Insurers at Risk from Climate Change, GAO Finds

Carefully never calling it "global warming," the Government Accountability Office (GAO) has warned that rising earth temperatures over the coming decades will expose federal and private insurers to greatly increased risk of losses from excessive payments of claims due to catastrophic weather events.

In its report, Financial Risks to Federal and Private Insurers in Coming Decades (.pdf) the GAO reports that the global average temperature has increased by 0.74 degrees Celsius over the past 100 years, with climate models predicting "additional, perhaps accelerating, increases in temperature" in the future. Rising temperatures, says the GAO are expected to increase the frequency and severity of damaging weather-related events, like floods, hurricanes and droughts.

GAO reports that private and federal insurers paid more than $320 billion in claims on weather-related losses from 1980 to 2005, with even greater losses are on the horizon. Population growth and new development over that period have greatly increased the potential for losses suffered due to catastrophic weather. Since 1980, the exposure to loss for the National Flood Insurance Program (NFIP) has quadrupled, nearing $1 trillion in 2005, and the exposure of the Federal Crop Insurance Corporation (FCIC) increase an amazing 26-fold to $44 billion.

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