In the decade there have and will be debates about climate change, from an economic point of view is what does the insurance world think? For an average person, they need to buy insurance if they own a car – can not renew your license; if you have a mortgage or a house – the financial institution requires you have insurance; and for a majority of people living paycheck to paycheck – the biggest part of their estate maybe the life insurance. We all look at insurance in different ways, but insurance is basically having a wide number of people in the pool and hopefully most do not collect early. If people collect too early, rates go up. If people collect too early and too often, insurance companies find different markets or raise rates so fewer people will buy. One of the indicators of climate change is the cost of natural storms – storms that bring rain, wind, hail, thunderstorms, flooding.

In an article by Michelle Chapman of the Associated Press, according to Swiss Re Group, one of the biggest Reinsurance companies in the world, in the first half of 2023, storms caused $34 billion in insured losses.

The storms in the US were so severe there were 10 that resulted in damages of $1 billion or more, almost double the average recorded over the past decade and Texas was the state hit the hardest. A series of thunderstorms was the most expensive single event in the US will the loss at $8.4 billion.

Reinsurers are the insurance industry’s insurers, covering losses that could upend an individual company. The biggest reinsurers are Munich Re and Swiss Re.

One of the lessons of going through a storm is to ensure the annual accounting for the cost of what is inside a building and what it would cost to rebuild or annual audits. In the case of Kerry Symons, of Perryton Texas one building had done its audit and the valuation was easy. Another building had not and months afterwards they are still discussing money.

It is noted State Farm and Allstate has pulled back offering insurance in Florida and California. Travelers lost money and AAA has pulled back in hurricane states. This leads the only insurance as a state insurance which was designed to be a last backstop. The state offers something but not replacement costs.

Linking to dividend paying stocks, when you decided on an action you need to watch the monetary flows. Is money flowing into the company or out, people vote with their feet and their wallets or they may say one thing but do another when it comes time to spend. With dividend stocks, you need to watch the cash flow to profits to paying of dividends.

There are more questions than answers, till the next time – to raising questions.