A Warming World Means More Destructive Storms

Elevated global temperatures bring a number of threats, including rising seas and more crop-withering heat waves. Higher surface water temperatures in the tropical oceans also provide more energy to drive tropical storm systems, leading to more-destructive hurricanes and typhoons.

The combination of rising seas, more powerful storms, and stronger storm surges can be devastating.

As noted in my most recent book, Plan B 3.0: Mobilizing to Save Civilization, just how devastating this combination can be became evident in late August 2005, when Hurricane Katrina came onshore on the U.S. Gulf Coast near New Orleans. It was a powerful example of recent storms that have destroyed lives, swamped economies and forced insurers to reassess how they calculate risk.

In some Gulf Coast towns, Katrina's powerful 28-foot-high storm surge did not leave a single structure standing. New Orleans survived the initial hit but was flooded when the inland levees were breached and water covered large parts of the city to its rooftops, where thousands of people were stranded.

Even in August 2006, a year after the storm had passed, the most damaged areas of the city remained without water, power, sewage disposal, garbage collection, or telecommunications.

With advance warning of the storm and official urging to evacuate coastal areas, 1 million or so evacuees fled northward into Louisiana or to neighboring states of Texas and Arkansas. Of this total, more than 200,000 have not yet returned home and will likely never do so. These storm evacuees are the world's first large wave of climate refugees.

Katrina was the most financially destructive hurricane ever to make landfall anywhere. It was one of eight hurricanes that hit the southeastern United States in 2004 and 2005. As a result of the unprecedented damage, insurance premiums have doubled, tripled, and even in some especially vulnerable situations gone up 10-fold. This enormous jump in insurance costs is lowering coastal real estate values and driving people and businesses out of highly exposed states like Florida.

The devastation caused by Katrina was not an isolated incident.

In the fall of 1998, Hurricane Mitch, one of the most powerful storms ever to come out of the Atlantic, with winds approaching 200 miles per hour, hit the east coast of Central America. As atmospheric conditions stalled the normal northward progression of the storm, some 2 meters of rain fell on parts of Honduras and Nicaragua within a few days.

The deluge collapsed homes, factories, and schools, leaving them in ruins. It destroyed roads and bridges. Seventy percent of the crops and much of the topsoil in Honduras that had accumulated over long stretches of geological time were washed away. Huge mudslides destroyed villages, burying some local populations.

The storms from Hurricane Mitch left 11,000 dead. Thousands more, buried or washed out to sea, were never found. The basic infrastructure in Honduras and Nicaragua was largely destroyed. President Flores of Honduras summed it up this way:

"Overall, what was destroyed over several days took us 50 years to build."

The damage, exceeding the annual gross domestic product of the two countries, set their economic development back by 20 years.

In 2004, Japan experienced a record 10 typhoons that collectively caused $10 billion worth of losses. During the same season, Florida was hit by four of the 10 most costly hurricanes in U.S. history. These four hurricanes together generated insurance claims of $22 billion.

Insurers Recognize the Risk

Against this backdrop, insurance companies and reinsurance companies are finding it difficult to calculate a safe level of premiums, since the historical record traditionally used to calculate insurance fees is no longer a guide to the future. For example, the number of major flood disasters worldwide has grown over the last several decades, increasing from six major floods in the 1950s to 26 in the 1990s.