Human response to climate change - The Global Climate System: Patterns, Processes, and Teleconnections - page 277

Record high insured climate losses during the 1990s
The United States experienced record-setting high insured property losses
from numerous climate extremes during 1990-6. The 7-year total insured
loss, after adjusting for inflation and other factors, was $39.65 billion of
which $15 billion was due to Hurricane Andrew (Changnon 1999a ). Insured
losses in the United States represent 70 percent of the total national losses
from climate extremes (Changnon et al. 1997 ). Assessment of events causing
losses of $100 million or more revealed 72 had occurred during 1990-6,
an average of 10.3 per year, as compared to an average of only 3.6 such
events annually during 1950-89 (Changnon and Changnon 1991 ). Annual
insured losses during the 1990-6 period averaged $5.665 billion, whereas
the 1950-89 loss value (1997 dollars) from events causing $100 million or
more damage was $1.7 billion per year. Thus, the 1990s experienced a
major increase in the number of costly events and in the magnitude of their
annual losses, creating major economic impacts on the insurance industry.
8.4.5 Causes for increasing climate losses
Various factors including shifts in climate conditions have been identified as
responsible for the increases in economic losses related to climate extremes in
recent decades.
Insurance industry
The record high insured property losses during the 1990s created immense
concern amongst the crop insurance, property insurance, and reinsurance
industries. They sought explanations for the causes. One that surfaced quickly
was that the peaking of losses represented the start of a climate change due to
global warming (Swiss Re 1996 ), whereas others believed the shift was due to
natural fluctuations in climate. Studies of storm frequencies did not reveal
a major increase in many storm frequencies or intensities. Extensive analysis
of when and where the insured losses had increased pointed to shifts in
insured risks that the insurance industry had not adjusted for in their rates.
The upward trend in insured property losses due to catastrophes (events
causing > $1 million in losses) during 1949-94 had a close relationship
with the trend in the nation's population. The recent increase in insured losses
partly resulted from a lack of adjustment over time by the industry for
population growth and shifting risks.
Climate shifts to more extremes
The nation experienced a ''climatologically quiet'' period from the late 1950s
through the early 1970s. It was largely devoid of climatic extremes, such as