The Senate Homeland Security and Governmental Affairs Committee held a hearing today to discuss a Government Accountability Office (GAO) report that was requested by Senators Susan Collins and Joe Lieberman on the impact of global warming on private and federal insurance. The report warns that climate change will likely cause an increase in devastating storms—like Hurricanes Katrina and Rita which devastated our Gulf Coast in 2005. Unlike private insurance industry, however, federal insurance programs such as crop and flood insurance are doing little to prepare for the effects of climate change.
Committee Ranking Member Senator Collins said, “The rapidly mounting evidence of climate change depicts a threat that extends even beyond vital environmental and social concerns. Global warming also threatens to burden consumers and taxpayers with billions of dollars in added costs as insured losses from floods and storms cause increases in federal spending and insurance premiums.
“The private insurance industry, driven by the discipline of the marketplace, has been paying serious attention to increased risks presented by climate changes. But federal insurance programs, on the other hand, have done little to develop the kind of information needed to understand programs’ long-term exposure to climate change.”
During the hearing, Senator Collins pointed to crucial climate change research being conducted at the University of Maine, which indicates that changes in severe weather patterns could happen abruptly. Although many climate change discussions often focus on coastal regions, Senator Collins noted that the consequences extend far beyond our coasts and could have a severe impact on the agricultural throughout the United States due to drought.
The GAO report entitled, “Climate Change: Financial Risks to Federal and Private Insurers in Coming Decades are Potentially Significant,” warns global warming threatens to burden consumers and taxpayers with billions of dollars in added costs as insured losses from floods and storms cause increases federal spending and insurance premiums. For example, according to the GAO, between 1980 and 2005, the amount of property covered by the federal flood insurance program quadrupled to nearly $1 trillion dollars. And the value of crops covered by the federal crop insurance program has risen by a factor of 26, to $44 billion.
The report points out that rising population growth and construction in vulnerable areas such as the Gulf Coast, along with an increase in the frequency and severity of droughts, floods, and storms, will cause our insured loss exposures to grow. The report indicates that the private insurance industry has begun taking into account global warming and more severe weather as it plans for the future. In contrast however, federal insurance programs have done little to prepare for the future
The report recommends that the Secretaries of Agriculture and Homeland Security analyze the potential long-term fiscal implications of climate change and report their findings to Congress.
Senator Collins stressed the need to take sensible steps in many areas to lead us to a more stable climate future. During her time in the Senate, she has met with numerous climate researchers, and has seen the effects of climate change on snowfall, ice caps, and glaciers. She is a cosponsor of the Climate Stewardship and Innovation Act and will soon introduce legislation designed to reduce our greenhouse gas emissions and slow climate change.
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