Ask your insurance agent if global warming is alarming


One of the internet research techniques that can be used is to sift through all the information on climate change  is to pay attention to what the stakeholders are doing. Who are the stakeholders? Some of the most important ones are:

  1. climate scientists (it’s what they do)
  2. oil companies (fossil fuel production and distribution costs could be affected by legislation)
  3. farmers (their productivity is highly dependent on the local climate)
  4. insurance companies (weather related catastrophic losses can affect their profits)

While journalists can have bias, and politicians can ignore climate change, you know that the stakeholders listed above are thinking seriously about climate change. The U.S. military might be a less obvious stakeholder but they are also paying careful attention to global warming. The United States defense secretary, Leon E. Panetta, said as much:

Climate and environmental change are emerging as national security threats that weigh heavily in the Pentagon’s new strategy.

Insurance companies, after the flooding in Alberta are being asked many questions from home and business owners. Some people are quick to blame global warming for the flooding and others are quick to dismiss that thought. Finding differing opinions as to whether or not global warming had anything to do with the Alberta flooding is easy to do if people look for simple explanations. The Calgary flooding is the result of a complicated web of causation, and therefore simple answers are the wrong thing to look for. Sometimes stepping back, looking less regionally and considering longer time frames, can be helpful.  In the case of Canada’s long-term national trends, looking over two decades worth of natural disaster insurance losses and comparing it to surface temperature data over the same time span, a correlation starts to appear.

loss v temp graph

The vertical axis shows catastrophic insurance losses in units of dollars x 1000 (adjusted) and the horizontal axis shows Canada’s average surface temperature anomaly in degrees Celsius. The temperature “anomaly” is a measure of the temperature change (positive or negative) from a reference baseline.

If there is a correlation between surface temperatures and insurance payouts in the data above, it remains very important to remember that “correlation does not imply causation”.

above or below

This implied causation might not be meaningful unless one can answer the question, “Is there a plausible mechanism by which higher surface temperatures can lead to increased catastrophic insurance loss?” As it turns out, the answer is “probably yes”. It is reasonable to think that there could be causation between temperatures and insurance losses. Climate scientists have been warning that increasing weather extremes are a consequence of global warming, weather extremes cause insurance payouts, and Canada has been warming.

The Insurance Bureau of Canada (IBC) is paying attention to these numbers and has taken a very proactive approach. They claim global warming is already here and they want us to adapt.

Public and private sector leaders need information about regional climate trends in order to adapt for the future.


Changes to Canada’s climate will also have implications for climate effects other than changing precipitation patterns. The occurrence of forest fire activity is projected to increase by 25% by 2030, with major regional variations as certain parts of the country become hotter and drier than others. Recent observations have led to projections of global mean sea level rises of 1 metre or more over the next century, with tangible impacts for Canada’s coastal regions.

before diaster strikes

This “Strike Back!” graphic (on the right) was also published by the Insurance Bureau of Canada and is quite dramatic:

Media outlets such as the Financial Post have been reporting on what the insurance companies are saying about global warming.

Climate change blamed for spike in home insurance premiums.

This has high public interest since all of us are affected directly when we pay our premiums, but the extent to which our insurance rates will change in the future is not yet known. A Financial Times article suggests suggests that some coastal areas might even become uninsurable in the future because of wind and flood risks. The article states:

The number of weather catastrophes worldwide has risen noticeably over the past 30 years, according to data from Munich Re, the reinsurer. They show a trend in the numbers of storms, floods, heatwaves, droughts and forest fires that has risen from about 300 a year in 1980 to about 900 in 2012.

The Financial Times article was picking up on on the alarm raised by an organization that studies insurance economics, the Geneva Association.  In their report, the Geneva Association identifies flood insurance in the U.K. and wind storm insurance in Florida as examples of markets that are at risk of uninsurability in the future. In a manner similar to the Insurance Bureau of Canada, the Geneva Association suggests that insurance companies should take a leadership role in adaptation which would include consultation with governments on such practical things as making amendments to building codes that would strengthen a building’s resistance to weather events.

The insurance industry should play an active role in raising awareness of risk and climate change through risk education and disseminating high-quality risk information.

You may continue to feel that the risks of global warming are small and therefore you may choose to ignore the scientific consensus on climate change. You may not pay attention to how concerned the Pentagon and oil companies are. Can you also ignore what your friendly neighbourhood insurance agent is saying?

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  • Shawn Brooks

    Shawn has taught physics for many years and has also worked for a software company. He has presented at conferences and has conducted workshops for physics teachers. He is the former treasurer of the Ontario Association of Physics Teachers and has participated in and co-designed research projects pertaining to technology enhanced science education. He cares about science education and critical thinking.