# Florida

Imagine that in the 1970s you bought a plat along the coast in Florida that was on a large pile of sand that was basically at sea level upon which you planned to build a four-hundred unit, twelve story tall, condominium complex. This complex was to rest on a slab of concrete that rested atop the pile of sand and a lot of long pilings driven deep into the pile (but not to bedrock). If you will, the building(s) were to rest atop a concrete many-legged table with sand beneath the table top itself.

Imagine that, for several years now, there had been an encroachment of sea-water onto the property during high tides; that with each encroachment, the sea-water wet the sand beneath the table supporting the building, then drained away. That with each wetting, a small amount of sand was removed from beneath the building, shrinking away from underneath the table’s top. The sand pile was slowly being lowered with each wetting, leaving the table’s slab top resting on only the top of the pilings. That there was subsidence in the area.

What if, during an adjacent construction project, someone were to drive piles at times when the area of the sand pile was saturated with sea-water; each blow of the hammer sending an earthquake like shock wave through the neighboring wet sand?

In the 1970s, there was still little public knowledge of Climate Change. Even the insurance companies probably did know that much about it. Hurricanes were something they could still actuary around.

Of late, they have been reaching a breaking point on the hurricanes; now this.

In the broadest of strokes: Insurance is all about the odds of an occurrence. The term ‘100 year —-‘ is an actuarial term speaking to the statistical probability of an event’s occurrence; in this case, a 1% probability or a 1 in 100 chance of occurring in any given year. Actuarially, an insurance company would quote a premium of about \$10.00 plus overhead and profit for a one-year policy coverage of \$1,000.00 for such a possibility. Likewise, an insurance company might quote an annual premium of \$1.00 plus overhead and profit for coverage of the possibility of a ‘1,000-year event’ given that the probability of the event occurring was 1 in 1,000, or 0.01%.

What about an event with a probability of occurrence of 97%, or, a 97 in 100 chance of occurring? The insurance company would most assuredly want at an annual premium of at least \$970.00 plus overhead and profit for one a one year \$1,000.00 policy: about \$970.00 + (15% of \$970.00) + (10% of \$970.00 + \$97.00) = \$970.00 + \$145.50 + \$111.55 = \$1,227.05.

97% of climate scientists agree that human-caused Climate Change is happening. What would be the one year premium quote for a policy covering damage from Climate Change?

Follows the collapse of the condominium in Florida, the first of many steps in the our retreat from sea-level rise, from the effects of Climate Change. Here, in America, we will see more retreating from the low-lying coastal areas, from the drought stricken areas of the west (just as we are now seeing in the Middle-East, Africa, …).

The step(s) that needs be taken, more quickly, more often, are those that address the causes of Climate Change. In this, insurance companies will, no doubt, be playing an ever more important role in assessing the true cost of Climate Change, on bringing their assessment to bear in the marketplace. We’ve seen some action being taken by finance; we need to see a lot more. They have a lot at stake. They need to make the assessment as to what will be the cost of Climate Change to their firm’s, to the world’s, finances.