Rethinking Our Place In A Post-Hurricane Sandy World
The financial sting from Hurricane Sandy lingers, but it is encouraging to see more businesses and policymakers embracing bold measures to protect against extreme weather fueled by a changing climate.
In just the past two weeks, New Jersey and New York have announced sweeping changes to limit future development in vulnerable coastal areas. San Francisco is also instituting a “managed retreat” of a key coastal highway and other critical public infrastructure due to rising sea levels.
Promising ideas are also surfacing in Washington. Among those, a thoughtful initiative from SmarterSafer.org, a network of insurance groups, taxpayer advocates and NGOs (including Ceres), which recommends that federal authorities require statewide resiliency mitigation plans before states can receive federal disaster assistance. The network also wants to require communities participating in the National Flood Insurance Program to adopt stronger building codes and conduct a vulnerability assessment of critical facilities.
A common thread in all of these efforts is reducing economic losses and taxpayer exposure from climate change impacts.
“Instead of scattershot, ad hoc approaches after a disaster strikes, we should be planning for these events all along and make communities and infrastructure more resilient and less vulnerable,” said Steve Ellis, vice president for Taxpayers for Common Sense, speaking in support of the SmarterSafer plan. “Every dime of taxpayer funds spent on disaster recovery should help ensure that we don’t have to spend that dime again in a future disaster.”
U.S. taxpayers are being ravaged by climate-influenced economic losses. The devastating drought across much of the country will cost taxpayers a record $16 billion of crop insurance losses, and last week they saw President Obama sign a $50.5 billion disaster relief package to help Hurricane Sandy victims. While the relief bill is obviously necessary, taxpayers should be rightfully disappointed that the package contains no provisions requiring stronger planning measures to protect against more powerful future storms.
Insurers are also feeling the financial pinch of more pronounced extreme weather. Among those are property/casualty insurer Chubb, which last week reported a 77 percent drop in fourth-quarter profits due to $882 million of Sandy-related losses to its major portfolio of high-end Northeast homes. The Travelers Cos. also saw a 51 percent drop in quarterly profits, a direct result of Sandy-related claims.
The mounting losses are getting insurers’ attention.
“We’ve embraced the notion that weather is different. I don’t know why. I’m not a scientist,” Travelers CEO Jay Fishman told CNBC last Friday. “If you’re not impressed with what the weather has been doing over the last few years, you’re not keeping your eyes open.”
Insurance regulators are also paying attention. The National Association of Insurance Commissioners is now requiring climate change risks to be included when examiners audit the financial condition of insurance companies.
“I want to make sure that the industry that we regulate is adapting to climate [change] in a positive way so that they don’t get blind sided, or more importantly that we don’t see insurance companies pulling out of markets or raising rates to the point where they’re unaffordable,” said Washington Insurance Commissioner Mike Kreidler, who advocated for including climate risks in the NAIC’s Financial Examiners Handbook.
These efforts are surely encouraging, but whether Congress has an appetite for more comprehensive changes, such as SmarterSafer’s ideas, remains a big question. And that’s before even considering the most important change of all – adopting comprehensive legislation to reduce the carbon pollution causing climate change in the first place.