Climate casino

by Judith Curry

114 responses to “Climate casino

  1. Should the insurance premiums be higher or lower for populations living on the ocean below sea level?

    • Pedro Oliveira

      If the insurance corporations live up to ‘climate change’ then it should be so…

  2. My worst nightmare in the flesh.

  3. Buying insurance against climate change is an indication of insanity: “Complete loss of contact with reality!”

    • If you buy insurance for natural disasters, that is insurance for climate change. Climate Change is extremely Natural. It is Natural for Climate to change. No Climate Change would be extremely Un-Natural. The only place No Climate Change ever occurs is in Consensus Theory and Models.

    • Mesdames et messieurs, faites vos jours.

      ( … Insane music … dadadada dadadada
      dada daaa.)

  4. One of the “proofs” I sometimes see for climate change is “the insurance companies are asking for higher rates against hurricanes and weather disasters!”

    One problem: if they raise their rates and don’t have to pay out, they just make more money.

    There’s no mechanism for “oops, we were wrong about that whole ‘increase in hurricanes and tornadoes’ prediction, here’s your money back for the last few decades.”

    • Some insurance company, somewhere, always has a disaster and can say I was right. Many other insurance companies, in many other places, have no disaster, and mum is the word.

  5. The house ( insurance company ) always wins:

  6. This an absurd claim.
    ” They [insurers] have deep experience in smoothing out disasters’ effects by sharing them among large numbers of people.”

    Insurers can insure only against known and well defined disasters, that is – against routine risks (such as fires), whose risk factor can be easily calculated based on past statistics.

    Insurance against unknown risks is just a blind gamble. Serious businesses can’t do that. So, this idea of insurance is particularly dumb.

    Nevertheless I’m willing to insure anyone against climate change damages. Before paying claims I would, of course, require that it be proven beyond reasonable doubt that it was climate change that done it.

    • David Springer



    • If you are looking for this type of insurance, look for the climate skeptics. They will have the lowest rates, right or wrong, if they are putting their money on their skepticism, that is.

  7. It’s not an insurable risk. All your policies go bad at once, so you won’t be able to pay, and policyholders won’t be able to collect.

    Insurance works by having a few policies go bad, and most are good, so the money from the good ones pays the bad ones.

    • I’m glad someone is actually paying attention. Curious as to how the best and brightest miss the fundamentals so frequently. These “thought experiments” get out of hand sometimes.

      On another topic, I would love to see where the 97% would place their markers on the observed temperature increase and SLR at 2050 and 2100, with actual significant money of their own on the line. My guess is this number and the IPCC’s numbers won’t match up.

      There is currently no downside in climate science to being overly alarmist. Unless you consider media fame and future grant fortunes to be a downside. There are significant downsides to being overly skeptical.

      The “climate science market” here is out of balance.

  8. Judith

    A single link. No comment or explanation?

    Did this article escape before you intended?


  9. I’ve long been curious, but had no luck, to find out who were all the people involved in significantly narrowing the Hudson to make more Battery Park real estate. This was done with rubble from the construction of the Twin Towers, was it not? And there is no way that those responsible could be in ignorance of low-lying New York’s exposure to hurricanes, given events such as the Long Island Express of 1935, and many other category hurricanes far more intense than Sandy, if not so large in area.

    Above all, I am very curious to know if any of these people have been keen to point the finger at what they call “climate change” (a hijacking of the English language, but what the hell.) Sydney Harbour is out of the reach of cyclones and that city is safely above sea level; yet nobody would dream of narrowing any part of that massive body of water. So who, in their right mind, would not scream City Hall down when such a thing was done in the capital of sophistication, many of whose residents think people in flyover land vulnerable to tornadoes should not be allowed even to build.

    What were authorities, engineers, insurance people, Bloomberg and the NYT saying about such supreme vandalism at the time? And what are they saying now? Or have they changed the subject to a fraction of thin air called CO2?

  10. A fan of *MORE* discourse

    Market-failures in healthcare  ensure that no nation has ever turned back from Romney/Clinton/Obama/Swiss-style managed healthcare.

    Game-theory failures in global nuclear armament  ensure that no nation has ever turned back from Reagan/Gorbachev-style managed thermonuclear disarmament.

    Market-failures in climate-risk  now ensure that the globalized insurance markets will embrace Romney/Clinton/Obama/Swiss-style managed climate-risk.

    Conclusion  The 21st century’s globalized computerized monopolized infantilized markets — in food, health, ecosystems, and weapons of armageddon — tyrannically disrespect individual Jeffersonian civic virtues.

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    • Pedro Oliveira

      WTF mate???

    • catweazle666

      You’ve forgotten to take your medication again haven’t you., FOMBS?

    • A fan of *MORE* discourse

      catweazle666 opines “You’ve forgotten to take your medication again haven’t you, FOMBS?”

      Please let me remark that your chosen name is appropriate, catweazle666″.

      However, perhaps you had better have said “declined” than “forgotten” medication … `cuz ever since the era of the ancient Greeks, scientists have declined the soothing soma-slogans of ignorant ideology’s Brave New World.

      That’s common sense, eh Climate Etc readers?

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    • Don Monfort

      You will find that you don’t get dizzy from reading fannie’s comments, if you don’t read them.

    • I loved Catwezel as a child.

    • David Springer

      Catweazle was a television series. A television series cannot be a child.

    • Individual Jeffersonian civic virtue says: “One of the biggest challenges the environmental movement faces is to figure out what to do with people. We are, without question, a blight on the landscape…”

    • funny that Fan of Maximum Trolling would mention Huxley’s “Brave New World”….

      I think of FOMT as the kind of incipient totalitarian who fantasizes about imposing a set-up like BNW upon all of us.

      FOMT’s quasi-religious self-righteous dogmatism, mixed with his bombastic assertions of his own assumed superiority, his extreme intolerance of all hints of dissenting views, all make him the perfect candidate to impose a BNW society upon us if he had the power.

    • A fan of *MORE* discourse

      Skiphil decries “quasi-religious self-righteous dogmatism”

      Yah mean the anti-scientific self-serving Heartland/CEI/Cato/Marshall/GWPF/Koch/Randian/TEPCO/BP/Enron brand of dogmatism that asserts “Market fundamentalism is true; therefore climate-change cannot be real.”

      Yeppers, pretty much everyone nowadays — especially younger scientists and ordinary family-minded citizens — appreciates the horrendously dysfunctional nutjobbery of short-sighted anti-scientific amoral denialistic market-dogmatism.

      That’s getting to be *EVERYONE’S* everyday common-sense, eh Climate Etc readers?

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    • FOMF (Fan of More Flatulence):

      You have assembled quite a spaghetti-list of entities to be paranoid about…. perhaps you can ask Lewandowsky to help you with your “conspiracy ideation”

      Since yet again you evade the actual points under discussion by resorting to more incoherent ranting, we myst conclude that you are incapable of participating in any rational discussion. As for your melange of organizations and people who give you nightmares, you don’t need to list them to me since none of them has any influence on what I think and why I think it. You are merely a ranting buffoon, ignored by nearly everyone here, but I choose not to let all of your squalid attacks pass without comment.

      btw, you have no business citing Quakers or Catholics or Thomas Jefferson or Wendell Berry as exemplars for what you are doing here — you understand nothing of the spirit and ideas of any of those people and traditions.

    • A fan of *MORE* discourse

      Skiphil froths “You have no business citing Quakers or Catholics or Thomas Jefferson or Wendell Berry.

      Froth by Skiphil, facts by FOMD.

      Climate Etc readers can assess for themselves.

      You are invited out of your “bubble”, Skiphil!

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    • Fernando Leanme

      Mr more discourse I would like to issue you a policy to provide you and your family coverage against any and all anthropogenic climate change phenomena you will experience. Attribution of the anthropogenic component is in the fine print, page 3 of the appendix. But wait, there is more. If you order by may 30 2017 we will add an insurance policy to cover any damages you suffer from an asteroid impact anywhere within a 10 km radius of your principal dwelling. California residents not eligible for this offer if over the age of 21.

  11. This is just one of the places in the scam where they actually relieve you of the cash. It would be foolish to ‘insure’ against natural climate change(would you insure a tree against seasonal change?), and to the extent man can cause change it can only be to net benefit. They may blame, shame, and frighten, but it won’t change that.

    I saw the island at the head of the piece and almost decided not to waste my time on such unseriousness. Haven’t they better things to do on a Holy Day Afternoon? Apparently nothing better than relieving you of cash.

    • A fan of *MORE* discourse

      Kim asserts [wholly contrary to common-sense and history]  “To the extent man can cause change it can only be to net benefit.

      Juvenile slogan mindlessly parroted by Kim, adult facts-and-reason by FOMD.

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    • pokerguy (aka al neipris)

      ROBERT J. SHILLER is Sterling Professor of Economics at Yale. Smart man, Predicted the housing crash, which though frankly obvious to me and many other like minded skeptics when it comes to man’s infinite capacity for crowd induced madness, was still a pretty good feat for an academic.
      But when it comes to “climate change,” he doesn’t have the good sense of your average 15 year old…

      Entirely typical.

    • Every wildfire, every inundation on tidal coasts and river flood plains can now be dismissed as an economic catastrophe wrought by AGW. Building structures in scenic risky locations has nothing go do with it. Make for a goldmine from government disaster relief

  12. The appropriately named Biggert-Waters act would have had people paying realistic flood insurance in coastal areas, but unfortunately that got overturned, so that we all pay for these people.

    • Jimd

      We have the same thing over here. It seems to negate the purpose of insurance. What next,?that we have to pay a surcharge on our insurance to help pay for those living in high crime areas?


    • David Wojick

      I did not think US flood insurance paid for coastal flooding, only inland rivers and streams.

    • Steven Mosher

      yep. subsiding coastal dwelling rich democrats

  13. How does this affect local governments with infrastructure to protect? Let’s say some state like New Jersey, for example, goes for a private insurer who asks a big premium. Who pays? It seems they would have to raise a tax or something to pay for it.

    • Is anyone even interested in this market? I doubt it.

      This problem is easier than most people think. Insurance is renewed every year. In 2099 we will know a lot more how to insure a specific coastline for 2100 than we do now.

      Nobody will likely sell you coastal insurance for the year 2100 today, and the market doesn’t even want that.

      Those that build dwellings with a 50 or 100 year lifespan on the coast today MIGHT have to pay higher premiums later if SLR is worse than anticipated and/or tropical storms get worse toward the end of the century. That is the risk they take.

      But there is no reason they would need to pay higher rates today when insurance rates renew every year. It only matters what this years risks are, not future risks. There is a bit of an obsession with advocates who really really want to punish people today for future climate damages that have not happened yet, and there is a great deal of scope uncertainty over.

      The private sector market is easy, people build at their own risk today, and are subject to higher insurance and property taxes later if they “choose poorly”. It’s (mostly) fair, and it works. It doesn’t really cost that much more to build a large structure 3 feet higher to account for SLR over its lifespan. I agree that taxpayers subsidizing these risks isn’t very smart.

      The public sector is a bit different as you point out. If the governments infrastructure costs go up, then taxes will need to go up accordingly. If people don’t like those tax rates, they can choose to leave. See Detroit. It’s going to be a tough lift to get people to agree to pre-pay these future taxes via a carbon tax to avoid supposedly larger future tax increases. The cost / benefits here is very muddy.

      Very large companies often self insure if they have large assets. The government probably doesn’t buy a lot of insurance is my guess.

  14. David Wojick

    Insurance is used against risks with a known frequency of occurrence and likelyhood of damage, where the unknown is to whom they will occur. There is no parallel with climate change. In particular there is no way to price such insurance.

    • Steven Mosher

      There is ALWAYS a way to price insurance even against things that have never happened.

      For example, I will sell you a 10 dollar a month policy to insure that if you are reincarnated as a dog that your needs in that life will be met

      or this

      One does not need a frequency of occurance or a likelihood of damage.
      you can in fact price ANYTHING.

      Now, can you price it and make a profit? different question.

  15. I’d like to suggest insurance for when coastal watersheds and river systems are taken out of their natural state in a way that increases the risks of ocean storm surges.

    Some of us believe that the answer is to retain water during heavy rainfall as opposed to moving it quickly down stream.

  16. My favorite post to date.

  17. When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.

    Wall St. sets the stage for the next Big Heist

    Environmentalist Henry Paulson
    Former Head of Nature Conservancy

    Paulson’s an environmentalist – he is the former chair of the Nature Conservancy and the reason why Goldman Sachs, under his watch, became the first investment bank to call for federal regulation of greenhouse gases

  18. David L. Hagen

    US average Retail Electricity price was 12.26c/kWh.
    Climate policies escalated prices in Berlin to 38.9c/kWh (28.49 eu/kWh) – 317% of US rates.
    Such higher prices is moving industry offshore to cheaper sites. e.g Monckton notes>

    • David L. Hagen

      Monckton in UK’s only climate skeptic party crushingly wins the EU election

      “A steelworks at Redcar is closing with the loss of 1700 jobs, because the European carbon-trading scheme has made it uneconomic. Precisely the same steelworks will be re-erected in India. Net effect on the climate: nil. Net effect on British workers’ jobs: catastrophic.

      Political winds can change far faster than 50-100 year climate projections.

  19. Florida’s dirt little secret is that the state thrives on federal disaster dollars.

  20. michael hart

    I quite agree, Dr. Curry. I don’t think it merits a comment either.

  21. David in Cal

    As a casualty actuary working in reinsurance, I have experience in the insurance products discussed in Schiller’s article. Schiller is very smart, but I think his article invites misunderstanding. If climate change makes certain types of losses worse, then insurance will still be available, but it will cost more. In fact, companies have already raised the price of insurance against windstorms, based on the theory that climate change will make windstorms worse.

    However, as a Times commenter pointed out, if climate change damages everyone, then insurance isn’t a good mechanism to deal with that problem. Insurance works when a few experience loss based on random events. It doesn’t work when large numbers experience loss based on change in overall conditions.

    • David Springer

      What prevents them from inventing reasons out of whole cloth to raise rates? Presumably it’s competition.

  22. k scott denison

    How does one define climate change? What is the baseline, today? If so, what are the metrics that defined today’s climate: temperature, daily temperature deviation, seasonal variation, precipitation, ice mass, sunshine, clouds, sea level, sea level variation, etc, etc.

    So exactly how will we know if any future damage was caused by “climate change” versus weather, etc?

  23. k scott denison

    Or, succinctly, what is today’s climate?

  24. Stephen Singer

    This is a casino you’re 99.99%, maybe higher, guaranteed to be the loser of a lot of money. Only fools would go near such a scam. The insurance companies know no one can prove a connection of any natural disaster to climate change now or ever. Meaning they’ll likely never payout on such a claim making it a perfect scam so they’ll all in on this idea.

    • David Wojick

      Yes, if they only pay when the damage is due to human induced climate change then they never need pay. But is that the proposal? Or is it just that we buy more insurance, at higher rates? Either way it is nuts.

    • I have no problem with insurance companies offering insurance against climate change. Caveat emptor and all that–perhaps some extreme storms will be covered that otherwise were not.

      What we should watch out for is some government mandating carriage of such policies…

    • Steven Mosher

      “Yes, if they only pay when the damage is due to human induced climate change then they never need pay”

      Thats not how it work. You wouldnt sell someone flood insurance that only paid if the cause was “human induced warming” You just charge them more for flood insurance on the theory that future risk will increase.

      The challenge is figuring how to price it and what to do when the damage is too wide spread and enormous.

      Basically insurance companies will ( they already have) start to price in climate change..
      we just need to remove subsidies so that the market can actually work

    • Peter Lang

      Mosher said (correctly)

      Basically insurance companies will ( they already have) start to price in climate change..
      we just need to remove subsidies so that the market can actually work

      dead right. We don’t have to do anything. no government intervention needed. Just let the insurance companies and the market do what it does. it will insure the risks and people pay what is required (or go to a company where the premiums are less). That’s as it should be. Up to the individuals to buy the insurance they want and for insurance companies to offer the products the market wants. No role for government!!

  25. Curious George

    I hope Obama administration will offer an earthquake insurance in California. The state created a California Earthquake Authority. It has a zero authority over earthquakes, but it offers a not very affordable insurance policy.

    How would a “climate change insurance” differ from a flood insurance, a tornado insurance, a hurricane insurance, an insurance against getting scammed? All these questions will be answered; lawyers will get rich.

  26. David Springer

    Climate change insurance is a scam and the New York Times is staffed by imbeciles.

  27. Matthew R Marler

    Should you be thinking about buying insurance against the risks associated with mean global temperature decline?

    • pokerguy (aka al neipris)

      I know, why not buy insurance policies to reimburse losses due to nuclear war? At least in that case, one could validate the claim. Of course the insurance companies would likely no longer even exist. But then most of the claimants would most likely be dead as well.

  28. “ROBERT J. SHILLER is Sterling Professor of Economics at Yale”.

    “Professor of Economics” on the dangers of predicted future catastrophic climate events.
    The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
    Friedrich August von Hayek
    I’d call it a new version of voodoo economics, but I’m afraid that would give witch doctors a bad name.
    Geraldine Ferraro

  29. If you understand the motivations., this was not an article about insurance at all. Any more than Obamacare is. Collusion between the government and crony capitalist insurers is the short term goal.

    “Governments should recognize that by giving these businesses a profit incentive to prepare for these unevenly distributed disasters.”

    “Then there is the Alliance of Small Island States, formed in 1990 as a response to climate change. The group represents 5 percent of the world’s population, and its island members are scattered around the globe. But if sea levels rise substantially, all of them will be affected. These countries generally aren’t big enough to have a heartland that can help coastal dwellers in a climate catastrophe.”

    And the clearest example of this just being another plea for government central planning, this time of the natural disaster insurance economy:

    “We have a crucial need to bring innovation to our risk-management institutions. We need to make them flexible, to clarify their long-term international legal status, to develop mechanisms and indexes that can be the basis of long-term risk management contracts and to educate the public about them. Most important, we need concrete action now to build a mechanism that will provide real help for the victims of climate-change disasters.”

    We’re the government, and we’re here to “bring innovation” to you.

    “We,” meaning the New York Times and progressive academics and politicians, don’t need to do anything. They aren’t competent to.

    • Yes, and despite the lip service paid to private plans, the whole project goes against the fundamentals of the insurance industry.

      To address these claims effectively, with adequate risk pools and payouts, would require global pooled funds and payouts for disasters without regard to “climate change” … for how could any particular event be reliably attributed to climate change, and more importantly how could “policy holders” have any confidence that claims would be paid, when it would be so easy for an insurance company to deny that a particular event meets the threshold for the “climate change” policy to kick in??

      No, it seems that the only way such schemes could “work” even on the superficial level (although with all the usual problems of govt. boondoggles taken to exorbitant and extortionate levels) would be for global nearly universal “disaster” coverage backed by all govts, combined with payouts for every kind of natural disaster without regard to whether the event could be associated with “climate change” or not.

      Since much of the world’s populations and govts. will be declared incapable of financially supporting this project to any significant extent, what we have here is a vague effort to move toward global disaster “insurance” for all, funded by the 40 or do wealthier nations…. and funded most disproportionately, of course, by the USA and a few other countries.

    • Skiphil,

      And of course, one of the “innovations” government would bestow on the industry would be to make such insurance mandatory. And presto, we have another funding mechanism for transfer payments from tax payers to governments to whoever the progressives decide to give the money to. Only we call it “insurance.”

      It bears remembering that the way Chief Justice John Roberts foisted the unconstitutional Obamacare on the US was by calling the mandatory purchase of insurance a tax.

    • Actually, Roberts opinion was, “This is unconstitutional, but I’m going to let it stand because voters need to learn a lesson.”

  30. Isn’t insurance supposed to be for sudden losses? Climate change has to be one of the most unsudden things one can imagine. It may cause an increase in occurrence and severity in events that there is already insurance for.

  31. Peter Lang

    After discussing how to mitigate the coming dangers, the report says, “Commercially available mechanisms such as insurance can also play a role in providing protection against losses due to climate change.” That sentence should have been in big, bold letters and underlined.

    That’s because of the substantial risk that efforts to stop global warming will fail. The implications are staggering, and we must encourage private innovation and government support to insure against the devastating financial losses that will result.

    That’s why global warming needs to be addressed by the private institutions of risk management, such as insurance and securitization.

    I agree. Problem solved. Government get right out of the way and let the private sector insurance companies handle it. Let them offer insurance, compete on premiums and let everyone buy insurance if they want it and to the extent they want to without any compulsion by governments.

    NYT has, unwittingly, recommended the optimal solution. Well done NYT!!!

    The problem is an age-old one: Each country has a strong individual incentive to take a free ride on the rest of the world — to find self-serving or nationalistic justifications for adding carbon dioxide and other pollutants to the global air supply. Such behavior, which in some ways might benefit the individual country while hurting everyone else, is known in economics as an externality problem, and the world has never solved one of this magnitude.

    I disagree. The world invariable solves such problems. The winding back of protectionism is a classic example. All the world has to do to solve this one is to remove the impediments it (led by the ‘Progressives’ the Greenies and the Left in the wealthiest countries) have placed on cheap, low-emissions energy sources. The USA is in by far the best position to lead on.

    In March, a United Nations report identified with “high confidence” a number of risks that will be visited on different people unequally. It spoke of the “risk of death, injury, ill health or disrupted livelihoods” in low-lying coastal zones and on small islands — and that is just the start. Food systems may break down. There may not be enough water for drinking and irrigation. Ecosystems may be shattered.

    Unsupported scaremongering. There is a lack of persuasive evidence to support these claims. However, we know the damage that would be done by wasting money on policies that have near zero probability of delivering the claimed benefits (i.e. climate damages avoided). That cost is seldom considered by the advocates of the high cost but near useless policies they advocate (such as carbon pricing and renewable energy).

    In short, we need to worry about the potential for greater-than-expected disasters, especially those that concentrate their fury on specific places or circumstances, many of which we cannot now predict.

    We need to weigh the consequences and probabilities of man caused climate change against the opportunity costs of what we could have done with the money if spent on policies that would deliver greater benefits to man-kind. That is something the single-issues climate alarmists seem incapable of understanding.

    Governments should recognize that by giving these businesses a profit incentive to prepare for these unevenly distributed disasters. After all, fire insurance does no good unless you buy it before the house burns down. And you have to diversify your portfolio before the stock market crashes.

    The government doesn’t have to do anything. The insurance companies will offer the insurance and people will buy it if they want it. The governments should keep right out of it. But oh wait. This is a Left news service. They want the governments to mandate that everyone must buy insurance, right? They probably want the UN to mandate it for all countries. Next step the government’s will run the insurance schemes, and then the UN will run it for the whole world. Sill my for not realising where this was heading from the start … as if I didn’t :(

    We already have weather derivatives that can help, like the 50 contracts in 13 countries OFFERED by the Chicago Mercantile Exchange.
    NOTE: Offered, not compulsory!!!

    Psychologically, it’s hard for most of us to take the initiative on long-term, ill-defined risks.

    OMG, now its down to the psychology stuff. And it about the psychology of those who don’t accept the doomsayers scenarios. The rationalists have a psychology problem but he loony Left don’t According to the climate alarmists. We need psychoanalysis by the likes of Lewandowski, John Cook, Michael Mann and other such notable psychologists to “reduce these psychological impediments”.

  32. Generalissimo Skippy

    Obviously Judy is not to act to prevent denizens from getting dizzy by accidentally reading comments by FOMBS. We therefore need an equal an opposite force to balance the blog. I’m suggesting we all join the Monster Raving Loony Party who have a great song and fabulous policies for saving the sanity of the planet.

    One they have recently got up is the EU proposal!!!!!

    The options on the Referendum ballot on our membership of the EU to
    a) In
    b) Out
    c) Shake it all about

    The removal of funding for weather prediction as they seem to get it wrong most of the time anyway. This money would then be redirected into an extensive scientific research scheme to find out what actually came first, the chicken or the egg?

    Fuel Efficiency!!!!!
    A bungy rope should be attached to all vehicles making a journey. No fuel would be required for the return journey.

    Ah – sanity returns.

  33. I thought insurance companies have fine print that EXCLUDES payout if the damage is caused by war or large natural disasters?

  34. Yesterday I was traveling, so unable to check in. I had no idea i accidentally pushed the publish button on this one, I was planning an interesting post! I guess I will need a part II or something to publish my post

    • Thank you. I could not read past “… carbon dioxide and other pollutants …”

  35. “After all, fire insurance does no good unless you buy it before the house burns down.”
    Actually the only reason for taking it out, the only good it does, is when the house burns down.

    “And you have to diversify your portfolio before the stock market crashes.”

    I tried this, but buying more stocks i.e. diversifying only means you lose more money when the market crashes.

    The problem here is insurance is not the same as taking preventative action.
    Taking preventative action is also not insurance.
    The aim of insurance is to recoup an unexpected loss. ie crashing your car due to someone else’s fault.
    In gambling this would be against the chance of a zero turning up in roulette or an Ace in blackjack which would interrupt the normal course of gaming. Note nobody really recommends one should do this for obvious reasons.

    The aim of preventative measures is to protect against a known problem, in the case of the Casino this would mean going home or watching the shows, eating the meals but not gambling.

    In the case of true catastrophes, insurance is usually completely pointless.
    Insure your life and when you die what do you get?? answer nothing.
    Insure against a meteor hitting the world and destroying all life?, Who would pay you and what is it worth being right, nothing.
    Life adapts and evolves. Whoever comes after us and survives will have truly evolved and adapted and be completely happy with their new water world complete with more droughts if that is the [completely unlikely] scenario.

  36. David in Cal wrote, “However, as a Times commenter pointed out, if climate change damages everyone, then insurance isn’t a good mechanism to deal with that problem. Insurance works when a few experience loss based on random events. It doesn’t work when large numbers experience loss based on change in overall conditions.”

    Others have commented that insurance is not a good financial vehicle to mitigate the financial loss due to climate change sure to happen some time in the future.

    1. Everyone dies yet life insurance is useful to the beneficiaries and profitable for the issuers. It works because the short term risk (you will die next year) is calculable and shared while the long term risk (you will for sure die some time) is not shared but paid in full by the premiums (paid-up whole life).

    2. Climate change may effect everyone, some beneficially and some detrimentally. For climate change insurance to work, everyone everywhere must be required to buy climate change insurance. This is the theory behind the Affordable Care Act — everyone participates so that the young and healthy subsidize the old and ill. If everyone everywhere will be adversely effected by climate change (no one benefits) then the total of premiums paid must equal the total of paid out benefits. This is no different from a savings account.

    3. Sharing the risk of financial loss among everyone everywhere with no difference in premiums according to size of risk will cause adverse selection — people will build in Miami Beach and watch the water rise to their doorstep. When their house washes away, people in Denver and Salt Lake City will be footing the bill.

    Key to any insurance scheme is carefully and completely defining what constitutes a loss. In the case of Climate Change Insurance this will be next to impossible and would change the description of the scheme to The Lawyer Full Employment scheme.

  37. Vapid.

  38. One thing my insurance agents ask, sometimes in a round about way, “what have I done to mitigate my own risk.” For car insurance, have I had any accidents? Do I have traffic violations? Is my car parked at night in a garage or on the street? Do I have a teenage driver in the house?The premium for my insurance is based in part on how I mitigate my own risky behavior. Have I used my insurance? if so, at what cost?

    One of the problems with car insurance, some people, some people who exhibit risky behaviors, don’t have car insurance and are still driving around, sometimes in other people’s cars. To deal with such situations, governments have passed laws about driving without car insurance, but people who already are high risk drivers, still don’t have car insurance either because the premium is too high, or, they don’t care if they injure or damage people or property, as they are self focused individuals.

    If there is to be insurance for climate change, then there needs to be an assessment of what the individual policy holders will need to do to become eligible for insurance. A teenage driver in a high performance vehicle or in a junker that clouds the air behind them as they drive are still risky drivers for the person crossing the street while the teenage driver is texting their friend in the vehicle’s back seat.

    If one is to insure subsistence living people with limited education, teetering on the edge of survival, what premium are you going to demand from them? What changes in behavior are you going to demand from them before they are eligible for insurance?

    Otherwise, I see this NYT essay as just another wealth transfer idea, rich people subsidize poor people and calling it insurance.

  39. Yes, we should insure against the known effects of climate change. Just look at how well all the dire predictions of climate change catastrophe have panned out so far. Just a few examples, I am sure others have more:

    “Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions….By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine.” – Peter Gunter, professor, North Texas State University – Earth Day 1970

    “[By] 1995, the greenhouse effect would be desolating the heartlands of North America and Eurasia with horrific drought, causing crop failures and food riots…[By 1996] The Platte River of Nebraska would be dry, while a continent-wide black blizzard of prairie topsoil will stop traffic on interstates, strip paint from houses and shut down computers.” – Michael Oppenheimer, published in “Dead Heat,” St. Martin’s Press, 1990

    “Telltale signs are everywhere (regarding the coming of the next Ice Age) from the unexpected persistence and thickness of pack ice in the waters around Iceland to the southward migration of a warmth-loving creature like the armadillo from the Midwest. Since the 1940s the mean global temperature has dropped about 2.7° F.” — Climatologist George J. Kukla of Columbia University in Time Magazine’s June 24th, 1974 issue.,8816,944914,00.html
    From Gavin Atkins:

    The United Nations predicted in 2005 that climate change, AKA global warming, would result in 50 million climate refugees by 2010. They would flee disasters involving sea levels rising, increased and more severe hurricanes and disruption of food production. The UN identified places most at risk.

    Nassau, The Bahamas – The 2010 population increased to 353,658 persons in The Bahamas. That’s 50,047 more people in the last 10 years.

    St Lucia:
    The island-nation of Saint Lucia increased 5 percent from May 2001 to May 2010.

    Population in 2002 was 81,755. In 2010 it was 88,311.

    Solomon Islands:
    “The latest Solomon Islands population has surpassed half a million – that’s according to the latest census results,” Atkins says. “It’s been a decade since the last census report, and in that time the population has leaped 100-thousand.”

    The people who want you to hock your future to pay for global warming mitigation haven’t gotten anything right yet. Not rising sea levels. Not hurricanes. Not soaring temperatures. Not polar bears disappearing. Nothing. Zip.

    “…far from being places where people are fleeing, no fewer than the top six of the very fastest growing cities in China, Shenzzen, Dongguan, Foshan, Zhuhai, Puning and Jinjiang, are absolutely smack bang within the shaded areas identified as being likely sources of climate refugees,” Atkins writes. “Similarly, many of the fastest growing cities in the United States also appear within or close to the areas identified by the UNEP as at risk of having climate refugees.”

    “Snow is starting to disappear from our lives. Sledges, snowmen, snowballs and the excitement of waking to find that the stuff has settled outside are all a rapidly diminishing part of Britain’s culture, as warmer winters – which scientists are attributing to global climate change – produce not only fewer white Christmases, but fewer white Januaries and Februaries. According to Dr. David Viner, a senior research scientist at the climatic research unit (CRU) of the University of East Anglia, within a few years winter snowfall will become ‘a very rare and exciting event. Children just aren’t going to know what snow is,’ he said.” -The Independent, March 20, 2000

    In 2000 we were on our way to cooking winter right off the seasonal map.
    But then,

    “Britain should brace itself for another freezing winter with the return of La Niña, a climate phenomenon known to disrupt global weather, ministers have warned. The warning coincides with research from the Met Office suggesting Europe could be facing a return of the ‘little ice age’ that gripped Britain 300 years ago, causing decades of bitter winters. The prediction, to be published in Nature, is based on observations showing a slight fall in the sun’s emissions of ultraviolet radiation, which over a long period may trigger mini ice ages in Europe.” –Jonathan Leake, The Sunday Times, October 9, 2011

    “Britain is set to suffer a mini ice age that could last for decades and bring with it a series of bitterly cold winters. And it could all begin within weeks as experts said last night that the mercury may soon plunge below the record -20C endured last year. Latest evidence shows La Nina, linked to extreme winter weather in America and with a knock-on effect on Britain, is in force and will gradually strengthen as the year ends. It coincides with research from the Met Office indicating the nation could be facing a repeat of the ‘little ice age’ that gripped the country 300 years ago, causing decades of harsh winters.” -Laura Caroe, Daily Express, October 10, 2011

    By all means, we need a whole new set of insurance policies based on such sound metrics as catostrophic climate change predictions.

    • Berényi Péter

      By all means, we need a whole new set of insurance policies based on such sound metrics as catostrophic climate change predictions.

      Yup. Some can always make money on misinformation. Used to be called fraud in the good ole days.

    • ‘Sound metrics’, heh. I suppose they mean ‘found metrics’.

    • Ulric Lyons

      “Britain should brace itself for another freezing winter with the return of La Niña…”

      Deary me, negative NAO/AO is directly associated with weaker trade winds and El Nino conditions/episodes.

  40. Craig Loehle

    People take out climate change insurance all the time. Last year, city governments bet that warming (as they were told) would be inexorable and rapid, and thus did not stockpile enough salt. Then we had a bitter US winter and they were caught short.
    Al Gore sees the terrible risk of rising sea level, and buys a house on the beach, so his true assessment of risk can be ascertained by his actions.
    My friend works in reinsurance, which pays out to insurance companies when they get hit with unusual claims–mostly hurricanes but also tornados and earthquakes. His industry raised rates some years ago because disasters were supposed to be rapidly increasing, but have not had to pay out so much and they now risk being undercut by competition willing to charge less for insurance.
    An actuary looking at the claims in the AR5 about the types of “disruptions” claimed by IPCC would cost them out at a low $ value. There is a lot of wailing and gnashing of teeth in the report (especially the US national climate assessment) about what are essentially trivial impacts which would cost very little. One report I saw talked about “billions” in damages–but in the US a billion $ is just $3/capita. Not even annoying.

  41. Pingback: Can I get insurance against ‘climate change’? « DON AITKIN

  42. We have already two major “insurance” schemes – Social Security and the Affordable Care act (health insurance). Under these schemes – everyone is required to pay into a system, which later, pays out benefits for disasters that are sure to happen and are entirely natural (old age and disease).

    Robert Shiller probably has in mind a third such scheme – a government mandated climate change insurance scheme. Or, in other words, peeling off the rhetoric, a climate change tax. It’s like the carbon tax. Some economists have a ready answer for all problems: a new tax.

  43. JasonScando

    I am an actuary at an insurance company that sells lines of business that are at risk from hurricanes.

    Insurance prices, for primary insurance (homeowners, commercial property, auto physical damage) are impacted by weather events. However, AGW has no explicit part in anything we do, nor for any other insurance company I’ve ever heard of. Rates continue to rise because people continue to disproportionately inhabit the coast, because the cost of building materials continues to increase through inflation, and because the average real dollar cost of houses continues to increase.

    It is possible that there is some amount of increase due to an actual increase in the damage potential of weather, but there is no evidence of that and any such impact is hidden amongst natural volatility in weather events.

    Other pricing factor is things like pension plans and health insurance costs for employees; loss of investment income on insurer funds due to abysmally low fixed income yields; reinsurers raising prices in the aftermath of catastrophes (pricing in reinsurance is largely based on supply and demand — true capitalism, i.e. price gouging, is rampant).

    All of that is to say that increases in property insurance prices have absolutely nothing to do with AGW in any way explicitly acknowledged, and even if one did acknowledge it, the impact on pricing would be neglible in the face of all the other above factors I’ve mentioned.

  44. If the matter is private insurance companies – nothing needs to be done, i.e. BAU – insurance companies already insure everything – and it functions well, with or without AGW.

    As I said above, Rober Shiller, in the NY Times piece, probably meant a new government mandated “insurance” scheme.

  45. Tanglewood

    Norhaus up to his usual tricks : since you can’t prove CAGW, just assume it, and proceed from there. Life is so much easier that way.

  46. Ulric Lyons

    Climate Casino, it doesn’t resume warming and we get a whole string of cold related disasters which they don’t cover. They win, you lose.

  47. Pingback: Climate data and financial data: Part I | Climate Etc.