Global Warming and Insurance

1
Global Warming and Insurance

• Jason Benson
• Chris Longacre

2
Natural Disasters are Increasing

• On a ten-year view, the frequency of weather
  disasters has tripled since the 1960s and insured
  losses have risen ten-fold.

3
Insurance Rates on the Rise?

• What is Catastrophe Insurance?
• Evidence of Climate Changes
• Types of Insurance Affected
• Effects on the Insurance Industry

4
What is Catastrophe Insurance?

• Insurance against Natural Disasters
• Hurricanes
• Floods
• Earthquakes
• Etc.
• Globally Insured
• Reinsurance

5
Evidence of Climate Changes

• Four severe hurricanes in Florida in 2004
• Average global temperature increasing
• Europe experienced the hottest summer ever

6
Types of Insurance Affected

• Home Insurance
• Auto Insurance
• Health Insurance

7
Effects on the Insurance Industry

• Economic costs may rise exponentially
• Increased demands for catastrophe bonds
• Increased government support

8
Conclusion

• Natural disasters are expensive
• More catastrophes every year
• Increase in premiums to off-set costs
• Increased disasters may cause higher taxes.

9
Sources

• Meir Kohn. Financial Institutions and
  Markets. Oxford University Press. 2004.
• The Economist. Awful Weather were Having.
  p. 74. October 02, 2004.
• Thomas Atkins. Insurer Warns of Global
  Warming Catastrophe. Common Dreams News Center.
  March 03, 2004. October 26, 2004.
  tm

10
Questions

• 1. How is Global Warming Effecting Insurance
  Premiums?
• Causing them to decrease
• Causing them to increase
• Causing them to stay the same
• None of the above

11
Questions

• 2. What is a cat bond for?
• Pet Cat
• Heavy Equipment
• Catastrophe
• None of the Above

12
Questions

• 3. What is Reinsurance?
• To restore confidence
• Insurance purchased by an insurance company
• To take back insurance
• None of the above

13
Questions

• 4. Bonds with a return that depends on the
  occurrence of natural disasters are?
• Corporate Bonds
• Government Bonds
• Municipal Bonds
• Catastrophe Bonds

14
Questions

• 5. What state experienced 4 hurricanes in 2004?
• Washington
• Alaska
• New York
• Florida