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Old Posted Dec 28, 2013, 4:21 PM
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Big insurers are brought into discussions on how to protect NYC against future storms
Evan Lehmann, E&E reporter
ClimateWire: Friday, December 13, 2013

Quote:
Some of the world's leading insurance companies assembled in a room on Wall Street this fall to hear the opening pitch for a massive undertaking, constructing a chain of coastal barriers to defend the New York City region from future flooding.

The ambitious vision differs from the $14 billion system completed recently by the federal government to protect New Orleans from hurricanes that might mimic Katrina. The East Coast project, a potential network of walls, gates and dunes, would be financed largely by corporations.


Organizers envision that investors would earn a return through fees collected from residents, businesses and city governments that benefit from the project's "protective services." Their hope is that the insurance industry would be among the investors, having collected $4.6 trillion in premiums worldwide last year.
Storm defenses

Engineers from the Army Corps of Engineers inspect the seawall defenses of the New York City region after they were battered by Superstorm Sandy. Photo by Dan Desmet, courtesy of the New York District of the Army Corps.

Insurers would have another incentive to see the system built: It stands to lower their exposure to climbing disaster losses as sea levels go up, organizers said in interviews. Seven companies attended the private meeting Sept. 25 at the Louis Berger Group, an engineering firm that designs public infrastructure projects. Among the participants were industry giants Swiss Re and Zurich.

"The main part of the discussion was if you're going to build a flood barrier, for example, either on the tip of Manhattan or maybe even from Sandy Hook, N.J., over to the Rockaways [in Queens] to protect the entire New York Harbor from surge, who's going to benefit from that?"
said Tom Lewis, a vice president with the Berger Group.

"Some of the biggest beneficiaries include the insurance industry because the amount of claims they would have to pay would go down. Significantly."

Lewis added, "OK, well, if they're going to benefit from it, why can't they contribute to building that barrier?" He recalled that insurers were asked, "What do you think, guys, does this have legs?"

Lewis and other organizers said industry representatives seemed open to the idea: No one said no, but no one committed to it, either. Several insurance officials familiar with the proposal expressed more caution. The industry invests a huge amount of money each year, but it's often in predictable bonds and more liquid investments -- in part to make that cash available during a disaster.

"To put direct cash in is very different," said one executive. "There's no mechanism that I know of to ask for that."
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