On Jan 25, 8:25 am, "[email protected]" <[email protected]>
wrote:
> > However, we live in a competitive society, and insurance is priced at
> > the lowest level that will produce a profit. There are plenty of
> > people out there willing to sell cheaper insurance provided they can
> > make a profit.
>
> > The problem for them is that if there is a big disaster they may not
> > have the funds to pay out. So they need to know the real risks. It is
> > a matter of life and death for their companies.
>
> They need to know the real risks, but they also have a strong interest
> in competitors and customers believing that the risks are higher than
> they really are.
>
Are you really suggesting that if Munich Re say that hurricanes are
going to increase as a result of global warming then more people in
Haiti will take out house insurance?
Haiti may be an extreme example, so will it encourage more people to
take out house insurance in the UK, or the USA? Are they going to
rush to take up hurricane insurance because of Munich Re or because of
Katrina? I doubt if they come from New Oleans that Munich Re wants
their business :-(
> Munich Re can cope with few or many hurricanes by charging appropriate
> premiums. What they want is that customers pay them high rates, and
> that competitors don't swoop in and undercut them. And the way to do
> that is to overstate the likelihood and magnitude of damage.
>
> And indeed it is vital for them to know the real risks. An insurance
> company is alway best off insuring against a minimal risk (say 0.001%
> per year of 100 Dollar damage) while charging a lot (say 1000 Dollars
> per year).
>
> Now I am not suggesting deceit, but Munich Re is clearly alarmist in
> their presentation of natural disaster impact trends (suggesting they
> are on a rising course), and they have a strong profit incentive to be
> alarmist in the literal sense, ie knowingly exaggerating a threat.
They can't exaggerate the threat if they do not know what it is. So
that is why they are objective experts. They cannot allow cries of
"Alarmist" from customers who feel they are being overcharged to
affect their search for true risk.
> In fact, a much stronger profit incentive than oil companies have in
> opposing carbon taxes or cap and trade. Oil company profits depend on
> how carbon taxes or cap and trade are implemented, not on whether they
> are. A simple 50 Euro tax per tonne of carbon say applied equally
> across all sectors on top of existing taxes and subsidies would in my
> opinion raise the profits of oil companies. From the analysis of
> energyoutlook I understand that the presently discussed cap and trade
> bill in the US is quite kind to coal burning utilities and rather
> unkind to refiners, but that's all got to do with who gets free
> allowances, and not with the overall cap and trade approach.
The oil etc. companies do not face the prospect of going out of
business if they underesimate the danger of global warming. Like the
bankers, they are willing to take big profits now, and let the
government pick up the bill if things go wrong.
It is probably true that cap and trade will not affect their business.
For that reason it is not the answer. If we don't decrease the amount
of oil burnt, then the dangers from AGW will only increase. But I
doubt the oil companies think that an increase in taxes will help
their business. Any increase in the tax on oil means less profit for
them. Selling price = Cost price + taxes + profit. Increasing taxes
reduces the profit or raises the Selling Price, in which case demand
falls and so too will the total profit.
But if you are convinced that there is nothing to fear from global
warming, and that any attempt to itemise the dangers amounts to
alarmism, then it is pointless me continuing this debate. The Arctic
sea ice will be gone soon, and the Greenland ice sheet has begun to
melt. That is an inevitable rise in sea level of 7 m (24 ft) unless we
take action. That will float the Antarctic ice shelves, and a further
rise in sea level. It won't just be the centre of New Orleans below
sea level. London, New York and Melbourne will join it.
Cheers, Alastair.
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