I’m not sure why Cory believes terrorism insurance “is pretty darned cheap.” In fact, but for government intervention, it would be largely unavailable to commercial businesses in the US as it is considered an unpredictable act of war with potentially catastrophic impact (nuclear radiation cleanup duty, anyone?). That is why Congress passed the Terrorism Risk Insurance Act and its successors since 9-11, although many Republicans want to let the program expire and rely on the “market” instead.
On the other hand, weather (not climate) presents an insurable risk because you can predict the general frequency of storms, etc. If you insure across a broad geographic area, you can balance the risks against the annual premiums.
Relevant to this discussion is the fact that the actual statistics indicate that major storms (particularly tornado & hurricane) have not increased – even if media coverage makes it seem that way. Instead, the value of things destroyed by natural disasters has increased greatly and, therefore, insured losses have increased. Insurance companies know this and seek to stay one step ahead by raising premiums and investing the proceeds in long-term portfolios, typically heavily weighted toward commercial real estate.
