models, algorithms and lots of data (also known as AI). Insurance companies are money experts, but most of all they are risk-experts. They take risk and make money by being smart at it. Risk increasing? Prices go up. Risk becoming too unpredictable or just unacceptable? No insurance.

Which is the obvious connection to climate change. Insurance companies involuntarily become referees in a fight between observable facts and fake reality. The referee doesn’t need to read the reports or believe in/question the experts (they do anyway), they look at the numbers. Their own numbers. Damages and subsequent payouts after storms, fires, flooding, sinkholes, drought. Homes – some times entire city blocks – washed to sea or burned down. Of course it shows in the numbers. 

And of course insurance premiums are going through the roof. Unsurprisingly, even the climate deniers need insurance. That’s where the ‘conversion’ back to reality starts. The wallet hurts – and denial doesn’t reduce the pain.

A friend has a summer home on the beach in southern Florida. Not much used these days, and a few weeks ago I asked why he didn’t sell. ‘I like it there’, he says. ‘And besides, it’s a good investment.’ What about the rising sea, the storms and the increasing heat, I asked. Not a problem, he responds. The weather has been up and down forever, it’s natural. And the sea isn’t really rising.

I decided to change tactics. What about insurance, I said. What about it, he responded. Isn’t it increasing, I asked – referring to a couple of recent articles on the subject, like this one from Business Insider: Americans flocked to Florida for low taxes and sunshine, but an under-the-radar cost of homeownership keeps rising: insurance, which reports …

The Insurance Information Institute projected that property insurance rates in Florida could increase by at least 40% in 2023.

And continues, quoting the Insurance Information Institute:

“Florida is a unique marketplace where you see a culmination of hurricanes and severe weather, leading to Floridians paying the highest average insurance premium in the US.

My friend admitted he hadn’t paid attention. A couple of days later he confirmed the news reports – then added some colorful (and unprintable) expressions in fluent Italian. Needless to say, his attitude changed. Like many people I know, he’s stubborn but not stupid.

Florida is just one example. There are thousands – like Paradise, Northern California, nearly wiped out by fires I 2018, and Venice, Italy where flooding insurance has been unavailable for many years.

None of this is good news, but there is a tiny silver lining: Fewer deniers. We really need that. We’re in this together.

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