Whether you subscribe to the idea of global warming or not, it has becoming harder and harder to ignore the looming impact of climate change on taxpayer-backed wind insurance programs and the National Flood Insurance Program, or NFIP, especially if you live as I do with saltwater at your back door.
The title of a new report last week from the Union of Concerned Scientists, or UCS, sums it up pretty well: "Overwhelming Risk: Rethinking Flood Insurance in a World of Rising Seas."
Rising seas, rising risks
In it, the scientists conclude that when the growing numbers of coastal homes and businesses meet the more intense hurricanes and storm surge being generated by rising sea levels due to the culprit-who-dare-not-be-named, the coming losses could overwhelm home insurance companies, flood insurers, reinsurers and, worst case, U.S. taxpayers.
What's more, the scientists say the National Flood Insurance Program is actually making matters worse by offering residents of coastal zones flood insurance rates so low they're described as "perverse," and paying claims over and over on properties in high-risk areas without imposing penalties. UCS says NFIP data show that while repetitive-loss properties account for just 1.3 percent of its policies, they've sucked up 25 percent of all payouts from the program since 1978, nearly $9 billion in total.
Last year's suspiciously freaky weather, from Superstorm Sandy in the Northeast to the protracted Midwest drought to the wildfires out west, cost insurers $35 billion in privately insured home insurance and commercial property losses, more than three times the $11 billion annual average over the past decade.
Perhaps coincidentally, last May, scientists announced that the concentration of carbon dioxide in the atmosphere had reached 400 parts per million, the highest level in 300 million years, long before man arrived on the scene.
Insurance industry's message: Face reality
Even Frank Nutter, president of the Reinsurance Association of America, lost patience recently with U.S. political dithering over whether climate change is real or just some anti-fossil-fuel conspiracy.
"Insurance is heavily dependent on scientific thought," he told The New York Times. "It is not as amenable to politicized scientific thought."
While last year's Biggert-Waters Flood Insurance Reform Act made a nod to climate change by gradually increasing flood rates, updating risk maps and phasing out subsidies for repetitive-loss and low-rate "grandfathered" properties, the UCS says it didn't go far enough to batten down NFIP's hatches.
"We need to build resilience along our coasts, including through reforms to insurance programs, and we need to protect the long-term future of our coast by reducing carbon emissions to help slow global warming and sea level rise," the report concludes.
Whether you believe in global warming or not, the rising sea levels and unpredictable severe-weather events will likely have a very real impact on your home and flood insurance rates.
Follow me on Twitter: @omnisaurus
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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.