Hurricane Ian is the poster child for the coming climate crash

Unfortunately, because of climate change, past weather patterns are becoming less and less useful for pricing future weather-related risks. Rather than 500-year events, biblical floods have become near-annual events in the U.S.

Ian is the poster child of how recent hurricanes have been affected by climate change: rapid intensification, astounding rains related to very slow speed over land and extremely high wind speeds related to the energy supplied by the warming oceans. Rather than an anomaly, Ian shows us what happens when a society underprices climate risk.

With Ian, the most dramatic underestimation of risk took place in the central part of Florida. The hurricane crossed the state at the speed of a recreational jogger (the slowing speed of hurricanes relates to a loss of vigor in the steering winds, which in turn relates to the warming of the Arctic), a pace that led to astounding rainfall – 28.6 inches in one spot.

Estimates of insured losses from the storm run to $63 billion but it's the uninsured losses that will wreak economic havoc.

Climate risk for those closer to the coast has also been underpriced for decades. After private insurers began pulling out of the state following a drumbeat of weather-related losses, Florida set up the Citizens Property Insurance Corp., which quickly became the largest insurer in the state, evidence that it underprices wind risk. Similarly, coastal flood risk from storms and sea-level rise is backstopped – and underpriced – by U.S. taxpayers through the National Flood Insurance Program.

One result of underpricing risks is a flood of people moving to dangerous areas. According to census data, Lee County, home to Ian-devastated Fort Myers, has seen a 50% population increase since it was hit by Hurricane Charley in 2004; Miami Dade County has grown by 600,000 people since Hurricane Andrew did over $50 billion in damage there in 1992.

Once upon a time, I expected the insurance industry would be the White Knight of climate change, simply because the industry relies on the proper estimation of risk. I underestimated the power of business as usual and the industry's genius at offloading risk.

After Hurricane Andrew, for instance, the reinsurance industry began selling catastrophe bonds – so-called cat bonds – securities that paid a high interest rate for insuring a specific risk for a limited time period. (Ian threatens this market, as the storm will visit huge losses on cat bonds tied to named storms hitting Florida.)

Finally, after years of record losses tied to weather and climate, insurers are beginning to act as they should have done long ago. But so long as the burden of greenhouse gases in the atmosphere continues to increase, the already-identified climate risks to the economy will continue to increase, new unanticipated risks will emerge and the cost of insuring those risks will rise, perhaps rapidly, to catch up with decades of underpricing.

At some point, rates will become unaffordable for the average American in an expanding number of counties vulnerable to one or several climate-related risks, and/or the taxpayers will rebel against paying for those risks for those who persist in living in harm's way.

The multitrillion-dollar question looming over us is whether the nation can begin an orderly adjustment to this new reality, or whether that adjustment will be forced during a housing crash and economic crisis.

Eugene Linden is the author of "Fire and Flood: A People's History of Climate Change, from 1979 to the Present." This piece is part of The Invading Sea series by a collaborative of Florida media outlets.

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Eugene Linden

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