Guest essay by Eric Worrall
Warren Buffett doesn’t understand the insurance industry; Or so suggests the Huffington Post, in a rather hysterical critique of Buffett’s lukewarm acceptance of climate dogma.
Buffett’s case against the resolution boils down to this: “Thinking only as a shareholder of a major insurer, climate change should not be on your list of worries.”
First, he said, his company can handle any possible losses thanks to rising premiums. Because insurance policies are typically written for one year and repriced annually, Buffett’s company can hike premiums to better account for the heightened risk of climate change-driven losses.
Second, Buffett asserts that climate change has produced neither “more frequent nor more costly hurricanes nor other weather-related events covered by insurance.”
But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute. Nine of the 10 costliest floods in U.S. history, when measured by payouts from the federal government’s National Flood Insurance Program, also have occurred since 2000, according to the insurance group.
…
He [Mark Carney, Governor of the Bank of England] also warned about potential losses from claims on policies written by insurers. For example, insurance companies could be forced to make massive payouts if victims of climate change successfully hold accountable companies that contributed to it. He likened the situation to the one faced by U.S. insurers stung by tens of billions of dollars in losses from asbestos claims.
In fact, Carney said that as a result of recent weather trends, some now estimate that insurers are undervaluing their potential losses by as much as 50 percent.
Insurance companies caught unprepared for the effects of climate change could cause problems for government officials and put taxpayers at risk.
Read more: http://www.huffingtonpost.com.au/entry/warren-buffett-climate-change_us_56d36cade4b03260bf773563
Huffington Post is upset, because Buffett claimed that insurance losses have not increased to date due to climate change. It does not matter to the Huffington Post, that Buffett thinks climate change is a serious issue. It doesn’t matter that Buffett is a world renowned expert at correctly pricing insurance risk, and has repeatedly demonstrated that expertise, with a long track record of business success. What matters is that Buffett dared to contradict a tenet of the alarmist viewpoint; Buffett suggested that to date, there has not been an increase in extreme weather events, due to Climate Change. To true believers, this divergence from climate dogma is intolerable; in their minds, Buffett must be wrong.
When the evidence contradicts green dogma, climate alarmists discard the evidence.
HuffPo? Really?
I have never been there. I don’t intend to. They’re ridiculously biased.
What’s next,
Salon.com?
HuffPo being referred to here at WUWT must make their day.
“Hey look we’re legit.”
It may also be the case that the courts have forced insurance companies, over time, to be more generous with their payouts. And that homeowners have become more willing to file claims, and less willing to stoically suck it up.
The headline:
is wrong. I’m pretty sure they don’t expect Buffett to waste his time on their article. At best the job will be done by some very junior minion. The title should be:
I seldom make an argument from authority but I make an exception in this case. Geez, who’s the billionaire renowned for his business acumen? Who’s the penurious scribbler? Who’s advice should I take with regard to the insurance industry? LOL
Warren Buffett has heard more sophisticated BS business proposals than most of us realize is possible for one human in one lifetime. He knows crap when he smells it.
If Warren Buffet has one failing, it’s his inability to demonstrate chutzpah, a trait with which HufPo is so generously endowed.
This is why the workers at Huff Po unionized. It’s tough work making up fantasy and attacking the facts and subject experts day in and day out.
HuffPo is totally ignoring the part where Buffett (referring to automotive insurance) said “Think back to 1951 when I first became enthused about GEICO. The company’s average loss-per-policy was then about $30 annually. Imagine your reaction if I had predicted then that in 2015 the loss costs would increase to about $1,000 per policy.” and ” …inflation has caused a huge increase in the cost of repairing both the cars and the humans involved in accidents. But these increased costs have been promptly matched by increased premiums. So, paradoxically, the upward march in loss costs has made insurance companies far more valuable. If costs had remained unchanged, Berkshire would now own an auto insurer doing $600 million of business annually rather than one doing $23 billion.”
In short, the increases in insured losses are due to inflation, and he has the numbers to prove it.
“But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute. Nine of the 10 costliest floods in U.S. history, when measured by payouts from the federal government’s National Flood Insurance Program, also have occurred since 2000, according to the insurance group.”
Well gee whizz HuffPost, I reckon that 10/10 of the most expensive accumulated capital investment in coastal areas have occurred in those years so whaddya reckon the insurance losses would have increased. I also reckon that the total insurance premiums paid by asset owners in those areas in those years would be relatively high compared to previous years.
Honestly, these people must get breathless just going to the toilet.
Another way to frame this is that the risk of climate change is so obviously miniscule that people are climbing over each other to build on the coast.
I would LOVE to see someone try and prove in court that any cost a person had due to a weather event was attributable to what some person or company did. If they showed any real data it would show exactly what Buffet is saying, the weather is not getting more dangerous. Or, better yet, have them show predictions from their climate models on what would happen with and without the influence of one company on the planet’s climate. They would have to show how their model predictions correlate to past data so the judge/jury believes their models. That is something they will not want to do. They’d get some slick looking lawyer up there pointing at a plot of model predictions versus real data that are no where CLOSE to being the same, trying to convince us the models are good by giving us his best Jim Carrey Pet Detective impression as he says “LLLLLLIKE A Glove!”
He repeated it all to Joe Kernan on Squawk Box this morning, including there having been no serious hurricane landfall in a record amount of time.
Seems to me, the acid test is how many Huffy Po dudes (who used to) own and have sold their BRK-A shares as a result of their fantastic insight.
SWAG = 1 or 2.
I doubt that many owned any in the first place.
Read the scientific explanation of the text
” hide the decline” is a way of life for climate imperialism.