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Insurance Not Likely to Cover Climate Change

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Recent ocean warming from climate change could now make some parts of the world “uninsurable” according to a new report from global insurance trade body, the Geneva Association. The report warns that the speed at which the global oceans are warming up is starting to threaten the industry’s ability to sell affordable policies throughout the world. Parts of the United Kingdom and the United States are already facing “a risk environment that is uninsurable.” These areas are unlikely to be the last regions that will experience such issues as well. In the UK, hundreds of thousands of homeowners in areas that are at high risk of flooding will still be able to insure their properties after the government decided to make a deal with the industry itself.

The deal, which was introduced as part of the government’s new water bill, has come just weeks before the current agreement is set to expire. It will follow many negotiations with the Association of British Insurers. The agreement will cap flood insurance premiums and link them to council tax bands so that people who are in high risk areas will understand the maximum amount that they have to pay. Meanwhile, a levy on all UK household insurers will be used to help create a fund that will cover the claims for people who are living in high-risk homes. The new bill includes plans that will increase competition in the water market and improve some drought resilience.

There has been some noticeable rising friction in the recent years between the governments around the world and the insurance industry. Mainly because the governments throughout the world have been struggling to be able to create enough flood protection. The Geneva Association, which is overseen by executives from some of the world’s largest insurance firms, has warned that governments will have to focus more on protecting their towns from the effects associated with climate change. Warming oceans have already locked in the shifts in climate, even if some countries have made attempts to reduce the greenhouse gases and had results that suggested they were successful.

Ocean warming has caused a shift towards a “new normal” for many insurance relevant hazards. This shift is irreversible; even if greenhouse gas emissions were to stop immediately, the oceanic temperatures would still continue to rise. As the oceans warm, they expand, which contributes to a rise in sea levels. Ice sheets and glaciers that are melting are another contribution. The average global sea has risen around 20 cm over the past century, with even faster rises that have been seen in more recent years. In the most recent report in 2007, the Intergovernmental Panel on Climate Change estimated that the sea levels rose an average of 1.8mm every year from 1961 to 1993. They also rose 3.1mm from 1993 to 2003. In addition to rising sea levels, scientists also believe that warmer oceans contribute to an increase in evaporation from the surface of the seas.