Washington DC (PRWEB) September 8, 2005
Action Fund Management LLC (AFM), an investment advisory firm, warned the property and casualty insurance industry not to be fooled by environmental activist efforts to link natural disasters, such as Hurricane Katrina, with global warming.
A new report scheduled to be released on Sep. 8 by Ceres, a coalition of environmental and investor activists, alleges that insurance companies are at financial risk from manmade global warming.
"Insurance companies aren't financially exposed because of any supposed global warming," said Steve Milloy of AFM. "They're exposed because they've spent decades writing policies for risky coastal development and not charging sufficiently high premiums," added Milloy.
Although there has been a dramatic increase in hurricane damage in the U.S., virtually all of this is due to more people building and living in coastal, hurricane-prone areas. Factoring in the increases in population and development, there is no discernible trend left in hurricane damage.
Massachusetts Institute of Technology hurricane research Kerry Emanuel wrote in the aftermath of Hurricane Katrina that, "For U.S.-centric concerns over the next 30-50 years, by far the most important hurricane problem we face is demographic and political. Consider that Katrina, as horrible as it was, was by no means unprecedented, meteorologically speaking. More intense storms have struck the U.S. coastline long ago. The big problem is the headlong rush to tropical coastlines, coupled with federal and state policies that subsidize the risk incurred by coastal development. Private property insurance is heavily regulated by each state, and political pressure keeps rates low in high-risk regions like tropical coastlines, thus encouraging people to build flimsy structures there. (Those living in low-risk regions pay for this in artificially high premiums.) Federal flood insurance pays for storm surge damage, and like private insurance, its rates do not reflect the true risk. We are subsidizing risky behavior and should not be surprised at the result."
"Now that consumers are faced with dramatically higher gasoline and energy prices, the insurance industry shouldn't try to pass on the higher costs of risky policies to the vast majority of consumers who live in low-risk areas," said AFM's Tom Borelli.
"The notion of manmade global warming is junk science," said Milloy. Global warming activists are trying to lure the insurance industry to their side with false hopes that it will be able to continue writing risky policies, blame subsequent losses on manmade global warming and, then, try to get taxpayers and energy and automobile to reimburse them.
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