Insurance is based on two things: risk and benefit.
If the risk outweighs the benefit, then the for-profit insurance model breaks down.
I predict the private storm insurance model will break down soon (like it has in some American east coast states) because the risk will outweigh the size of the premium necessary to yield a benefit. For instance, in Florida the state has had to offer storm insurance because the premiums charged by companies were unaffordable. Florida’s storm insurance programme is politically popular, but it is under funded and will predictably collapse when bad storm years occurs, unless the federal government bails it out.
There is no doubt that higher sea surface temperatures lead to larger more powerful storms and it is predictable the ocean water will continue to heat up.
Therefore, it is only a matter of time before the current for-profit storm insurance model breaks down (as foreshadowed by some insurance companies abandoning some American east coast states) because of the issue of profitability.
What it will be replaced with is anyone’s guess. On the other hand, we have bigger things to worry about due to global warming:
‘Few seem to realise that the present IPCC models predict almost unanimously that by 2040 the average summer in Europe will be as hot as the summer of 2003 when over 30,000 died from heat. By then we may cool ourselves with air conditioning and learn to live in a climate no worse than that of Baghdad now. But without extensive irrigation the plants will die and both farming and natural ecosystems will be replaced by scrub and desert. What will there be to eat? The same dire changes will affect the rest of the world and I can envisage Americans migrating into Canada and the Chinese into Siberia but there may be little food for any of them.’ –Dr James Lovelock’s lecture to the Royal Society, 29 Oct. ’07