Florida Governor Ron de Santis called Hurricane Ian “a once-in-500-year event.”

If only. Floridians could then rebuild after Ian and return to business as usual.

Unfortunately, due to climate change, past weather patterns are becoming less and less useful for assessing future weather-related risks. Rather than 500-year events, Biblical floods have become almost annual events in the United States

Ian is the star child of how recent hurricanes have been affected by climate change: rapid intensification, amazing rains linked to very slow speed over land and extremely high wind speeds linked to the energy provided by warming oceans. Rather than an anomaly, Ian shows us what happens when a society underestimates climate risk.

As the frequency and intensity of economically destructive events such as storms, floods, fires, droughts and extreme temperatures increase, the risk of a climate-related repeat of the 2008 crash increases, the difference being that the economic destruction will only increase in the following years.

With Ian, the most dramatic underestimation of risk occurred in central Florida. The hurricane moved across the state at the speed of a recreational jogger (the slowdown in hurricane speed is linked to a loss in the strength of the guiding winds, which in turn is linked to the warming of the Arctic), a pace that led to amazing rainfall – 28.6 inches in one place.

Estimates of insured losses from the storm stand at $63 billion, but it is the uninsured losses that will wreak economic havoc. For example, risk analysis firm Verisk estimates insured losses from flooding in the Florida interior at approximately $1 billion. That sounds small, but the number is so low because very few Central Florida homeowners have flood insurance. In Orlando, the figure is 1.5%, suggesting that the losses that will be borne by Central Florida homeowners and businesses will be in the tens of billions.

The climate risk for people close to the coast has also been underestimated for decades. After private insurers began pulling out of the state following a drumbeat of weather-related losses, Florida created Citizens Property Insurance Corp., as a safety net. It quickly became the largest insurer in the state, proving that it undervalues ​​wind risk. Likewise, the risk of coastal flooding from storms and sea-level rise is supported — and underestimated — by U.S. taxpayers through the Agency’s National Flood Insurance Program. federal emergency management. The NFIP is now more than $20 billion in debt despite having $16 billion canceled by Congress as recently as 2017.

One of the consequences of under-assessing risk is an influx of people moving into dangerous areas. According to census data, Lee County, home to Fort Myers devastated by Ian, has seen its population increase by 50% since it was hit by Hurricane Charley in 2004; Miami Dade County has grown by 600,000 people since Hurricane Andrew caused more than $50 billion in damage there in 1992. Millions of people in California have moved into fire-prone areas since the start of a mega-drought at the turn of the millennium.

Once upon a time, I expected the insurance industry to be the white knight of climate change, simply because the industry relied on correct risk estimation. I underestimated the power of business as usual and the industry’s genius at offloading risk.

After Hurricane Andrew, for example, the reinsurance industry began selling catastrophe bonds — so-called catastrophe bonds — securities that paid a high rate of interest to insure a specific risk for a limited period. (Ian is threatening this market, as the storm will cause huge losses on cat bonds related to named storms hitting Florida.) a market.

Finally, after years of record weather and climate-related losses, insurers are beginning to act as they should have done a long time ago. After a succession of record fires in the West, insurers stopped offering policies in the most vulnerable areas. California has slowed that exodus by imposing a moratorium on insurance cancellations for ZIP codes covered by fire-related emergencies. Nevertheless, large insurers such as AIG have pulled out of the state, leaving homeowners with skyrocketing rates in the private market or fire insurance from a rudimentary state-provided safety net.

As long as the load of greenhouse gases in the atmosphere continues to increase, the climate risks already identified for the economy will continue to increase, new unforeseen risks will appear and the cost of insuring these risks will increase, perhaps quickly to make up for decades of underpricing. At some point, fares will become unaffordable for the average American in a growing number of counties vulnerable to one or more climate-related risks, and/or taxpayers will revolt against paying those risks for those who persist in living in danger.

The multi-trillion dollar question looming over our future is whether the nation can begin an orderly adjustment to this new reality, or whether this adjustment will be forced in the wake of a housing crash and economic crisis.

Eugene Linden is the author, most recently, of “Fire and Flood: A People’s History of Climate Change, from 1979 to the Present”.

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