I first moved to Florida from Maine in 1987. Sure enough, just a few months after calling the Sunshine State home, a tropical storm blew through. The damages were relatively mild and I counted myself lucky. It wasn’t until 1992 that I had another chance to see what nature’s fury can do to this lovely and low-lying peninsula. The name of the fury was Hurricane Andrew.
There were devastating similarities between Andrew and his gruesome successor Katrina but also differences. Andrew caused the greatest portion of damage with gales which lasted for brutal, extended periods. Katrina, on the other hand, killed mostly with water, both in the storm surge and the rainfall which breeched levies.
The other key similarity in the destruction of Hurricane Andrew and Katrina points to a trend: the $100 billion natural disaster.
In this blog, I tend to discuss the environmental ramifications of current events. I am an environmentalist so my choice of topics should come as no surprise. However, I also am a Floridian and a homeowner, a risky and often expensive combination. Everyone who owns property or plans to buy property must consider the impact of hurricanes, not just in their immediate effects but the toll they take on the property casualty industry.
Before Hurricane Andrew, the standard practice for many insurance companies in calculating their losses from tropical wind storms, including hurricanes, was to plan for a $100 billion event once every decade somewhere in the northern hemisphere. After Andrew, Florida saw huge ripples run through the insurance industry and heard calls for new government subsidies to cover Category 5 storms. A political compromise was struck and it served the Sunshine State adequately (to many critics) for a decade.
As the realities of global warming became more and more apparent, calls for reform began to echo within the insurance industry. Thus far, some of them have been heeded. In the wake of the second anniversary of Hurricane Katrina, the most poignant of them is the realization of a $100 billion catastrophe EVERY YEAR. Yes, that is the financial lesson of Andrew and Katrina.
Global warming causes tropical weather systems to accelerate faster and more often, giving us stronger and more numerous hurricanes. Just imagining what this fact will mean for our future is enough to make me quiver. Let’s not forget, though, that many insurance companies cover homes in multiple states and regions. So, no matter where you live, the property casualty model of your provider here in the new millennium must include annual events which involve losses of $100 billion. The inescapable truth is that every homeowner likely will be affected negatively. That’s a bitter pill to swallow but it is the truth.
Andrew and Katrina erased vast swaths of neighborhoods and communities. With global warming as the new catalyst in the formation and intensity of wind storms, we are in for a bumpy ride which also may well erase insurance policies or firms from existence.
Sustainable Justice For All!
Corbett Kroehler
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