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Should Insurance Rates Be Raised With Climate Change Risk?

Insurance companies have incorporated climate change assumptions into their disaster probability calculations, thus withdrawing coverage or charging staggering rates on parts of the US East and Gulf coasts.

According to the Wall Street Journal, there is a scientific consensus about rising sea temperatures, and practically a consensus that the temperature is tied to greater hurricane activity. But, science has not definitively concluded how or if this will impact the US coastal area now facing rising premiums.

Even so, insurers are adjusting their coverage plans in reaction to the horrific 2004 and 2005 hurricane season. The article reports that companies are treating disasters like Katrina and Rita as the norm, not the exception.

Should insurance companies wait for science to make a unanimous connection between climate change and increased risk in these specific regions before they raise the rates?


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