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Joining the dots (Part II) – insurance, the law, and the cost of living as the climate boils

by | Oct 10, 2023 | 0 comments

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“Our world is becoming unhinged and we seem incapable of coming together to respond.” So said the Secretary-General of the United Nations, António Guterres, a few days ago.

How is it that for a species with such a big and clever brain that we can’t see what we’re doing to the planet? Could it be we simply can’t join the dots? Or could it be we’re joining the wrong dots?

Going dotty

The dots here are data points of climate disruption (or ‘climate boiling’ as António is now framing it). They are growing in number and intensity, just as the science has forecast. Yet, as a society, we seem unable to do anything meaningful in response.

When it comes to seeing patterns in a set of data points, humans are both wonderful and terrible. We’re wonderful in our ability to detect trends and storylines, draw up hypotheses and explanations.

We’re terrible in our ability to only select information that fits our idea of how the world and society should work. Currently, the prevailing idea that warps all other considerations is a belief that strong unbounded economic growth mediated by markets (and left alone by government) provide security and stability – ad infinitum!

It was a good and powerful idea following the disruption and chaos of a world at war in the 1940s. It improved our quality of life, produced decades of peace and stability, and lifted many people out of poverty. But now it is preventing the transformational changes needed to steer society towards sustainability (however you want to define ‘sustainability’).

However, while it is apparent that we can turn a blind eye to bleaching coral reefs, burning forest biomes and flooding cities, there are several emerging dots we can’t so blithely ignore. That’s because they affect everyone – rich and poor, north and south, leader and voter. And these emerging dots include the cost of living, insurance and the law.

The cost of living

Have you seen the price of mangoes? Apparently, yields are down following an unseasonably warm winter in north Queensland and we might have problems supplying mangoes for Christmas. Who’d have thought? (BTW, in Texas, the state tree, the pecan, is being crushed by record summer temperatures and pecan growers are on the brink of collapse. Meanwhile, Europe’s olive oil supply is running out after drought and severe hailstorms. These are just a few examples of climate disruption on specific crops in recent weeks.)

Yes, mango availability may be a First World problem but rising food prices impact everyone. Climate impacts on food are nothing new but spikes in prices are becoming more common as climate ‘events’ (floods, droughts, fires and cyclones) take out food growing regions with greater frequency. In Australia we expect the headline ‘banana prices go through the roof’ following most tropical cyclones.

Nothing we can’t wait out or get around by importing it. Except that food growing regions everywhere, here and overseas, are copping it; and our very capacity for overseas trading is also hitting roadblocks.

For example, the region around one of the world’s most important trade routes, the Panama Canal, is experiencing its worst drought in 100 years. That’s bad news for people living there, of course. However, it’s also bad news for world trade as ships using the Canal pass along a series of channels and locks in which the water level of the channel is raised and lowered to let ships through. Each crossing of the canal uses over 50 million gallons of water from nearby lakes, and those lakes are now running low (I could give you the conversion in litres but what’s the point, it’s a number beyond our capacity to process). The Panama Canal Authority said the current drought situation “has no historical precedence” but the consequence is there are currently 200 ships waiting up to three weeks to cross. Expect delays and price hikes on any commodity travelling this route. Who’d have thought?

Climate disruption is a stress multiplier, and it’s adding expense to everything we do. We might be able to ignore the bleaching death of a thousand coral reefs but the pain of the cost of living spiralling out of our reach is something that cuts deep.

Insuring the future

Then there’s the little problem of covering our risk in an increasingly uncertain world.

Several people I know have ‘fire emergency plans’ that consist of ‘jump in the car and flee at the first whiff of smoke – the house is insured but you can’t replace life’. It’s a sound rational plan, I reckon. But what if your house, your biggest single investment, can’t be insured? (I use the example of wildfire here because it’s one of our biggest fears here in Australia but the same applies for big storms and floods).

At least five large US property insurers have told regulators that extreme weather patterns caused by climate change have led them to stop writing coverages in some regions. And where they will provide a policy, they are increasingly excluding protections from various weather events while raising premiums.

They’re not doing it to be mean. They’re doing it to stay in business. State Farm, one of America’s biggest companies, just announced it wouldn’t insure any more California homeowners starting May 27, 2023. The company, which held the most policies in the California property market in 2021, experienced a 60% loss that year.

And the trend for big disasters (and devastating insurance payouts) is only set to rise. In the 1980s a disaster causing at least $1 billion in damage hit the US about every three months. Now they happen about every three weeks!

In Australia the situation is just as bad. The Actuaries Institute’s research on home insurance affordability and funding for flood costs, released last month, found median home insurance premiums rose by 28% in the year to March. For high-risk properties, including those in flood-prone areas, home insurance premiums were up by 50%. There are fears that many Australians will abandon home insurance altogether. Though it could well be many areas will no longer be afforded cover.

The wheels of justice

When voters begin getting crushed by the cost of living and losing the capacity to insure their investments, they get narky. When they hear that big companies profiting from fossil fuels have known about climate change for decades and done nothing; worse, have actively lobbied government to subsidise their operation and promote the expansion of fossil fuel development; voters feel betrayed. At a certain point they begin turning on their elected politicians who either do something or lose power. Some, after much delay, are choosing to do something.

So here is another emerging dot: individuals, activist groups and now even governments are turning to the law to hold ‘climate criminals’ to account.

Sustainability Bites has done several stories on individuals (often school students) taking fossil fuel companies and government ministers to court in an effort to hold them to account. To date that has added delays to some developments and added red tape to some approval processes, but it has done little to slow the overall growth of the sector; or even get the fossil fuel sector to acknowledge its responsibility for the damage it has done to the Earth system.

However, now, in a landmark case, the State of California (the world’s fifth largest economy) has sued ExxonMobil, Chevron, BP, Shell, ConocoPhillips, and the American Petroleum Institute to make them pay for lying to the public for decades about their fossil fuel products’ central role in the climate crisis. They join a growing nationwide wave of climate accountability lawsuits against Big Oil.

California’s Attorney General’s lawsuit follows after eight Californian municipalities filed some of the nation’s first-ever climate lawsuits against fossil fuel companies. Several of those cases are now proceeding toward trial in state courts.

A spokesperson for Shell responded by saying: “We do not believe the courtroom is the right venue to address climate change.” But they would say that, wouldn’t they. Every other pathway being tried by society to meaningfully engage with climate disruption has been obstructed by the fossil fuel sector; maybe their reluctance to enter the courtroom is the best indicator that this is the way to go.

The wheels of justice turn slowly, but grind exceedingly fine. Let’s hope they finally make a difference; that the courts can join the dots that we, as individuals, have so abjectly failed to connect.

Banner image: Image by Gerd Altmann from Pixabay


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