It was a beautiful Friday afternoon in the Philadelphia area, and my weekend was almost ruined by the news that the world’s sea level is rising at the fastest rate in human history, threatening lives and property (“The SLR Factor,” AR, May-June 2018) — and it was Friday the 13th, no less.
But I was comforted, perhaps falsely, by recalling that, despite the drastic rise in sea levels from 1990 to 2016 as reported by the Actuaries Climate Index®, the insurance industry over that time period has been, if anything, awash in capital. Not only that, but the segment most likely to see the impact first, the cat reinsurers, have been doing quite well — profitable enough to bring about a soft market for a number of recent years. Maybe measurements that are thought to be likely predictors of insurance losses are not measured as accurately as we assume, or are not as correlated with claims experience as we tend to believe. That gave me enough reason to believe we’ll at least survive the weekend.
There’s a cost to predictions of great catastrophes that do not come to pass. Let’s be careful not only to warn of the possible devastation from sea levels rising, but also to see levels of risk through the data judiciously, with a healthy dose of professional skepticism.
—Mark R. Proska, FCAS