HH Wildfires, Droughts, And Floods Are Here — How Will That Impact The Economy & Insurance Stocks?

Wildfires, Droughts and Floods Are Here — How Will That Impact the Economy & Insurance Stocks?

In the last couple of years, insurance companies have received a lot of attention. That’s in part because of more unpredictable — and more exacerbated and fatal — climatic events that have struck the United States. 

What Happened

There has been an increasing attention on climatic devastation, mostly because of the media’s coverage on it and because of the economic toll its taking on the country. 

According to information gathered by the National Centers for Environmental Information, a variety of destructive weather events — including floods, droughts, fires, freezes, and storms — have created trillions of dollars of damage. More specifically, 298 of these events from 1980 to 2021 have cost America $1.975 trillion. (And this only includes events that accumulated losses of over $1 billion each.)

The economic toll that is coming appears much worse. According to estimations accumulated by University of California, Berkeley Professor Solomon Hsiang, assuming the economy continues its predicted trends, one added degree Celsius will lead to a contraction of U.S. GDP by 1.2%.

In 2019 Congressional testimony, Hsiang explained that over 80 years, anywhere from $5 trillion to $10 trillion of value from incomes could be lost to severe changes to the climate. On the global level, if unmitigated warming continues, global growth could slow by .28% on average over the next eight years. The consequences are thought to be many, including weighing heavily on America’s financial institutions. 

“These effects are likely to be felt in the U.S. through their impact on financial markets, continuous adjustments in the global trading system, and increased migration pressure from both economic migrants and asylum seekers escaping political violence,” said Hsiang in the testimonial. 

In addition to the human costs in the south and northeast, Hurricane Ida is gearing up to be the most expensive storm that has ever hit New York, according to MarketWatch.

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