5 Reasons why Earth is going to Hell

Bruce Sterling gives them in a Wired article. Among the five is the (facetious?) prediction that insurance companies will all go broke within the next 50 years.

Planetary insolvency: How would insurance companies pay for the devastation if an extinction-level asteroid were to collide with Earth? They wouldn't. They'd go broke. Worse yet, storms, floods, fires, and earthquakes could do the job first.

Evidence: A 2002 report issued by reinsurance behemoth Munich Re Group notes that insurance payouts for natural disasters are rising as climate change kicks in and more people in disaster-prone areas buy policies. If the trend continues, by 2050 payments will exceed the combined current GNP of every nation on the planet, no asteroid required.
Implications: In a brief 50 years, Mother Earth will be disrupting human enterprises faster than we can rebuild them. Earth will be bankrupt and no longer a viable commercial concern. What will life be like then? Well, nobody knows.

Can you spot the analytic fallacy?

Share this

I'm no economist, so I'm

I'm no economist, so I'm just doing my best Ace Ventura and talking out of my ass here, but if more people are buying policies as Sterling says then should there not be more money within the insurance companies to offset claims?

Also, to expect that storms, fires, earthquakes, etc. will "continue at their current pace" for the next 50 years is kind of silly - there is no way to determine what the pace of these sorts of things is because they do not operate as one big phenomenon; rather they are separate phenomena that are being lumped together under the category of "climate change."

I do like Bruce Sterling a lot, though. His writing is imaginative and excellent. See "The Difference Engine" (co-written with Wm. Gibson) and "Globalhead" (short stories) among others.

bq. _...more people in

bq. _...more people in disaster-prone areas buy policies_

No, the insurance companies won't go broke, if they stop selling policies to people who live in disaster-prone areas, and they should.

There are loads of people living in areas where nobody would voluntarily insure them, but the government often forces insurers to offer policies, or it isures the idiots itself.

"No, the insurance companies

"No, the insurance companies won?t go broke, if they stop selling policies to people who live in disaster-prone areas, and they should.

There are loads of people living in areas where nobody would voluntarily insure them, but the government often forces insurers to offer policies, or it isures the idiots itself."

I would add to that that the insurance companies are not managing their risks correctly in regards to this possible future problem, if indeed this is a legitimate concern. The next thing you know, the government will be subsidizing all natural disaster insurances, not just the flood insurance program that John Stossel types have taken advantage of.

If an extinction-level event

If an extinction-level event were to happen on Earth, it's kinda pointless to worry about who's going to pay the insurance claims, isn't it? So many people will be killed that I doubt institutions like insurance companies will be gutted. Hell, in a Road Warrior aftermath, money looses a great deal of it's value as a medium of exchange. I'd assume survivors would fall back on a barter economy for the near-term.

If the trend

If the trend continues...

Dynamic systems have this awful tendency to not allow trends to continue. And I really want to know who thinks they can predict major geological, climatological, AND economic events individually let alone in combination. Psychology has a term to describe such a neurosis - meglomania.

"If the trend

"If the trend continues..."

This is like The Amazing Growing Boy gag I once saw on Letterman. "Based on his amazing growth rate to date, by the time he's forty this boy will be.... FORTY FEET TALL!!"

Jason, I think you're

Jason,

I think you're exactly right. Among the many things Sterling gets wrong in the article, this one is the most egregious:

A 2002 report issued by reinsurance behemoth Munich Re Group notes that insurance payouts for natural disasters are rising as climate change kicks in and more people in disaster-prone areas buy policies. If the trend continues, by 2050 payments will exceed the combined current GNP of every nation on the planet, no asteroid required.

He takes a limited data trend and forecasts 50 years in to the future. Markets don't work like that. The market for insurance could respond in many different ways. Insurers could raise insurance premiums. They could be more selective about whom they insure. In those scenarios, it is likely that people would themselves start being more selective in where they choose to live.

This is one of the very reasons markets work better than central planners - prices create signals that individuals respond to, resulting in better allocations of resources than in a planned society. Of course, technocrats like Sterling do not understand this.

To be fair, no matter what a

To be fair, no matter what a doofus Bruce Sterling may be when he tries to write about the real world, a lot of his science fiction is really quite good. Heavy Weather and Islands in the Net are my favorites.

Portlandian? I thought he

Portlandian? I thought he was fom Austin.

"How would insurance

"How would insurance companies pay for the devastation if an extinction-level asteroid were to collide with Earth?"

Better to ask who would be around to pay whom with what. "Extinction-level event" kinda implies *extinction*.

Bruce Sterling...

Bruce Sterling... Sterling... hmmmm...

Now where have I heard that name before?

Ah! I remember! He's that Portlandian clout who labeled the city I reside in - Tacoma, Washington - America's "most stressful city". Since this disclosure, my city has been gripped by the agonizing stress that comes with being called "America's most stressful city".

I'm sure John gets down here every now and then. John - do we Tacomans looked stressed out to you? I mean, really.

God. This is stressing me out.