Have you noticed your Home owners insurance? Clean energy news and lots of water.
A year ago I noticed my property owners insurance has been rather high. I say property because some is home, some is business. So, being that have been using accounting software since 1991, I went back a few years to see how much. In 2003 the house was $454/year. This year it will be $1543. Better than tripled. Do you know why? Natural disasters. Google it.
That brings me to 2 recent articles. This one regarding how fast the ice is melting. Faster than they thought.
The study—written by James Hansen, NASA’s former lead climate scientist, and 16 co-authors, many of whom are considered among the top in their fields—concludes that glaciers in Greenland and Antarctica will melt 10 times faster than previous consensus estimates, resulting in sea level rise of at least 10 feet in as little as 50 years.
The science of ice melt rates is advancing so fast, scientists have generally been reluctant to put a number to what is essentially an unpredictable, nonlinear response of ice sheets to a steadily warming ocean. With Hansen’s new study, that changes in a dramatic way. One of the study’s co-authors is Eric Rignot, whose own study last year found that glacial melt from West Antarctica now appears to be “unstoppable.” Chris Mooney, writing for Mother Jones, called that study a “holy shit” moment for the climate.
Well, I think that is the correct response.
But, there is some positive news, at least for those who are living in a motivated nation.
So much power was produced by Denmark’s windfarms on Thursday that the country was able to meet its domestic electricity demand and export power to Norway, Germany and Sweden.On an unusually windy day, Denmark found itself producing 116% of its national electricity needs from wind turbines yesterday evening. By 3am on Friday, when electricity demand dropped, that figure had risen to 140%.The site shows that Denmark’s windfarms were not even operating at their full 4.8GW capacity at the time of yesterday’s peaks.
Unfortunately, as with the Greek tragedy playing out, there are those of a certain persuasion who just can not let their humanity shine through.
The Conservatives will end subsidies to onshore windfarms from 1 April 2016, a year earlier than set out in the previous Tory-Liberal Democrat coalition agreement. Rudd and the communities secretary, Greg Clark, are also to press ahead with plans to give local communities – rather than national government – the right to veto windfarms. Rudd and the communities secretary, Greg Clark, are also to press ahead with plans to give local communities – rather than national government – the right to veto windfarms.
She also confirmed she was content for the Chinese government to invest in new nuclear plants in the UK, despite its questionable nuclear safety record. She said Chinese investors would be subject to UK nuclear safety regulation standards.
Some of that language sounds familiar. States rights? Oh, and Chinese nuclear. The English conservatives are going to sit for foreigners muscling in on their nuclear stuff.
The story has sub plots too. Investor state dispute settlements of sorts?
But the European commission warned on Tuesday that the UK was set to miss its key EU renewable energy target for 2020, and told the government it should review its policies to get back on track.
The Scottish government’s energy minister, Fergus Ewing, has said it is irrational to reduce or scrap onshore wind subsidies. He claimed, citing figures from Scottish Power, that British consumers could end up paying between £2bn and £3bn more in bills. Scotland would be home to 70% of planned future windfarms and the Edinburgh government claims it has not been consulted by the UK government.
Oh well, it’s only water anyway.
Hat tip to C & L and Real Economics
Homeowners’ policies typically (but not always) exclude named perils such as floods and earthquakes, especially in regions prone to such perils. Additionally, there’s also usually a hurricane sub-limit. So not clear that natural disasters would be the cause of the premium increase.
Additionally, the latest IPCC report generally concluded there was low confidence that climate change was a cause of increased frequency or severity of natural disaster activity.
Do you live in a high storm-risk area? Did you have many claims? Did your house increase significantly in value over that period?
Here in Northern VA, my package policy premium (for combined home, auto & umbrella liability coverage) increased by only 20% between 2003 and 2015. Same house, same number & types of cars, same liability limits & same insurance company.),
M. Jed, I know I could count on you.
Wkj, certainly the value of the home went up, but it has also gone back down, in this case by $50K and yet, the cost is up again.
This from the Insurance Information Institute: http://www.iii.org/article/why-are-homeowners-insurance-rates-rising
Rising homeowners rates also reflect the growing frequency and severity of natural catastrophes. In 2010 the federal government provided disaster relief for 81 natural disasters—a record number at the time. This record was broken in 2011, when there were 99 federal disaster declarations. To put this in historical perspective, in the 14 years prior to 2010, the number of disaster declarations made by the U.S. federal government ranged from 44 to 75, averaging 57 a year.
2011 was one of the most expensive years for insurers in global history, as well as in the United States. Furthermore, some of the areas hit hard by big storms in 2011 are not areas of the U.S. that insurance companies expected to have a great deal of risk. The extraordinary spring tornado season in the U.S. in 2011, along with severe winter weather and the $5.5 billion in claims payouts arising out of Hurricane Irene in August, reduced the property/casualty insurance industry’s cumulative policyholders’ surplus—the amount of money remaining after an insurer’s liabilities are subtracted from its assets—to $550.3 billion as of December 31, 2011, from $559.2 billion at December 31, 2010, a nearly 2 percent drop.
It also notes low rate of return on investments (though this was 2012) and construction costs. Well, construction costs continually rise, so this won’t explain it. And the investment return sure has been good since 2012…
The value of the home itself isn’t relevant (not least because the value you’re thinking of includes the value of the land, which the insurer won’t have to repair/replace), it’s the cost to repair/replace that matters, and as the housing markets have improved nationally, those costs have increased because of both material inflation and trade labor inflation, i.e., construction costs have increased.
“And the investment return sure has been good since 2012
The vast majority of property insurer investment portfolios (high level guess without digging is roughly 90%) is held in fixed income portfolios with short duration to match the duration of their liabilities and held to maturity, so new money from premiums collected has been invested at rates lower than expiring investments since then, and the lower yields leading to higher prices for bonds doesn’t impact them.
Regarding the III article, 2011 was the year of the Joplin tornadoes and indeed was one of the more expensive years in recent history, e.g., Allstate’s catastrophe losses as a percent of premiums were about double in 2011 relative to the average from 2006-2010, but since 2011, Allstate’s catastrophe losses have been about 10% below the average of 2006-2010.
According to NOAA, ( http://www.spc.noaa.gov/climo/online/monthly/newm.html ) total severe weather events (tornadoes, hail, wind) were 29,241 in 2011 versus an average from 2000-2010 of 25,297. The reason for the increase was Tornadoes and Wind contributed to the increase realtive to the average, while Hail was lower. Not surprising, similar to Allstate’s experience, for 2012-2014, severe weather has been below the 2000-2010 average, at 17,296, with all three categories below the average, though Wind running closest to the pre-2011 trend.
Some of the data I used in the prior comment was stale. It doesn’t change any of my statements drawn from the stale data but wanted to correct it:
NOAA severe weather events:
average of 2000-2010: 26,730
2011: 29,996
average of 2012-2014: 20,143
related, the generic 3 yr US Treasury note yields at year-end:
average of 2000-2010: 2.93%
2011: 0.36%
average of 2012-2014: 0.73%
I’d also note that the III article’s first reason for the rise in premiums was “The rates have been inadequate for many years, “, i.e., the starting point you’re using was too low in actuarial terms.
You both are really not addressing the issues. Local weather can affect insurance rates. To look at merely U.S. severe weather events–drought as severe weather does not count, I guess…chuckle–is to avoid understanding what in effect is happening. Furthermore, the site M.Jed cites is 1) Merely U.S. 2) very limited definition of severe weather. How about floods? Does the NASA site define severe weather. What about Canada? How about California?
Here is one for you: Dead zones along the Atlantic seaboard are proliferating. Why is that?
Good to see you here!
Stormy,
The issue, or at least the title and first paragraph of the post, specifically addressed insurance rates – and yes local weather can affect insurance rates – and yes, US severe weather events (drought would not be an insurable event for a property policy) specifically addressed the post. As I mentioned, floods are typically not covered by homeowners’ insurance policies.
As for dead zones – given my interpretation that you’re comment focuses more climate change rather than insurance, can you specify what you mean? If it’s about insurance, I’m happy to offer a reason.
Lastly, as I mentioned, the latest IPCC report generally concluded there was low confidence that climate change was a cause of increased frequency or severity of natural disaster activity.
(chapter 2, as a warning this is a large PDF file: http://www.ipcc.ch/pdf/assessment-report/ar5/wg1/WG1AR5_Chapter02_FINAL.pdf): :
“In summary, there continues to be a lack of evidence and thus low confidence regarding the sign of trend in the magnitude and/or frequency of floods on a global scale.” p. 214
“In summary, the current assessment concludes that there is not enough evidence at present to suggest more than low confidence in a global-scale observed trend in drought or dryness (lack of rainfall) since the middle of the 20th century, owing to lack of direct observations, geographical inconsistencies in the trends, and dependencies of inferred trends on the index choice. Based on updated studies, AR4 conclusions regarding global increasing trends in drought since the 1970s were probably overstated.” p. 215
“Current data sets indicate no significant observed trends in global tropical cyclone frequency over the past century” p. 216
“In summary, there is low confidence in observed trends in small-scale severe weather phenomena such as hail and thunderstorms” p. 216
“In summary, this assessment does not revise the SREX conclusion of low confidence that any reported long-term (centennial) increases in tropical cyclone activity are robust, after accounting for past changes in observing capabilities.” p. 217
“In summary, confidence in large scale changes in the intensity of extreme extratropical cyclones since 1900 is low. There is also low confidence for a clear trend in storminess proxies over the last century due to inconsistencies between studies or lack of long-term data in some parts of the world (particularly in the SH). Likewise, confidence in trends in extreme winds is low, owing to quality and consistency issues with analysed data.” p. 220
“Confidence remains low for long-term (centennial) changes in
tropical cyclone activity, after accounting for past changes in
observing capabilities.
However, it is virtually certain that the frequency and intensity of the strongest tropical cyclones in the North Atlantic has increased since the 1970s. {2.6.3}”
While robust increases have been seen in tropical cyclone frequency and activity in the North Atlantic since the 1970s, the reasons for this are still being debated. There is limited evidence of changes in extremes associated with other climate variables since the mid-20th century.” p. 219
and there’s been a decrease in tropical cyclone activity in other geographies, e.g., http://models.weatherbell.com/maue_grl_2011.pdf
Recent historically low global tropical cyclone activity
In the pentad since 2006, Northern Hemisphere and global tropical cyclone ACE has decreased dramatically to the lowest levels since the late 1970s. Additionally, the global frequency of tropical cyclones has reached a historical low. . . . In contrast to record quiet North Pacific tropical cyclone activity in 2010, the North Atlantic basin remained very active by contributing almost one‐third of the overall calendar year global ACE.
C’mon. IPCC reports have not ever talked about increasing numbers, but increasing strengths.
Particularly so in terms of numbers when La Nina is around.
We are wasting time here.
In summary, confidence in large scale changes in the intensity of
extreme extratropical cyclones since 1900 is low. p. 220
“owing to quality and consistency issues with analysed data.”
pg. 220
Once again, wasting time here. And using the honesty and integrity of those who compile the IPCC report against them is scurrilous.
Well lack of consistency, i.e., some evidence of more intense storms and some evidence of less intense storms, would be a reason to have low confidence in a forecast.
Separately, using what against whom? My one declarative statement with regard to the IPCC was “[its] report generally concluded there was low confidence that climate change was a cause of increased frequency or severity of natural disaster activity.” Do you disagree with this statement?
The rape of the planet proceeds apace.
Regarding dead zones: Certainly we should all know what they are–hypoxic areas created generally by human pollution. The number of dead zones has increased dramatically world-wide–logarithmically, actually. Simply look at the proliferation of these areas along the Atlantic coast.
M.Jed: Cards on the table, please.
1. Do you support ALEC? Monckton?
2. Are you what we could call loosely, a denier–that global warming is a myth, a hoax…
3. Are you connected with the Petroleum, Coal sector of the economy?
I realize the above questions are a bit random, but if you are as knowledgeable as you seem to assert, you should understand what ALEC is–who Monckton is–and who claims global warming is a myth or a hoax.
Back to my seemingly odd assertion on dead zones. Global warming encompasses more than merely warming and bad weather–it is part of the general poisoning of the planet.
Do you agree that with the latest study that asserts that we are in the midst of an extinction event? Do you know how this study differs from prior such claims? Is this of any concern to you?
Do you think that greater ocean acidification, for example, will result from pumping more and more CO2 into the air? Do you know the consequences to such acidification? Do you think it is happening?
Do you think the oceans are rising–from heat and from glacial loss –as well as from Greenland, etc.
C’Mon, man.
What part of
“owing to quality and consistency issues with analysed data.”
pg. 220
do you not understand? Recreating such records in the past is almost impossible. In the Pacific, such records do not even extend to 1970. And the accuracy is impossible to figure.
So they refuse to declare a result since their base line cannot be determined.
Stormy,
Not sure the relevance of “my cards”, whom I support, what I believe, or who employs me. Only in rare situations do I endeavor to assert knowledge; rather my comments at AB are usually well cited from non-partisan sources, of which this comment thread serves as an example. That said here are you answers:
1) Until I did a web search, wasn’t sure who ALEC was. Monckton I had awareness of through my general reading on climate change and I’ve snippets of his talks on YouTube. I’ve believe some of his arguments to be compelling and some to be ridiculous.
2) Interpreting “we” and “loosely” – yes. However, I would describe myself a skeptic – I believe warming is happening, human activities are contributing to the warming, but the outcome is likely to underwhelm catastrophic forecasts. I’ve found this discussion: http://www.forbes.com/sites/warrenmeyer/2010/10/15/denying-the-catstrophe-the-science-of-the-climate-skeptics-position/ to be a reasonable summary.
3) Simple answer is no. The more complicated and honest answer is if I were a professional entertainer who performed in an arena where a Petroleum company leased a luxury box and provided revenues to my employer who in turn paid me I guess you could say I was connected. Or if I worked at a large advertising agency where I focused on consumer products but had colleagues who worked for Coal companies you could say I was connected. Or if I was a store manager at a Staples and we had a contract to service Exxon’s photocopiers, you could say I was connected. I’m also not a professional lobbyist. I do own actively- and passively-managed mutual and other investment funds that hold Energy stocks though none are “Energy-focused” and I own single stocks that would have a similar connection as described above to Energy companies, but none would be considered an Energy company.