Scientists say the jury is still out on whether rising sea temperatures will cause more hurricanes to hit U.S. coastlines. Yet some insurance companies are boosting premiums based on assumptions that they will. Others are withdrawing from coastal communities altogether.
Last year, Leanne Lord of Marion, Mass., decided to put her house up for sale after her insurance premiums more than doubled to about $2,892 a year since 2005. Many of her Cape Cod neighbors, who hadn't seen a hurricane in the area since 1991, followed suit. Today, there's a glut of houses on the local market.
"A lot of people can't afford to live here anymore, between the insurance and the taxes having gone up so much," says Ms. Lord, a 52-year-old public-health nurse. "They have been forced to leave and I think that is really sad."
Costs for homeowner insurance along the East and Gulf coasts have risen 20% to 100% since 2004, says the Insurance Information Institute, a trade group. In the three years through 2006, says the institute, property and casualty insurers registered record profits, topping out at $65.8 billion in 2006. (Despite severe U.S. weather that has caused about $8.9 billion in insured property losses to date this year, it's too early to forecast 2008 profits.)
Helping to drive these developments is a little-known tool of the insurance world: Computerized catastrophe modeling. Crafted by several independent firms and used by most insurers, so-called cat models rely on complex data to estimate probable losses from hurricanes.
But regulators and other critics contend that the latest cat models -- which include assumptions about various climate changes -- are triggering higher insurance rates.
As long as globaloney continues to be politically correct and promoted by such doofuses as Harry Reid, the insurers will have cover to raise their rates pretty much at will. Anyone in a potentially affected area will get hammered.
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