Rates Rise In Response To Climate Instability

November 13, 2000

As representatives from 150 governments gather in the Dutch capital, The Hague, to examine and discuss the state of the world’s weather, insurers are already taking note of the increasing instability in the global climate.

The conference will review progress on the control of “greenhouse gasses,” which are believed by many meteorologists to be at least partly responsible for the phenomenon know as “global warming.”

While debates continue on the cause and effect of global warming, no one disputes the fact that the world is in fact warmer, and that weather related events have become increasingly violent and costly.

Although this year’s hurricane season has apparently passed without a major catastrophe, elsewhere in the world disastrous floods caused by abnormally heavy rainfall have caused widespread damage. The normally rainy U.K. has been experiencing the worst flooding in over 50 years.

As a result insurers in Europe are increasingly reticent to extend coverage at current rates, especially on homeowners’ policies in high risk areas, along the flood plains of rivers, and near the seacoast.

U.K. insurers have warned that rates will inevitably rise, and that some coverage will simply be unobtainable.

In France the president of MAAF Assurances and Mutuelles du Mans Assurances (MMA), Jean-Claude Seys, told Agence France Presse that he saw rates rising between 4 and 5 percent for 2001 due to the increasingly violent weather.

“We are entering a period of very great climate instability, which is going to affect the cost of insurance,” stated Seys, “All forms of insurance, particularly homeowners.” He sited the end of the year storms which cost MAAF 1.4 billion francs ($185 million) and MMA 2 billion ($264 million), stating, “One can only think that it’s going to increase in the years to come, and that leads to both an increase in premiums and an increase in loss coverage.”

The conference in the Netherlands hopes to obtain a consensus from the countries attending to burn less oil, gas and coal, particularly the U.S., but as that can only be realistically accomplished by significant increases in energy costs, it seems unlikely any time soon.

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