Global warming's financial impacts on the commercial insurance industry

Warming Impacts

How Global Warming Impacts Commercial Insurers

People assume that every person on earth is in danger due to global warming, but what companies and industries have the greatest financial risk? And, which industry will have to assume the risk that others disregarded? Of course, the obvious answer is the insurance industry. Insurance is the gamble by a financier (or underwriter) against the risks that endanger any purchase or venture (Cummins & Venard, 2008). Understanding what global warming threats entail and how they can adversely affect the insurance industry's ability to provide the funds to secure risk is a crucial present and future occupation.

The insurance industry may be the most significant deterrent against the costs that are to be incurred by the possible deleterious environmental effects of global warming (Litan, 2006). However, because of the money to be made and the costs associated others will incur some of the cost also (Dorman, Duchen & Markus, 1999; Jagers & Stripple, 2003). This investigation will, in part, determine what the role of insurance providers will be in the event of a global warming crisis, and whether they are better equipped to deal with these events or if it could be bettered assigned to a global government structure (Jagers & Stripple, 2003), or some conglomerate of commercial insurers, "investment bankers, Internet companies offering financial services, and specialist risk consultants" (Dorman, Duchen & Markus, 1999).

The main idea behind the research is that studies have investigated all manner of individuals, industries and nations that could be intimately involved with some aspect of global warming, but how the associated risk from actions that either result in global warming or are possibly as a result of global warming has been under-researched. People who build houses too close to a tidal region are risk averse because they can buy subsidized by the government (Litan, 2006). People have sued the United States government because "plaintiffs alleged that the oil and gas industry, naming specific companies, had caused all the property damage in Mississippi, because their operations resulted in emissions of greenhouse gases and caused global warming, which caused the hurricane winds to be stronger and the storm surge to be greater than it otherwise would have (Geary, 2007). These possible elements of global warming have not been examined.

A working title is:

The risks that individuals take considering the forecasts associated with global warming

This study will use data from insurers and different forecasters associated with global warming to determine how risky are the decisions people make regarding home placement, business ventures, and others.

Objective #1

How will people pay for the damage that they incur as a result of a catastrophic global warming scenario. If the worst happens, people will be forced to move farther inland. These relocations could take place in a scenario that lasts many years, or it could happen quickly. The time frame of the event and the availability of resources will determine what happens.

Objective #2

How risk averse is the average person. This part of the research could be conducted using a random sample of individuals who take a survey assessing their risk aversion. The questionnaire would ask the person about all areas of their life and determine if people who are adventurous in one area are risk averse in another. This will show how people think about risk in general.

Objective #3

How much stock do people place in the forecasts of global warming, and how do they think that they will be affected. This data can either be gleaned from surveys, or it can be taken from data that has already been collected by various sources.

Research Methods

Research Strategy

The main strategy here will be surveys. Some of the research will be gathered from sources that already contain needed research data. It may be possible to gather all of the necessary research from alternate sources that have collected like data, and compile it. But, this would entail gathering from very recent sources to make the research viable.

Data Gathering

Data required for this research would be from either individuals who have agreed to take a survey (which would require a human subjects review and approval), from a U.S. survey that has data that meets the requirements of the research or it could be gleaned from other sources. The data requirements would require that a specific document be drawn up which would reflect what exactly is to be gathered, from whom, and for what purpose. These data requirements would have to be followed to the letter after they are approved because they are the basis for the safety of the individuals from whom the data is gathered. Data recording would require the use statistical analysis to determine the severity of the risk factors involved and how risk averse the average person is. Also, it may be valuable to do separate assessments of the risk aversion of certain demographics within the general population. Insurers already use such data when they rate people for specific premiums, so this data should not be difficult to gather.

Access to data would be determined by what type is used. Primary sources would be people who have agreed to take a survey and answer questions regarding risk aversion or adventurousness. There are instruments that have been previously used to make these determinations, and they would be tailored for the specific research.