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A Dream Blown Away

Even on their existing loan, the Buchanans are having a hard time getting flood insurance. On a house that cost $700,000 to build and furnish, their lender has been able to get them only a $250,000 policy, with a $50,000 deductible.

The thought of losing their retirement reserve "really makes me mad," Peg says. "I feel like going over with a shotgun."

Emotion, however, does not drive insurance writers. By definition, they are the world's most serious futurists. When it comes to life insurance, for example, they pride themselves on their ability to routinely and accurately predict when a whole lot of people are going to die. If their models are wrong, and they have to pay out too much money too quickly, they go bankrupt.

As a result, these fiduciaries have a long and distinguished history of driving social change. Passion-laden causes move beyond the realm of hand-waving activists when large gray men in large gray suits decide they must.

Highway fatalities dropped when insurance companies started financially punishing unsafe drivers, as well as makers of unsafe cars. Cigarette smokers saw their life insurance premiums skyrocket.

The big buzz in the insurance industry today is climate change.

Lloyd's of London's June report is titled: "Climate Change: Adapt or Bust."

The 2005 hurricane season gave the United States supposedly once-in-a-century storms, one right after the other. Katrina, Rita and Wilma were among the seven most expensive hurricanes ever to hit the country. Companies that had to eat too much of the $51.5 billion in insured losses went under.

The big problem with climate change for the insurance companies is not the risk. Their whole business is getting paid to accept risks.

The trouble is that their traditional means of calculating what is an acceptable risk -- and how much to charge for it -- is based on history.

It assumes that tomorrow will pretty much behave like yesterday.

Now they think that when it comes to the weather, the world is moving.

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