We all pay insurance partly because as individuals we have to. If you want to drive, the police will ask you for license and insurance (to see they are up to date). If you have a mortgage, the bank will need the insurance number, or you can find another bank. One thing the insurance companies will do is to ensure that either lessen their risk by reinsurance, but they will know exactly how much it will cost them if they have to pay a claim.

In an article by Noor Zainab Hussain and Carolyn Cohn of Reuters, in August one of the super yachts owned by a billionaire sank in a storm. Some people died, but this story emphasis is on the cost.

The British-flagged yacht the Bayesian cost around $40 million.

The hull of the boat was insured against physical damage by yacht insurance provider OMAC and others including Travelers Companies Inc., Navium Marine and Convex.

The Protection and Indemnity (P&I) which typically covers 3rd party liablity claims incuding for envrionmental damage, injury and death was provided by British Marine.

The hull was likely insured between $40 – $50 million, while the P&I cover would be several multiples larger in the range of $200 – $300 million, according to Marcos Alvarez, managing director global financial institutional ratings at Morningstar DBRS.

For the insurance companies, every time there is an increase in storms due to climate change, rates rise. Premium rates have risen by 4 to 5 times in the past couple of years in parts of the US and the Caribbean. Yacht insurers have cut the amount of cover they provide because of the higher risks.

Linking to dividend paying stocks, in the world of climate change, the insurance industry is on the forefront of examining higher risks. An insurance company collects more money than it pays out or it is out of business and insurance companies do not like risk taking. When you look at climate change, look at insurance premiums or lack of insurance coverage, then make your decision. The insurance companies have a wealth of data to examine to make their decisions.

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