“We don’t discuss the question anymore of, ‘Is there climate change’,”: Munich Re in the WSJ

WSJ: “Changing risk probabilities may make some areas uninsurable altogether, or at least so risky the cost would be prohibitively expensive for insurance buyers, executives say.”

Yes, but the trouble is – although the Wall Street Journal may only just have woken up to the problem – the big reinsurers have been saying this kind of thing since 1990. I chronicle their ineffectual journey, as an eye witness, in The Carbon War.

The article explains one reason: “Property insurance and reinsurance contracts typically last one year, so an insurer can recalibrate yearly as risks change. “Global warming may be occurring. Probably is,” says Warren Buffett, chief executive of Berkshire Hathaway Inc., which has a major reinsurance business. “But it hasn’t hurt the reinsurance industry. And people are pricing still as if it won’t, on a one-year basis”.”

And to make it worse:

“For most insurers, rates aren’t rising—yet. A flood of capital into the industry from pension and hedge-fund investors, driven by low interest rates, has increased competition and pushed down property-catastrophe reinsurance prices in the past decade.”

Images: from article

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