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A Nobel Prize in Economics a Climate Change Denier Might Love

It has been a scary month in climate science. Hurricane Michael and a frightening report from the U.N. Intergovernmental Panel on Climate Change underlined the potential costs of human-caused global warming. Then to add insult to injury, William Nordhaus won the economics Nobel Prize. Nordhaus wa...

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Apes, Men, & Language
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Insurers: We're Not Picking Up the Tab for Climate Change


Friday June 20, 2014

[Note: A version of this musing first appeared in the Los Angeles Times]

Well, that took longer than I expected! Twenty years ago, I interviewed Frank Nutter, then and now president of the Reinsurance Assn. of America, on the threat climate change posed to the $2-trillion-plus global property and casualty insurance industry.

"It is clear," he said back then, "that global warming could bankrupt the industry."

But in the two decades since, the industry mostly limited itself to talk, sponsoring innumerable reports on the threat. Now a major insurance company has moved to protect itself, and it may be the most important milestone yet in the struggle to contend with global warming.

Illinois Farmers has filed nine class-action suits against municipal entities in and around Chicago for losses the company sustained when the sanitation system backed up, spewing geysers of sewage into hundreds of homes, after extreme storms in April 2013.

The suit explicitly says that officials in various governments were aware that climate change would bring more extreme weather and yet failed to take steps (such as draining parts of the system) that would have prevented the losses. Regardless of the outcome — courts give governments wide latitude in immunity from lawsuits — it puts an end to the charade that global warming is some scientifically uncertain threat far off in the future. [Subsequent to this writing, Illinois Farmers withdrew the suits, noting that they had served their purpose in encouraging governments to take preventive steps.]

It was predictable that a major industry player's first hardball action would be to protect itself from losses. Insurers bet their existence on being accurately able to detect, model and price changes in risk. The Farmers' suit tells the world that regardless of what politicians and pundits say about climate change, an insurer is going to try to avoid paying for losses that could have been foreseen and prevented.

Most property insurers base their pricing on historical data, which makes the industry retrospective and thus inherently conservative. This is one reason it has taken so long for insurers to react aggressively in the face of climate change — its losses only filter in slowly over many years. Even then, attributing blame is complicated by other factors, such as a vast increase in the building of ever-more expensive homes in coastal areas.

Moreover, a number of major insurers feel that the potential losses of climate change can be addressed through existing procedures for analyzing and pricing risk. For example, one thing they can do is simply leave the market in places that are highly vulnerable to foreseeable negative effects.

This was the case in Florida as insurers voted with their feet after the $26 billion in insured losses incurred by Hurricane Andrew in 1992, and after Florida regulators wouldn't let them raise prices to adjust for the increased risks created by a rapidly growing population in harm's way. In 2002, the state was forced to set up its own insurance pool to protect against losses from windstorms.

The Citizens Property Insurance Co., which charges below-market rates thanks to the voter-conscious state legislature that set it up, quickly became the biggest property and casualty insurer in the state. Noting its precarious financing, a report on the state insurance market prepared by Florida State University in 2013 asserted that "Florida could be one major storm away from the state having to take all wind risk."

Should such an event occur, Florida would cover these losses by issuing bonds, which would be paid off by a surcharge on all insurance policies. That means any insured Floridian, even those with just an auto insurance policy, would take a hit.

Thus, Florida is shifting the burden of future catastrophic losses arising from wind damage from the affluent who have built along to coast to all Floridians.

While Floridians wait for the next big storm, sea levels — the most obvious worldwide signal of global warming — continue their inexorable rise. Rising waters have already created Venice-like conditions in the Miami area.

All the nation's taxpayers have assumed this risk as insurers routinely exclude flood and storm surge damage from policies. This forces homeowners to seek coverage with the National Flood Insurance Program, a tax-dollar backed program also forced by political pressure to under-price its coverage.

Between the state program and federal flood insurance, the American middle class has been given the burden of insuring and subsidizing the affluent. Let's call it climate change socialism for the rich.

After news of the Farmers' lawsuit broke, I spoke again with Nutter. He said he too was surprised at how long it has taken for the risk of climate change to percolate through the insurance community. He also pointed out that Farmers is affiliated with the Zurich Group, which is noteworthy because European insurers, with global reach and exposure, tend to be more attentive to the risks of climate change than domestic insurers.

Is it possible that U.S. insurers are also affected by climate-change deniers? A number of recent studies by the Insurance Information Institute have singled out Florida as having the most exposure to the combined impacts of climate change, but its governor, Rick Scott, and Sen. Marco Rubio are on record dismissing the threat.

And yet everyone can see that sea levels are rising. Miami Beach Mayor Philip Levine told the New York Times last month, "We are past the point of debating climate change."

Now, as insurers begin to shift the costs of that reality through rate increases, exclusions, lawsuits and market retreat, consumers can ask such politicians, "Why, if climate change is a hoax, are we paying for it?"

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Short Take

In Memorium: Koko the Gorilla

Koko the gorilla died on June 19. She and a female chimpanzee named Washoe (who died in 2007) played an outsized role in changing how we view animal intelligence. Their accomplishments inaugurated deep soul-searching among us humans about the moral basis of our relationship with nature. Koko and Washoe have made it much more difficult for us to treat animals as commodities, in any way we wish.

I knew the two great apes when I was young and they were young, and I”ve closely followed the scientific, philosophical and moral upheavals they precipitated over the last five decades. In the 1960s and ’70s, they learned to use American sign language, and they came to understand that words could be combined to convey new meanings. It threw the scientific world into a tizzy, implying that sentience and languagewere not ours alone, that there was a continuum in higher mental abilities that linked animals and humans.

The problem for science remains unresolved: 3,000 years into the investigation of signal human attributes and we still don’t have rigorous ways to define language and intelligence that are agreed on and can be empirically tested. There remain a number of scientists who don’t think Koko and Washoe accomplished anything at all. Even if a scientist accepts one of the definitions of language that do exist, it’s nearly impossible to test it in animals because what is being examined is inherently subjective, and science demands objective, verifiable results.

Consider how hard it is to prove a lie beyond a reasonable doubt in court. Then consider trying to prove lying in an animal in accord with the much stricter standards of science.

As difficult as proving it may be, examples of apes lying abound. When Koko was 5, I was playing a chase game with her. When I caught her, she gave me a small bite. Penny Patterson, Koko’s lifelong foster parent and teacher, was there, and, in sign language, demanded, “What did you do?”

Koko signed, “Not teeth.”

Penny wasn’t buying it: “Koko, you lied.”

“Bad again Koko bad again,” Koko admitted.

“Koko, you lied.” But what was Koko’s intent — a central issue when it comes to proving a lie. What was actually going on in her head when she made the gestures for “not teeth?” As if that weren’t inscrutable enough, one of the guiding principles of scientific investigations of animal intelligence is what’s known as Morgan’s Canon: Scientists must not impute a higher mental ability if a behavior can be explained by something more primitive, for example, simple error.

Analogously, about 50 years ago, on a pond in Oklahoma, Washoe saw a swan and made the signs for “water” and “bird.” Was she simply noting a bird and water, or was she combining two of the signs she knew to describe an animal for which she had no specific word? The debate continued for decades and was unresolved when she died.

Since Washoe made those signs, there have been many more instances of apes combining words to describe something, but these examples still don’t prove they can combine words to arrive at a novel term, even if it seems obvious that they can. Faced with these ambiguities, many scientists have moved to studying whether animals can accomplish specific cognitive tasks, and a welter of credible findings show sophisticated abilities in animals ranging from crows to elephants.

Although science struggles with questions of general intelligence, language and intent, the public is in the “it’s obvious” camp, readily accepting evidence of animal sentience. The latest objects of fascination are the octopus — a relative of the clam! — and fish. Stories of cephalopod escape and problem-solving regularly go viral, and to the consternation of sushi lovers , John Balcomb’s book, “What a Fish Knows,” provides copious evidence that fish know a lot.

We tend to see animals as either personalities or commodities, or sometimes, both. When I wrote about octopus intelligence, I was amused by one octopus-oriented website that divided its space between stories of smart octopuses and recipes for cooking them. Perhaps the most extraordinary example of our schizophrenic view of animals occurred some years back when a chimp colony that included sign-language-using apes was disbanded and many of these onetime celebrities were shipped to a medical research lab to be used in Hepatitis B and AIDS drug testing.

I knew these chimps too, and visited them in their new environment. They were desperate to communicate with their human captors, but the staff didn’t know sign language. So insistent were Booee and Bruno with their signing that one handler put up a poster outside the cages showing some basic signs to help the humans respond. When I was there, three days after Booee had arrived, he was signing agitatedly for food and drink. But what I think he really wanted was reassurance: If the humans would respond to “gimme drink,” things were going to be OK.

Teaching Koko, Washoe and other animals some level of human and invented languages promised experimenters insight into the animal mind. But the animals seemed to seize on these languages as a way to make their wishes — and thoughts — known to their strange, bipedal wardens, who had no ability or interest in learning the animals’ communication system. For Koko, I believe, sign language was a way to make the best of a truly unnatural situation, and so she signed.

Science doesn’t know if great apes can invent terms or if they tell lies. And the tension between whether we view and treat animals as personalities or as commodities lives on. The truth is, Koko, Washoe and many other animals who have had two-way conversations with the people around them shatter the moral justification for the latter.



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