Back in 2006, analysts from the insurance industries predicted the storm surge caused by Super Storm Sandy. Yet, they do not include this risk in their cost models. The US government is actually on the hook for flood insurance, not the industry. This piece from the PBS News Hour outlines the issues around this topic. Many analysts recognize that climate change is making extreme storms more possible, and they are able to identify areas where major storms are likely. But, the industry is still scared of climate skeptics who do not want to pay for models that incorporate the costs of climate change.
SUMMARY: The insurance industry looks at historical data, old and new, in order to assess the risk for potential disasters and put a price on premiums. But when Sandy hit the Northeast, some insurance companies reconsidered if they priced insurance high enough for the greater risks brought on by climate change. Paul Solman reports.