Legislated environmental laws not only vary from country to country it is also evolving over time – in favor of the environment. Using this rationale, are existing environmental coverage clauses just a thinly veiled right for companies to pollute?
By: Vanessa Uy
Ever since the term Corporate Social Responsibility became the latest buzzword in the world, corporate leaders keeping their promises to shareholders and the company’s “bottom line” is no longer enough. Corporate leaders must also fulfil their promise to their employees and the community that their business practices are not placing our environment at risk. But when push comes to shove, how many of our so-called corporate leaders choose in favor of the environment instead of just “looking out for number one”? Especially when there are Environmental Coverage already available that not only turn “unforeseen disasters” that they create in the first place out of greed and ignorance – or a bit of both – into manageable situations. If you choose to define manageable situations as “immunity from prosecution” to “profiting from their own apathy”, which explains the popularity of every G8 summit to unruly teenagers.
There are now a number of insurance companies that offer environmental coverage with well-backed claims of underwriting authority for environmental risks. Some of them with reputations solidly backed by Triple-A-rated financial strength, the latest Basel Accord compliance and what have you. The question now is, are products like Cleanup Cost Cap and Pollution Legal Liability Select and their ilk nothing more than a thinly veiled rights for companies to pollute while avoiding the pay out of punitive damages?
The most commonly perceived truth states that this problem is either too complicated to the average layman or can be easily manipulated by the demagoguery of every environmentalist / vote-for-me politician come lately who favors passion over rational thought. Fortunately one can easily “hedge their bets” so to speak by utilizing the aid of one of the latest mathematical tools in assessing whether a corporations “green credentials” are nothing more than misspent PR – namely Quantitative Risk Assessment.
As of late, Quantitative Risk Assessment has been utilized by insurance companies I cited before that offer Cleanup Cost Cap and Pollution Legal Liability Select services as a form of corporate transparency. Stating that their products are not just thinly veiled provisos that allow corporations to pollute and ruin our environment with impunity. Insurance companies that provide environmental coverage always stay abreast with the latest Quantitative Risk Assessment findings especially ones pertaining to the protection of our environment. I just hope when insurance companies custom-tailor an environmental coverage policy to a certain company; it would be equitable to the needs of our environment and to the local economy. The world doesn’t need another corporate injustice like the still unresolved compensation claims of the victims of the 1984 Union Carbide insecticide plant disaster in Bhopal, India.
Friday, June 27, 2008
Monday, May 5, 2008
The Emergency Landing Brace Position: A Lethal Proposition?
Conspiracy theorists reasoned out that the emergency landing brace position is really designed to kill airline passengers in a crash because its cheaper to pay wrongful death suits than medical injury compensation. Is there a truth to this?
By: Vanessa UY
Our technological ability to fly – make that heavier than air technology – is now well over 100 years old, and yet quite a large portion of our populace still harbor this irrational fear of flying even though statistically air travel is the safest way to go. This is probably the reason why unfounded myths and rumors pertaining to the airline industry have become so prevalent lately. But one of these somewhat controversial myth / rumor being spread around by conspiracy theorists is about the one pertaining to the brace position instructed to be performed by airline passengers in case of an emergency landing.
According to the conspiracy buffs, the brace position is intended to kill airline passengers by breaking their necks easily rather than saving their lives. This is so because it’s cheaper for airline companies to pay out to the wrongful death lawsuits than to pay for the surviving passengers’ medical treatment and rehabilitation which could last the survivors entire natural life. In wrongful death pay outs, the airline companies typically pays 3 to 5 million dollars while for survivors medical treatment and lifetime rehabilitation, it could reach 50 million dollars. The risk assessment in dollar terms alone is very scary, reinforcing the typical conspiracy theorists conjecture about insurance and underwriters companies in collusion with the airline industry. By placing profits first before the safety and lives of their passengers, conspiracy theorists never had a better excuse in thinking so. But is there any truth to this?
A very entertaining science program on the Discovery Channel called Mythbusters routinely dispel and test suspected myths like the one previously mentioned by performing visually extravagant but valid scientific experiments that had gained them a cult following – especially to the younger viewers who desperately needed scientific enlightenment. In one episode, they did an experiment to test the validity of the myth that the brace position is designed to kill airline passengers during an emergency landing. Their high tech sensor loaded (actually they used postal / parcel service shock measuring stickers) crash test dummy named “Buster” was used to substitute a human passenger in an emergency landing situation. Sure enough, Buster demonstrated that the brace position actually reduced the shock or G load to a typical passenger by as much as 20 G s. That’s 20 G s less shock compared to a passenger in a normal sitting position. That’s a very significant difference of an outcome between survival and death.
To evaluate the big picture on why this myth ever came about in the first place, let’s examine first the history of manned aviation. When the Wright Brothers first demonstrated their newfound prowess of manned flight, they spawned a host of barnstormers i.e. early aviation enthusiasts. Even though they are very much popular and widespread, most people back then were still deathly scared by flying. Even witnessing a plane flying 30 feet above their heads is enough to terrify them even though there’s also a large majority who are curious to experience themselves the magic of flight. So when business entrepreneurs started the airline business back then, they have to convince the people how safe their planes are – or at least they cared about the safety of their passengers. And since airline companies are still around till this day, then safety concerns did came hand and hand with profits.
Sadly, there’s this other thing that the conspiracy theorists overlook that was always part and parcel of profit generating enterprises – namely corporate social responsibility and ethical business governance. Even though these concepts only became unique selling points of customers quite recently. It’s only common sense that your customers and clients will only do business with you again if you treat them right. Even private security contractors are subscribing to the corporate social responsibility and ethical business governance fad by using the phrase “at least we’re not killing innocent civilians” as their unique selling point. Maybe conspiracy theorists need to study the history of aviation first. If these conspiracy theorists don’t find history or science as a “sexy subject” anymore, then they should blame the Board of Education, not the airline industry.
By: Vanessa UY
Our technological ability to fly – make that heavier than air technology – is now well over 100 years old, and yet quite a large portion of our populace still harbor this irrational fear of flying even though statistically air travel is the safest way to go. This is probably the reason why unfounded myths and rumors pertaining to the airline industry have become so prevalent lately. But one of these somewhat controversial myth / rumor being spread around by conspiracy theorists is about the one pertaining to the brace position instructed to be performed by airline passengers in case of an emergency landing.
According to the conspiracy buffs, the brace position is intended to kill airline passengers by breaking their necks easily rather than saving their lives. This is so because it’s cheaper for airline companies to pay out to the wrongful death lawsuits than to pay for the surviving passengers’ medical treatment and rehabilitation which could last the survivors entire natural life. In wrongful death pay outs, the airline companies typically pays 3 to 5 million dollars while for survivors medical treatment and lifetime rehabilitation, it could reach 50 million dollars. The risk assessment in dollar terms alone is very scary, reinforcing the typical conspiracy theorists conjecture about insurance and underwriters companies in collusion with the airline industry. By placing profits first before the safety and lives of their passengers, conspiracy theorists never had a better excuse in thinking so. But is there any truth to this?
A very entertaining science program on the Discovery Channel called Mythbusters routinely dispel and test suspected myths like the one previously mentioned by performing visually extravagant but valid scientific experiments that had gained them a cult following – especially to the younger viewers who desperately needed scientific enlightenment. In one episode, they did an experiment to test the validity of the myth that the brace position is designed to kill airline passengers during an emergency landing. Their high tech sensor loaded (actually they used postal / parcel service shock measuring stickers) crash test dummy named “Buster” was used to substitute a human passenger in an emergency landing situation. Sure enough, Buster demonstrated that the brace position actually reduced the shock or G load to a typical passenger by as much as 20 G s. That’s 20 G s less shock compared to a passenger in a normal sitting position. That’s a very significant difference of an outcome between survival and death.
To evaluate the big picture on why this myth ever came about in the first place, let’s examine first the history of manned aviation. When the Wright Brothers first demonstrated their newfound prowess of manned flight, they spawned a host of barnstormers i.e. early aviation enthusiasts. Even though they are very much popular and widespread, most people back then were still deathly scared by flying. Even witnessing a plane flying 30 feet above their heads is enough to terrify them even though there’s also a large majority who are curious to experience themselves the magic of flight. So when business entrepreneurs started the airline business back then, they have to convince the people how safe their planes are – or at least they cared about the safety of their passengers. And since airline companies are still around till this day, then safety concerns did came hand and hand with profits.
Sadly, there’s this other thing that the conspiracy theorists overlook that was always part and parcel of profit generating enterprises – namely corporate social responsibility and ethical business governance. Even though these concepts only became unique selling points of customers quite recently. It’s only common sense that your customers and clients will only do business with you again if you treat them right. Even private security contractors are subscribing to the corporate social responsibility and ethical business governance fad by using the phrase “at least we’re not killing innocent civilians” as their unique selling point. Maybe conspiracy theorists need to study the history of aviation first. If these conspiracy theorists don’t find history or science as a “sexy subject” anymore, then they should blame the Board of Education, not the airline industry.
Wednesday, April 23, 2008
Risk Calculations: On the Mark or Missing by a Mile?
Ever since it was mathematically proven that air travel is actually much safer than driving, risk calculations has become a perennial topic of discussion by anyone too worried to be worried. Are we being scared unnecessarily?
By: Vanessa Uy
There’s this very funny anecdote that I heard quite recently about how much air travel is safer compared to your typical “little girls bike”. You also probably heard it before. The punch line goes: “At least when my little girl falls from her bike, its not a 30,000 foot drop. This could very well serve as a rationale for the toy manufacturer Mattel to start competing with the jumbo jet manufacturer Boeing once the scandal over the high lead content of Mattel’s PROC-manufactured toy products eventually dies down.
Basing from such tales of perception and of opinion from the general public with regards to the risks that they face everyday, its no wonder that people who do risk assessment for a living harbor a pre-conceived notion. A notion that the general public is largely irrational when it comes to risk assessment, but there’s a kernel of truth regarding this matter.
Calculations used for risk assessment are based on averages, so they have limited value to the individual. Air travel, for instance, may be safe in terms of deaths per passenger mile. But that says little about the specific flight you are about to board. The very one that will subject you and your fellow passengers to a number of takeoffs and landings in bad weather, not to mention the flight crews’ forays into alcohol addled hedonism that previous night.
To define a certain risk implies that the risk assessor resorts to foretelling, but the accuracy of the math’s predictive power can be misleading. This is so because risk assessors’ calculations – by and large – always use historical data while adhering to the dubious assumption that the future will behave like the past. It seems like risk and uncertainty always goes hand in hand, even under mathematical scrutiny.
On the other end of the risk spectrum, examine for a moment the unthinkable scenario when almost all life on Earth – including humans - being wiped out by a catastrophic comet, meteorite or asteroid impact. Due to Hollywood cashing in the legitimate concerns of astronomers warning us of this “Doomsday Scenario”, the general public has been fascinated on what might happen as we prepare, during, and after a catastrophic asteroid or comet impact during the last ten years or so.
One asteroid that got famous after receiving it’s “15 Minutes of Fame” in the mainstream media spotlight is 99942 Apophis. This 320 meter wide asteroid was first discovered in 2004 and was supposedly calculated to hit our planet on April 13, 2029. Though by no means dead certain, estimates for the asteroid 99942 Apophis hitting us ranges from a “scary” 1 in 27 to NASA’s “somewhat reassuring” official estimate of 1 in 45,000.
As of late, NASA’s official estimate has recently recalculated by an “astronomically curious” high school student using off the shelf computer software. Using such modest resources, the student’s findings that the asteroid 99942 Apophis now has a probability of 1 in 459 in hitting our planet. The student’s findings were later proven by NASA to be correct. But for those who based their calculations via current geological evidence that catastrophic impacts that wiped out the dinosaurs 65 million years occur regularly at 13 million- year intervals. Therefore the chances of our planet being hit catastrophically by a comet or asteroid in a span of one year comes to about 1 in 20,000. Even though I’m worried, I do keep my worries to an absolute-minimum. Anymore than that is an unacceptable risk to my overall wellbeing.
By: Vanessa Uy
There’s this very funny anecdote that I heard quite recently about how much air travel is safer compared to your typical “little girls bike”. You also probably heard it before. The punch line goes: “At least when my little girl falls from her bike, its not a 30,000 foot drop. This could very well serve as a rationale for the toy manufacturer Mattel to start competing with the jumbo jet manufacturer Boeing once the scandal over the high lead content of Mattel’s PROC-manufactured toy products eventually dies down.
Basing from such tales of perception and of opinion from the general public with regards to the risks that they face everyday, its no wonder that people who do risk assessment for a living harbor a pre-conceived notion. A notion that the general public is largely irrational when it comes to risk assessment, but there’s a kernel of truth regarding this matter.
Calculations used for risk assessment are based on averages, so they have limited value to the individual. Air travel, for instance, may be safe in terms of deaths per passenger mile. But that says little about the specific flight you are about to board. The very one that will subject you and your fellow passengers to a number of takeoffs and landings in bad weather, not to mention the flight crews’ forays into alcohol addled hedonism that previous night.
To define a certain risk implies that the risk assessor resorts to foretelling, but the accuracy of the math’s predictive power can be misleading. This is so because risk assessors’ calculations – by and large – always use historical data while adhering to the dubious assumption that the future will behave like the past. It seems like risk and uncertainty always goes hand in hand, even under mathematical scrutiny.
On the other end of the risk spectrum, examine for a moment the unthinkable scenario when almost all life on Earth – including humans - being wiped out by a catastrophic comet, meteorite or asteroid impact. Due to Hollywood cashing in the legitimate concerns of astronomers warning us of this “Doomsday Scenario”, the general public has been fascinated on what might happen as we prepare, during, and after a catastrophic asteroid or comet impact during the last ten years or so.
One asteroid that got famous after receiving it’s “15 Minutes of Fame” in the mainstream media spotlight is 99942 Apophis. This 320 meter wide asteroid was first discovered in 2004 and was supposedly calculated to hit our planet on April 13, 2029. Though by no means dead certain, estimates for the asteroid 99942 Apophis hitting us ranges from a “scary” 1 in 27 to NASA’s “somewhat reassuring” official estimate of 1 in 45,000.
As of late, NASA’s official estimate has recently recalculated by an “astronomically curious” high school student using off the shelf computer software. Using such modest resources, the student’s findings that the asteroid 99942 Apophis now has a probability of 1 in 459 in hitting our planet. The student’s findings were later proven by NASA to be correct. But for those who based their calculations via current geological evidence that catastrophic impacts that wiped out the dinosaurs 65 million years occur regularly at 13 million- year intervals. Therefore the chances of our planet being hit catastrophically by a comet or asteroid in a span of one year comes to about 1 in 20,000. Even though I’m worried, I do keep my worries to an absolute-minimum. Anymore than that is an unacceptable risk to my overall wellbeing.
Wednesday, March 26, 2008
Genetic Science and Life Insurance Companies: An Unholy Alliance?
As the science of genetics advances to a level where someone’s future health status and life span can be calculated with unprecedented degrees of accuracy. As these tools will be utilized by life insurance companies. Will the establishment of a voluntary code of conduct in the rate - making procedures of life insurance providers be the norm rather than the exception?
By: Vanessa Uy
In a typical contemporary life insurance company, the actuary knows only that ultimately that the policyholder will die. The factors governing the event as they apply to any given individual-the when, the why, and the how-are still a mystery beyond casual prediction. Insurance experts must therefore draw up their actuarial tables entirely from death statistics, separating into categories of such subdivisions as age, sex and occupation. The expert thus starts with known statistics and from these, works out the probabilities. As always in the case of probability, the greater the sampling, the more accurate the resultant forecast will be.
Recent advances in genetic science can now allow scientists to predict with ever increasingly accurate forecasts of the probable characteristics of even the unborn. Characteristics such as height, weight, intelligence, even longevity. These tools now in use routinely by genetic science has become increasingly harder to be overlooked by life insurance actuaries. Surely, the element of gambling can be eliminated if the customer’s premiums are like the proverbial “money in the bank” since the life insurance company will now be less likely to pay out with most of their policyholders are now living as long as sequoia trees.
Will life insurance policies in the future be tailored to the individual customer’s “genetic endowment”? The sad news is that it will be a definite certainty despite the resulting resentment that will be harbored by a working underclass. To me, this is where a voluntary code of conduct should be adopted by “mainstream” life insurance companies to avoid the increased customer exclusion that would result if life insurance actuaries adopt a method that by all intents and purposes is unfair. But the bad news is life insurance companies primarily are a business entity that’s primarily concerned with their “bottom line”. If life insurance actuaries see that an unjust method of customer exclusion or insurance policies can fatten up their bottom line, then surely, they will accept it with open arms despite of the ensuing social turmoil.
By: Vanessa Uy
In a typical contemporary life insurance company, the actuary knows only that ultimately that the policyholder will die. The factors governing the event as they apply to any given individual-the when, the why, and the how-are still a mystery beyond casual prediction. Insurance experts must therefore draw up their actuarial tables entirely from death statistics, separating into categories of such subdivisions as age, sex and occupation. The expert thus starts with known statistics and from these, works out the probabilities. As always in the case of probability, the greater the sampling, the more accurate the resultant forecast will be.
Recent advances in genetic science can now allow scientists to predict with ever increasingly accurate forecasts of the probable characteristics of even the unborn. Characteristics such as height, weight, intelligence, even longevity. These tools now in use routinely by genetic science has become increasingly harder to be overlooked by life insurance actuaries. Surely, the element of gambling can be eliminated if the customer’s premiums are like the proverbial “money in the bank” since the life insurance company will now be less likely to pay out with most of their policyholders are now living as long as sequoia trees.
Will life insurance policies in the future be tailored to the individual customer’s “genetic endowment”? The sad news is that it will be a definite certainty despite the resulting resentment that will be harbored by a working underclass. To me, this is where a voluntary code of conduct should be adopted by “mainstream” life insurance companies to avoid the increased customer exclusion that would result if life insurance actuaries adopt a method that by all intents and purposes is unfair. But the bad news is life insurance companies primarily are a business entity that’s primarily concerned with their “bottom line”. If life insurance actuaries see that an unjust method of customer exclusion or insurance policies can fatten up their bottom line, then surely, they will accept it with open arms despite of the ensuing social turmoil.
Friday, February 8, 2008
Credit Insurance: A White Knight against Recession?
As Bond Insurers loose their “triple A” credit ratings thanks to the US economic turbulence towards the end of 2007. Can Credit Insurance providers still be counted on as recession looms?
By: Vanessa Uy
In today’s world, credit has become a vital part of our modern economy. If large credit losses occur, profits may be totally lost. Manufacturing and wholesaling firms always have that looming threat that someone to whom they extend credit may become insolvent and will be unable to meet their obligations.
Ordinarily, it is possible to estimate probable losses caused by extending credit and to add this cost to the price of the goods. It is also possible to be very cautious about extending credit. However, one large loss may upset all plans and methods for meeting the losses, and if too restricted credit practice is followed sales and thus profits will be cut even greater than credit losses. Credit insurance was developed, therefore, to protect business against undue credit losses. This insurance does not cover credit transactions between retailers and customers. Credit insurance policies do not place any serious restrictions or limitations on the cause of the debtor’s insolvency and thus contain broad coverage after the title of the goods has passed to the various debtors.
The principal kinds of credit insurance policies are general coverage policies. With the general coverage policy, all customers are included subject to the limitation of the policy. The financial standing of the customers and their credit ratings determines whether he or she is to be covered and for what limit.
The Dun & Bradstreet, Inc., mercantile agency manual is generally relied upon for information concerning customers, although there are other approved agencies. The insurance companies require that the customers have a capital and credit rating in a recognized mercantile agency because of the nature of the fluctuating hazard of credit.
The mercantile agency books show the approximate amount of net worth and the promptness of meeting obligations of the various concerns. The better firms receive high or good credit ratings and are regarded as preferred ratings. Usually the much coveted “triple A” rating badge. Other, less secure enterprises are rated as fair and limited and are considered inferior ratings. Often credit – insurance policies do not cover concerns rated as limited as these firms represent great hazards. Under such circumstances credit afforded to customers in this class is extended at the insured own risk. The liability of the insurance company on any one loss is limited in relation to the credit and financial standing of the customer.
Credit insurance does not cover loss of profits involved in a failure of the customer to pay for the goods. An amount, representing the estimated profits, generally 10 per cent, is deducted from the total of the uncollected accounts for which indemnity is provided. This deduction of a stated percentage from provable losses is known as coinsurance. By payment of an additional premium the coinsurance clause will be eliminated.
Since all concerns normally expect to suffer some credit losses every year, an amount known as the normal loss, is deducted. This is done way before any of the losses be paid by the company. Generally the amount is based upon the total sales of the insured and the ratings on which coverage is required.
So in today’s financial climate that’s fast heading into uncertainty, do credit insurers help manufacturers and wholesalers from going under? Well, if one looks our global financial system from the perspective of “enlightened self interest” the answer is a big fat yes. This is so because manufacturers and wholesalers are the main customers of credit insurance providers. And credit insurance providers are not stupid enough to sacrifice their own “cash cows” just to protect their own interests. But when bad goes to worse especially if your specific credit insurance provider can’t reimburse you because it went bust. Then, this is surely a sign that a full blown economic recession is in progress. Just hope that a full blown economic depression doesn’t come next.
By: Vanessa Uy
In today’s world, credit has become a vital part of our modern economy. If large credit losses occur, profits may be totally lost. Manufacturing and wholesaling firms always have that looming threat that someone to whom they extend credit may become insolvent and will be unable to meet their obligations.
Ordinarily, it is possible to estimate probable losses caused by extending credit and to add this cost to the price of the goods. It is also possible to be very cautious about extending credit. However, one large loss may upset all plans and methods for meeting the losses, and if too restricted credit practice is followed sales and thus profits will be cut even greater than credit losses. Credit insurance was developed, therefore, to protect business against undue credit losses. This insurance does not cover credit transactions between retailers and customers. Credit insurance policies do not place any serious restrictions or limitations on the cause of the debtor’s insolvency and thus contain broad coverage after the title of the goods has passed to the various debtors.
The principal kinds of credit insurance policies are general coverage policies. With the general coverage policy, all customers are included subject to the limitation of the policy. The financial standing of the customers and their credit ratings determines whether he or she is to be covered and for what limit.
The Dun & Bradstreet, Inc., mercantile agency manual is generally relied upon for information concerning customers, although there are other approved agencies. The insurance companies require that the customers have a capital and credit rating in a recognized mercantile agency because of the nature of the fluctuating hazard of credit.
The mercantile agency books show the approximate amount of net worth and the promptness of meeting obligations of the various concerns. The better firms receive high or good credit ratings and are regarded as preferred ratings. Usually the much coveted “triple A” rating badge. Other, less secure enterprises are rated as fair and limited and are considered inferior ratings. Often credit – insurance policies do not cover concerns rated as limited as these firms represent great hazards. Under such circumstances credit afforded to customers in this class is extended at the insured own risk. The liability of the insurance company on any one loss is limited in relation to the credit and financial standing of the customer.
Credit insurance does not cover loss of profits involved in a failure of the customer to pay for the goods. An amount, representing the estimated profits, generally 10 per cent, is deducted from the total of the uncollected accounts for which indemnity is provided. This deduction of a stated percentage from provable losses is known as coinsurance. By payment of an additional premium the coinsurance clause will be eliminated.
Since all concerns normally expect to suffer some credit losses every year, an amount known as the normal loss, is deducted. This is done way before any of the losses be paid by the company. Generally the amount is based upon the total sales of the insured and the ratings on which coverage is required.
So in today’s financial climate that’s fast heading into uncertainty, do credit insurers help manufacturers and wholesalers from going under? Well, if one looks our global financial system from the perspective of “enlightened self interest” the answer is a big fat yes. This is so because manufacturers and wholesalers are the main customers of credit insurance providers. And credit insurance providers are not stupid enough to sacrifice their own “cash cows” just to protect their own interests. But when bad goes to worse especially if your specific credit insurance provider can’t reimburse you because it went bust. Then, this is surely a sign that a full blown economic recession is in progress. Just hope that a full blown economic depression doesn’t come next.
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.
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 (www.car-insurancefacts.co.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.
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 (www.car-insurancefacts.co.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.
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