Sunday, January 6, 2008

Does Anyone Need Climate Change Insurance?

Should we all go out and purchase “Climate Change Insurance” –like Life and Car Insurance- to protect our beachfront properties of the inevitable if-and-when?

By: Vanessa Uy

Like the establishment of the US Environmental Protection Agency back in 1970, there -as of yet unless you exclude Munich Re's Climate Change Insurance proposal that's still under evaluation - no existing legal precedents that allow –let alone to regulate- the sale of “Climate Change Insurance” policies to the average homeowner. I mean average because how many of us could afford the insurance premiums of Lloyd’s of London style insurance companies that provides coverage to risk whose mathematical evaluation borders on the non-existent? Also, the existing conservative political climate in the United States could easily allow existing insurance companies to classify the negative effects resulting from climate change –like sea level rise and increased frequency of hurricanes- as “Acts of God” which almost all existing insurance companies around the world won’t settle. And finally, is it wise to use the funds generated from “Carbon Offsetting” that’s already slated to bankroll sustainable / green development programs in “poor” countries be used as funds to settle the damages resulting from Climate Change?

Ever since “modern” insurance companies were established, they declared that the first essential factor in insurance is that the element of gambling must not be present. Since then, insurance companies had been eliminating the “element of gambling” by making it possible –through mathematics- to make accurate and scientific calculations of the extent of the hazard, so as to charge a fair premium. This is why it is important to study all the available scientific data to properly gauge the extent of Climate Change –now and in the future. The study can also be used to gauge if the risk must be important enough to warrant insurance. To make such a venture economically viable, the insurance company must have a large number of risks –spread out geographically- so that it will not have a concentration of risks in one area. And finally, the cost of the insurance –i.e. premiums- must be within the reach of a large number of people.

A couple of leading authorities –namely Michael Schlesinger and Natalia Andronova- professors of atmospheric sciences at the University of Illinois at Urbana-Champaign says that low cost climate-change insurance could help ensure a better future. By implementing a “Carbon Tax” of five US cents per gallon of gasoline and gradually increasing the tax over the next 30 years is the optimal solution, the researchers report. “You can think of the tax as a low- cost insurance policy that protects against climate change,” said Michael Schlesinger. The policy premiums –according to Professor Schlesinger- could be used to develop alternative energy technologies. Doing a little now to mitigate long-term climate change would cost much less than doing nothing and making adjustments in the future.

Because mitigation would impose immediate costs, with any long –term benefit unknown, some scientists and policy-makers have argued that nothing should be done until the “uncertainty surrounding the climate issue” is substantially reduced. But Professor Schlesinger says:” By then, however, it may be too late to and we will have foreclosed certain options. Rather, the uncertainty is the very reason we should implement a climate policy in the near term.”

Professor Michael Schlesinger’s idea of a taxation-bankrolled Climate Change insurance is somewhat similar to a State Insurance where state funds –i.e. tax revenues- are organized for the insurance of the compensation risk. To me, this is more or less similar to Social Security insurance. Like state funds, a government controlled Climate Change insurance has the advantages of costing much less than that of private organizations because no commissions are paid to brokers or agents and the work is handled by state employees. Also, some state funds may not emphasize the prevention of losses. Finally, if the premiums collected are insufficient to pay losses, the state may have to make up the difference if permitted by law.

Despite of all the rigmarole and red tape surrounding the establishment of a Climate Change insurance, the lack of legal precedents is the greatest obstacle for providing a system to mitigate the damages that might be incurred by the effects of Climate Change / Global Warming / sea-level rise. And by increasing the tax on gasoline incrementally over the years for the next 30 years could cause an- uproar to all of the petrochemical companies around the world. But –to me at least- a binding legislation of a Climate Change insurance based on the established principles of the modern insurance company / industry is probably the best solution where conservationist and the corporate / industrial world can reach a common ground.

Meteorite Strike Insurance: Absolute Necessity or Needless Luxury?

Will insurance companies provide a proviso on their personal risk insurance for a phenomenon that boarder on the “Act of God”?

By: Ringo Bones and Vanessa Uy

Throughout recorded history, only one person has been documented to having been hit by a meteorite from space. Fortunately, she survived. Because of this, opinions have always been divided in the insurance underwriters’ community whether the incident with Mrs. Hewlett Hodges should have been treated as a “freak occurrence.” She was extremely lucky though to have survived by being hit with a 10- pound fragment that pierced her roof and struck her left side. But first let us define which is which.

When the “rock” is still moving through the vacuum of space, it’s called a meteoroid. When the “rock” is glowing “pyrotechnically” as it enters the earth’s atmosphere, it’s called a meteor. When the said “rock” or “object” hits the earth surface, a house, or other unfortunate soul, it’s called a meteorite. These are the natural ones, while the increasingly commercial utilization of orbital space has created the problem of “space junk” that are the by - products of the launch of communication satellites which is also a possible source of meteorite strike hazard.

Concerns over the possibility of humans being injured or killed when hit by a meteorite strike usually becomes a topic of conversation during the annual meteor shower season that starts in August all through to mid –to- late November. These annual meteor showers occur in streams with established orbits. These meteor showers are named after the constellation from which they appear to radiate. Like the recent Perseid meteor shower that occurs in early August, which the one that occurred this year received heavy press coverage because of the ideal “viewing” conditions appear to radiate in the constellation Perseus. For those who missed it, don’t worry cause this coming late October the Orionid meteor shower will be radiating in the constellation of Orion. Though most of my buddies prefer the Leonid meteor shower because it’s occurrence from mid – to –late November in the constellation Leo are more likely to provide an ideal “viewing” conditions from our regular vantage point. Recent scientific studies have shown that that all recurrent meteor showers are mostly composed of debris left in the wake of comets, past or present.

Currently, Lloyds of London are the only known major insurance company that provides services on meteorite strike insurance policies. But the firm seriously advises anyone planning to purchase their meteorite strike “policies” to “think it over thoroughly” because these are somewhat expensive and meteorite strikes are statistically evaluated to a degree that their occurrence –in an average human lifetime- borders on the nonexistent. In the UK, meteor strikes (as written on their Webpage) are generally defined as an “Act of God.” According to the Website of Car Insurance in the UK ( which defines “Act of God”; as an event not caused directly by an individual that causes damage to your vehicle. An example (albeit an unlikely one) would be a meteorite strike. More often than not, “Acts of God” are uninsurable.

While the “budget” side of the insurance industry doesn’t do business when it comes to insuring our person and property against meteorite strike insurance. There is also the rigmarole that they also fail to classify meteorites that are made by man i.e. spent rocket parts and other by-products of space travel and commerce (communication satellite launches) from those that are natural i.e. left over material from the creation of our solar system. Most of these insurance companies just classify these occurrences / incidents under the “Act of God” clause.

For all intents and purposes, its in the insurance companies of the world’s best interest to provide an insurance proviso on meteorite strikes, especially objects that are a product of the commercial utilization of space like the regular launching of communication satellites used for cellular phone and Internet data traffic. The profits generated by this activity has the mathematical equitability to make the meteorite insurance proviso economically viable to the average prospective client.

Divorce Insurance: Equitability in Marriage?

In today’s post-modern society driven by capitalist consumerism, could a divorce insurance with really good provisos be the answer in keeping “modern love” equitable?

By: Vanessa Uy

Ever since Pope Gelasius declared February 14 as a Red Letter Day in honor of St. Valentine back in year 496, anyone from bards to scientists and even lawyers had lend a hand in gaining insight on this thing we call love. Although gaining insight means different things to different people, in this day and age, gaining insight on love usually means making the damned thing equitable to the parties involved. Love used to be the business between two loving couples, but in our present age, greeting card companies and those “weird people” who claim to be close to God by virtue of celibacy all lay claim to be the sole authority on love and marriage. I think these two camps are what’s been making Valentine’s Day a very interesting holiday for over a millennia.

When capitalist consumerism declared that it knew the price of everything – including devotion and obligation – did it made equitable ground rules? Or are we now so cynical that nothing free has value anymore? How could Calvinism put a price on one’s own devotion and obligation? Only the Anglo-Saxon God knows and He’s not talking. To me, this makes it a situation where only lawyers have free reign on arbitrarily deciding what’s equitable or not. I just hope that more prenuptial agreements be offered in pro bono flavor.

To me, it’s just sad that the thing we call money – whose value is backed up by our increasing materialism - is also the very thing that could get us out of this specific dilemma. In this day and age, divorce insurance with proviso for legal separation and prenuptial agreements really has existing demand. Divorce insurance really has legitimacy because the element of gambling – the first essential factor in insurance – is not present. This is so because countless people get married on a regular basis with the knowledge that over half of it will end in divorce and currently divorce proceedings are always messy affairs by judicial standards. Then, only a couple of things are left to be studied to make divorce insurance an integral part of most insurance companies’ / providers’ retinue. Like the possibility in making accurate and scientific calculations of the extent of the hazard, so as to charge a fair premium. Remember, irreconcilable differences causes stress and stress leads to ill health mental or otherwise. The other is the cost of divorce insurance must be within the reach of a large number of people.

Forgive me for being too cynical – even by “Michael Moore Documentary” standards – but divorce insurance, in my opinion, could really revolutionize how our present generation look at and approach “Romantic Love”. Divorce insurance could end once and for all the blatantly ithyphallic way young couple decide to get married – by whim – with utter disregard to the hardships that they will certainly encounter in marriage. Just something to think about during Valentine’s Day.