If you believed all the climate change and global warming disaster predictions ever told the last 20 years, you’d think we would be in Armageddon.Of course we are not. Economically, lets look at signs if climate change predictions were unraveling right before our eyes. One of the biggest indicators would be people claiming damage from storms or flooding to their insurance companies. It’s not happening. This time of year, 2017 stats start rolling in from what the insurance industry did in 2017. While examining a detailed report from Deliotte.com, I came across this piece of data.
US property-casualty (P&C) insurers saw underwriting losses more than double, to $5.1 billion, for the first half of 2017 compared with the year before—an even more dramatic downturn when you consider the industry was in the black on underwriting by $3.1 billion during the same period two years ago.1 Soaring loss costs, led by higher catastrophe and auto claims, drove net income down 29 percent in the first half,2 and this was before huge third-quarter disaster claims from Hurricanes Harvey, Irma, and Maria. These storms reverberated globally, particularly within the reinsurance sector, as did claims from other massive natural disasters outside the United States, most notably September’s earthquake in Mexico.
On the other hand, a soft market beyond auto and property-catastrophe lines continues to prevail, with global insurance renewal rates falling for the seventeenth consecutive period in the second quarter of 2017.3This appears mainly due to an overabundance of capital, particularly in the US market, with industry surplus as of June 30 at an all-time high of $704 billion.4 Even record storm losses would be unlikely to put more than a temporary dent in those reserves, most likely making recent hurricanes earnings events rather than serious capital concerns for most primary insurers—although reinsurers and those issuing insurance-linked securities may be harder-hit over the long-term as mounting catastrophe claims are settled.
Hoosier Econ 