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With sea level expected to rise an additional 5.7 in. to 7.7 in. during the next 20 years, beaches will continue to retreat, diminishing the sand barriers that protect $2 trillion worth of insured property along the Atlantic and Gulf coasts of the U.S. A study by Travelers Corp., based in Hartford, Connecticut, estimates that even a modest 0.9 degreesF increase in average global temperature by the year 2010 could produce a 20-day extension of the hurricane season, a 33% jump in hurricane landfalls in the U.S., an increase in the severity of the storms and a 30% annual rise in U.S. catastrophic losses.
Projections like that could easily swallow up the $160 billion the industry has in reserve for catastrophes. A hurricane that squarely hit both Miami and Fort Lauderdale could cost insurers as much as $100 billion. Even a small strengthening of storm winds could produce dramatically higher insurance claims. By one estimate, a wind-speed increase of only five knots would have doubled the $3 billion in losses incurred during a 1987 storm in Europe.
These risks and the crucial role played by the $1.41 trillion insurance industry in the global economy could change the dynamic of the debate about global warming. Last fall Nutter told an industry conference that climate change is an issue in which it may prove to be in the industry's interest to assume an advocacy role. In Europe insurance giants have already begun to lobby governments to take action, but in the U.S. the alliance between insurers and greens remains in the courtship phase. Nutter has invited Jeremy Leggett of Greenpeace to speak to his association about the threat global warming poses to the industry. For their part, environmentalists are praying that insurers will become their corporate Lancelots, challenging energy- industry attempts to sow doubts about global warming.
Insurers have already had an impact on the debate about climate change through their actions in the marketplace. Soaring premiums and insurance cancellations alert residents of coastal areas that changes in weather patterns can have profound economic consequences. With 50% of the U.S. population living within 50 miles of a coastline, ordinary people may also begin to draw a similar connection between climate change and their own well- being, should the windstorms continue.