by Judith Curry
Hearing on “Risk Business: How Climate Change is Changing the Insurance Market” begins at 10 a.m.
You can watch the Hearing at [link].
My written testimony can be downloaded at [Curry Testimony Senate Budget 2023].
Here are my verbal comments:
The insurance market is influenced by our perception of climate risk. Calling climate change a “crisis” contradicts expert assessments of climate risk.
The so-called “climate crisis” is not what it used to be. In 2013 in the IPCC Fifth Assessment Report, the extreme emissions scenario RCP8.5 was considered the business-as-usual scenario. With an expected warming of 4 to 5 degrees Celsius by 2100. It is now accepted that this extreme scenario is unbelievable. The baseline warming value currently used by the United Nations Conference of the Parties has halved, to 2.5 degrees by 2100. This is an increase of 1.3 degrees above current temperatures. in.
It is difficult to overstate the magnitude of the change in expectations for extreme weather events associated with dismissing this extreme scenario. The rejection of this extreme scenario has rendered much of the literature and assessment of climate impacts of the past decade obsolete, focusing on this scenario.
Hurricanes make landfall causing the greatest damage to property and casualties among extreme weather events.
Recent international assessment reports have low confidence that there have been detectable changes in the long-term record of storm activity, beyond natural variability.
The insurance industry’s perception of a significant future increase in hurricane damage in the United States is bolstered by three recent reports from the insurance industry. These reports erroneously infer high losses in 2050, using an unreasonably extreme emissions scenario. They also assumed a significant increase in the number of major hurricanes, which is in contrast to recent assessment reports. Furthermore, these reports ignore the main modes of natural variation for decades. These have had the dominant influence on Atlantic hurricanes in the historical record.
The unbelievably high forecast of hurricanes hitting the United States in 2050 leads to inappropriate notions of insurability, inappropriate underwriting valuations, and false confidence among policymakers. invest.
We are not only confused about the magnitude of the expected warming and its effects. We also misrepresented the nature of the risks from climate change.
We combined the slowly increasing risk from warming with the urgent risk associated with extreme weather events that have little to do with warming. This wrong combination of risks is driving the stated urgency for reducing emissions and rapidly transforming our energy systems.
| A key factor in insurance losses from extreme weather events is the reliability of the electrical utility system. Prolonged power outages contribute to loss of life. During extreme cold events, power outages can lead to significant property damage due to burst water lines. This is what happened due to the extreme cold event in Texas last year.
The worst winter problems have been linked to a continental-scale high-pressure system, which produces very cold temperatures and weak winds across most of the United States. Many coal and nuclear power plants are now shut down. motion. A lack of on-site fuel storage contributed to power outages in Texas and recent Christmas outages in areas served by the Tennessee Valley Authority. Short-term risks are associated with the rapid transition of electric utility systems to wind and solar. We can reduce transition risk by reducing the urgency of the transition commensurate with the slowly increasing risk from emissions. This will allow time to incorporate newer technologies without sacrificing power reliability. |
Climate change and its perceived threats provide an opportunity to broaden the insurance sector’s relevance to climate risk reduction. Adaptation offers new opportunities to offset climate risks. Insurance companies can help customers avoid losses. They can also work with the public sector to improve building standards and land use policies.
Climate change and change, with its accompanying extreme weather events, is best seen as an ongoing predicament. This will require the continued adaptation of communities and businesses along with mechanisms for sharing and transferring financial risks.
Thank.
JC notes: I’ll post more comments on the Hearing once it’s over.
