This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

In Global Warming Debate, Insurers Play it Cool

Stocks in this article: TRV CB ALL

NEW YORK (TheStreet) -- Both sides embroiled in the political debate over climate change will find proof for their positions in data collected by the insurance industry. But don't expect the industry itself to weigh in. 

In a phone interview, Dr. Robert Hartwig, president of the Insurance Information Institute, emphasized that the insurance industry as a whole is satisfied to let the scientific community estimate the realities of climate change and the possible influence of man-made greenhouse gasses. While insurers have an obvious stake in science's findings, agreeing or disagreeing with any particular theory isn't the job of an insurer.

"From an insurance perspective, irrespective of the debate, we place our chips on the actual hard data that we see from actual claim activity all around the world," Hartwig said, emphasizing the projection of trends in the frequency of insurance claims and the cost of those claims. "The cause of that trend is less important than the trend itself."

The longevity of insurance companies depends not on speculation about causes but on accurately predicting those trends.

"The fact that the climate is variable and volatile is nothing new," he said, noting that some insurance companies have been around for 200 years. While part of health insurer Cigna dates back to the 18th century, among the oldest in the property and casualty sector are Athens, Ga.,-based Southern Mutual,  founded 1847, and Maryland-based Hartford Mutual, dating back to 1842.

"Every insurer in business today has long since learned how to adapt to oftentimes extreme variability in the climate," Hartwig said.

In the historical analysis, changing demographics play a key role. One of the reasons hurricanes, wildfires and tornados are more devastating in recent decades is more people live in the areas where they occur.

"There was a very severe hurricane in 1926 in Miami -- not very many people lived there, but what would happen if that were to happen today?" Hartwig said. "All of those analyses are done to project expected costs."

It is partly the demographic variable that makes data from the insurance industry as a whole such a dubious source for those that would argue a political position on climate change. Tracking the cost of damages from natural disasters in any region over a century would appear to bolster the case for climate change: A greater number of people on the planet leads to greater damages and higher costs from storms. Meanwhile, data measuring the frequency and severity of such disasters may or may not not support the same conclusion.

But demographics aren't the whole story. Hartwig had no qualms about stating that violent weather activity has increased in recent years.

"There are certainly more [severe weather] events in the U.S. and maybe even globally," he said, adding that the rise in thunderstorm-related damage -- caused by what are termed "convective events" -- has been particularly dramatic.

"The largest insured loss in the world was a convective event last year, a hail storm in Germany," he said.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs