Insurance, Mortgages and Climate Change

Discussion in 'The big picture' started by Jez, Dec 8, 2006.

  1. Jez

    Jez Junior Member

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    I've been following this for quite a while wondering when it would kick in - it would seem we've reached or are close to the 'tipping point' which has been largely ignored by the 'situation good/normal' economists and those in the mainstream media.

    Insurance (and all the necessities which go hand in hand with it) is another of those taken for granted 'rights' which is going to change dramatically in the (quite possibly very near) future.



    *** Please bear in mind this is an excerpt from a Washington Post article which may not be archived for long.
     
  2. frosty

    frosty Junior Member

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    very interesting thanks jez

    wonder when aust will wake up to this ...... Lancelin town here is less than a metre above sea level :shock: sure glad we live up on the scarp 102m above sea level

    frosty
     
  3. Jez

    Jez Junior Member

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    Yeah Frosty, like the US we have a lot of vulnerable real estate - both private and commercial.

    Insurance rates for businesses and professionals (particularly medicine) have skyrocketed over the last few years...without any influence from climate change. You can imagine what would happen just to the tourism industry (a major employer in Australia) if insurance coverage was withdrawn or dramatically increased for all coastal operations. I'd imagine agriculture would be highly exposed also. Then there's all the homeowners and small business operators...

    Insurance is a business and the moment it is no longer profitable for a wide range of insurers to cover the public and private sector, then they will withdraw coverage or make it hideously expensive with a hefty excess for any future claims. And you have to wonder how many are already overexposed...much like a bank, once the funds run out then a best case scenario is a protracted legal process and partial remuneration, worst case scenario is no money forthcoming.

    And the the 'no insurance, no mortgage' doesn't just apply to those seeking a home loan, it also applies to those with an existing mortgage...if the number of financially viable insurance companies drops dramatically after a series of high exposure losses, then those that remain can charge whatever they like - to have a mortgage you must have coverage.

    It's the virtually hidden fourth part of the quadruple whammy...rising interest rates; rising fuel costs (and all that brings with it); widespread increasing unemployment in the private sector due to economic contraction; and massively increased insurance costs.
     

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