...and doesn't "believe" there is a free market for insurance
I've just read an article by Willis Eschenbach on WUWT (that's Wondering Willis of Remote Airports fame). His article appears to be based on the premise that there is no such thing as a free market for insurance.
It's an interesting thought to appear on an ideologically-driven denier website of the free-market persuasion.
Willis main lie is:
... there is no evidence that extreme weather events are increasing.
Willis is trying to claim that one of the world's largest reinsurance companies, Munich Re is making stuff up when it produces charts like this one (discussed by Tamino). (Click any chart to enlarge it.)
And this updated one, from a more recent Munich Re report: Topics Geo – Natural catastrophes 2012
Willis' whole argument seems to be founded on the false premise that climate change isn't bringing more weather disasters. He makes the following unstated assumptions:
- people who pay more for insurance as companies raise their rates as risk increases, are wasting their money because floods, fires, storms etc won't get worse with climate change.
- no insurance company will try to grab a bigger share of the market by offering lower rates than the industry norm. There won't be a company that will back Willis' notion that weather disasters won't continue to increase.
In other words, people are stupid for paying higher rates. I'm not so surprised by that first assumption. Anyone who doesn't stray far from the realm of denier-land can't be expected to know that there are people in the world who are not quite as stupid as those they come across on places like WUWT.
The second assumption is more odd, because free market ideology is what motivates a lot of deniers to adopt their denialist stance. Willis is assuming the insurance market isn't a free market. It is not competitive. There will be no company that will offer lower rates. Seems a bit of an odd position for someone on WUWT to take.
Insurance companies offer all sorts of things and compete with each other in my experience. But like any business, if they make too many bad choices they may go under. If an insurance company doesn't pay out for damages it insures against it will lose customers or worse. If an insurer wrongly assumes risks are lower than they really are and it does pay up when disasters hit, it may well run out of funds and fold.
Wondering Willis is wrong - again
Going back to Willis and his big hot whopper:
...there is no evidence that extreme weather events are increasing. Even the IPCC has been dragged kicking and screaming to admit this. The land has been warming for a couple hundred years, but nowhere in there are any thermal catastrophes, or any increase in the extremes of wind, water, and weather.
As we've seen there is evidence being stacked up that certain deleterious weather events are increasing. Most extreme events are rare, otherwise they would not be called extreme they'd be called 'normal'. That's not all. The IPCC itself reports certain extreme events are increasing in either or both magnitude and frequency, including heavy precipitation, heat waves and warm spells in various regions. Extreme events associated with cold are decreasing.
The most common of the recurring extreme events are arguably extreme heat and extreme precipitation. The weather in most places is pushing against the upper boundaries of "climate". There are disasters associated with these extremes - fire, drought and flash floods.
This IPCC report is devoted to extreme events and disasters and, contrary to what Willis tries to claim, it does document an observed increase in some extreme events. Already. And we've got a lot more to look forward to as climate change kicks in more strongly this century.
If rising insurance costs are a concern, I'd suggest moving to an area that is less likely to be affected by fire, flood, sea surges, hurricanes and other disasters. Insurance costs aren't going to drop from lowering climate risks, but you can still find companies that assess risk at the local level and will charge less where there is less risk exposure.