WASHINGTON, Oct 31 (Reuters Point Carbon) - Monday’s mammoth storm that caused severe flooding, damage and fatalities to the eastern U.S. will raise pressure on Congress and the next president to address the impacts of climate change as the price tag for extreme weather disasters escalates.
Hurricane Sandy devastated the east coast of the United States, claiming dozens of lives so far, cutting power to over 8 million people and damaging major roadways, buildings and infrastructure, such as New York’s 108-year old subway system.
Eqecat, one of the three primary firms used by the insurance industry to calculate disaster exposures, said Sandy could cause anywhere from $5 billion to $10 billion in insured losses and from $10 billion to $20 billion in economic losses, Reuters reported.
This would outdo the roughly $4.5 billion in insured losses caused by last year’s Hurricane Irene, which also hit the northeast.
Sharlene Leurig, senior manager for insurance and water programs at Ceres, warned that in addition to the physical damage caused by Monday’s storm, there would also be damage “on the balance sheet of taxpayers in the U.S.,” raising pressure on Congress to take action on climate change.
“The sort of storm we just saw is likely to be more common in some of the most populated and valuable areas of the country,” she said.
She said the government’s national flood insurance program (NFIP) is already in nearly $20 billion in debt since 2005’s Hurricane Katrina and would likely cost taxpayers more as such storms become more frequent.
Some taxpayer groups have called on Congress to further reform the flood insurance program and said that reinsurance companies are better positioned to absorb the costs and risks related to extreme weather occurrences.
“It appears likely that Sandy will exhaust the NFIP’s remaining $3 billion of statutory borrowing authority, meaning it will need to request more money from Congress to pay its claims,” said R.J. Lehmann, a senior fellow at free market policy research group R Street.
The R Street Institute is the insurance spinoff of the Heartland Institute, a group which has funded several high-profile campaigns questioning manmade climate change, but Lehmann has said the group does not promote “climate skepticism.”
”In the short term, we would insist the NFIP use its existing authority to raise rates, buy reinsurance and issue catastrophe bonds, so that the private market, rather than taxpayers, assume the risk of these sorts of catastrophes in the future.
Sustainablity-focused investor group Ceres said that while 2012 private insured losses were lower so far this year than last year, when floods, heat waves, tornadoes and other extreme weather events gripped the U.S., total economic losses are likely to be significant.
On top of Hurricane Sandy, this year’s drought alone is expected to cost insurers $20 billion, with most of those costs being shouldered by the federal crop insurance program.
“This storm, taken into consideration alongside one of the most economically damaging droughts in the last century, alongside wildfires that reached catastrophic proportions in the west… really point to the need for members of Congress to start taking seriously the reality that climate change is already upon us,” said Leurig.
Environmental groups and some political analysts said the exclusion of the climate change issue in this year’s presidential and vice presidential debates was a missed opportunity to bring the issue back into the national debate.
Although the House of Representatives passed a comprehensive climate change bill in 2009, similar efforts failed in the Senate.
The issue became a taboo subject after the Tea Party and some stiffly opposed Republicans ramped up efforts to derail climate legislation and regulatory programs to slash greenhouse gas emissions.
Jennifer Morgan and Kevin Kennedy of the World Resources Institute, wrote in a blog post Tuesday that the silence on climate change on the campaign trail was “extremely troubling” given the recent spate of extreme weather events and their economic impacts.
“We need our elected officials to break their silence on climate change. Whether climate change comes up in the final days of the campaign or not, the next president and Congress will need to step up and do more on this issue,” they wrote.
Former President Bill Clinton, who has been campaigning on President Barack Obama’s behalf, took aim at a quip made by Republican challenger Mitt Romney at the Republican convention that the president cared more about the rise of ocean levels than families.
At a campaign speech in Minnesota on Tuesday, Clinton addressed the climate impacts of Hurricane Sandy.
“All up and down the East Coast, there are mayors, many of them Republicans, who are being told, ‘You’ve got to move these houses back away from the ocean. You’ve got to lift them up,” he told the crowd.
“Climate change is going to raise the water levels on a permanent basis. If you want your town insured, you have to do this,” Clinton said.
Reporting by Valerie Volcovici