Risk & Insurance

“Our coasts face growing risks from sea level rise. Today’s flood insurance system encourages development that increases these risks—and taxpayers nationwide pay the price.”
OVERWHELMING RISK from The Union of Concerned Scientists

The concept of insurance and risk management dates to the ancient Chinese and Babylonian civilizations, in the second and third millennium BC. The modern concept of insurance, the one that you likely think of, if you think of insurance at all, dates to the coffee houses of London, especially the one founded in 1688 by Edward Lloyd, which has evolved over the last 400 plus years into what we know today as the Lloyds of London.

Insurance businesses over the course of time have not only specialized in financing risk and transferring risks from one person or entity to another, but along the way have demanded countless improvements in the risks that they are willing to underwrite and insure. In many cases, modern construction standards are the byproduct of what the insurance industry has demanded to help reduce, mitigate, or eliminate obvious risks. For example, for fire insurance purposes, innovations such as fire sprinkler systems and fire hydrants were first advocated and in some cases required before an insurance company was willing to write a given risk.



Hurricane Andrew, which devastated much of South Miami Dade County in 1992 and caused an estimated 20 billion dollars in damage, has led to dramatic improvement in construction standards and especially windstorm mitigation in the decades after that storm passed through our community. Today, our local windstorm construction codes are some of the most rigorous, perhaps the most rigorous, in the country. A building or a home that includes extensive windstorm protection, such as the way its roof is constructed or the use of impact rated windows and doors, all lead to the lowest possible cost of insurance and in some cases are vital to obtaining any insurance what so ever.

“There is a crucial need for collaboration among federal agencies and between the federal government and the states, as well as policy changes that will help us evolve from a nation that is primarily reactive to coastal disasters into one that invests wisely in risk reduction and resilience.”
Richard A. Luettich, Jr., professor of marine sciences at the University of North Carolina, Chapel Hill, and chair of the committee that wrote the report by The National Research Council in the National Geographic article entitled Gulf and Atlantic Coasts Not Prepared for Sea-Level Rise by Brian Clark Howard that was published July 23, 2014

The insurance industry is an important tool to protect consumers and businesses from the risks that they face. A homeowner’s policy, for example, is designed to protect one’s home from a variety of risks such as fire, windstorm and theft. But the importance of insurance, along with coverage being both available and affordable, is also important to many other businesses. A homeowner that can’t obtain coverage on their home impacts the real estate and lending industries. That same homeowner pays taxes to their local City and County, but without insurance it’s unlikely that most citizens can afford to bear the risk of owning their home and, thus, can’t pay their taxes.

My family knows a thing or two about insurance and has been in the insurance industry for three generations, since 1910, starting with my great grandfather, my grandfather, and today both my father and mother. Needless to say, we know a little bit about risk and insurance, but it is also clear that scientists increasingly believe that the insurance industry might be the key to creating, even requiring, solutions to the risks that our community faces from rising sea levels.

The idea that the insurance industry may demand that our community address the risks that we face related to sea level rise is a growing, if not yet well known, concept. Even the scientific community is aware of the importance that insurers and reinsurers may play in making the public aware of the sea level science, as well as the threats we face while also work with stakeholders throughout the community to try and find solutions for our future.

As a result of the importance that the insurance and reinsurance industry are starting to play in the sea level rise and global warming conversation, I am pleased to include a range of resources to help educate you on of how those industries view our region and this risk.


What Happens if Trump Pulls U.S. Out of Paris Agreement?

By: Don Jergler, Insurance Journal
Dam climate change. An opinion piece in the New York Times is offering a tie-in between global warming and the potential disaster unfolding at the Oroville Dam in Northern California.

Could Global Warming Really Bankrupt the Insurance Industry? Some Leaders Say Yes

By: Tom Randall, Insurance Business America Magazine
Since 1980, the world has set a new annual temperature record approximately every three years, and 15 of the hottest 16 years ever measured are in the 21st century.

Warren Buffett Slammed for Dismissing Climate Change as Potential Worry for Insurers

By: Caitlin Bronson, Insurance Business America Magazine
Investment tycoon Warren Buffett was roundly criticized by environmental advocacy groups for statements he made claiming climate change is not a worry for the insurance industry, but rather a significant and potentially profitable opportunity.

A Climate Risk Assessment For the United States

By: Risky Business
The U.S. faces significant and diverse economic risks from climate change. The signature effects of human-induced climate change—rising seas, increased damage from storm surge, more frequent bouts of extreme heat—all have specific, measurable impacts on our nation’s current assets and ongoing economic activity.

ClimateWise Principles

By: ClimateWise
The insurance sector continues to operate in a challenging environment. Many members have reflected to us on the pressures their businesses are facing now and have faced during the Fifth ClimateWise reporting period (July 2011 to June 2012). The continued repercussions of the economic crisis, in particular economic instability in Europe as well as capital pressures, a lowinterest- rate environment and increasingly complex regulatory risk (such as the EU’s harmonization of insurance regulation, Solvency II) are all factors. Customer expectations are also growing with an increase in on-line buying amongst the younger generation of customers and the increased intensity of competition that this brings with it.

Global Reinsurance: Strengthening Disaster Risk Resilience

By: The Global Reinsurance Forum
People, companies, cities and entire nations are under threat from natural disasters, disruptive technologies, political turmoil, terrorist attacks, and environmental degradation – to name only some major risks. On the other side, the last decades have brought unprecedented improvements in human wellbeing, growth and mobility. In a world where physical, financial, and information systems are ever more interconnected, risks are becoming more complex in their form and more widespread in their impact. The broadest geopolitical forces (population, economic progress, trade, governance, health, environment, and climate change) themselves shape the risk landscape, with a general trend over time of increasing overall value and the number of people at risk.

Managing Liabilities of European Carbon Capture & Storage

By: ClimateWise
The absence of viable risk management solutions presents a material barrier to the development of Carbon Capture and Storage (CCS) at scale in Europe. Insurance does have a role to play as a tool to manage the risks arising from the liabilities that the CCS industry faces in Europe. For many of the familiar operational risks, insurance solutions already exist and are known to both the insurance and oil and gas industries. For the CCS-specific liabilities identified by the EU CCS Directive, ‘off the shelf’ insurance solutions do not exist. This report identifies an innovative way that insurance could address a defined subset of these liabilities. However, some liabilities will remain uninsurable because of their nature and insurance solutions do present commercial challenges for storage operators.

Overwhelming Risk

By: The Union of Concerned Scientists
STORMS STRIKE THE U.S. COAST EACH YEAR, sometimes with devastating force. Both the risks and the costs of flooding and wind damage to seaside coastal communities are growing. Rising population and increasing development along scenic coastlines are putting more people and more valuable property in harm’s way. Accelerating sea level rise, which puts higher water levels in the path of coastal storms, is a growing threat, especially along the East and Gulf Coasts of the United States, which have seen much higher and faster rates of sea level rise than the global average. Global warming has resulted in stronger and more destructive hurricanes in the North Atlantic, and more frequent heavy rain events.


For Insurers, No Doubts on Climate Change

By: Eduardo Porter, The New York Times
If there were one American industry that would be particularly worried about climate change it would have to be insurance, right?

From Hurricane Sandy’s devastating blow to the Northeast to the protracted drought that hit the Midwest Corn Belt, natural catastrophes across the United States pounded insurers last year, generating $35 billion in privately insured property losses, $11 billion more than the average over the last decade.