Tayna Brown (R) and Andy Clyde (L) walk through the test chamber and wind tunnel at the Institute for Business and Home Safety's Research Center in Richburg, South Carolina December 22, 2010. To simulate hurricane-like conditions, an industry group has built a wind tunnel big enough to accommodate nine large residential homes. Some 105 fans deliver gusts of 175 miles per hour, destroying dwellings built precisely for this purpose. Picture taken December 22, 2010. REUTERS / Chris Keane

By Ben Berkowitz
Wed Feb 9, 2011 9:53am EST NEW YORK (Reuters) – In Chester County, South Carolina, off a dirt road in the middle of a field, insurance companies are literally unleashing a storm. To simulate hurricane-like conditions, an industry group has built a wind tunnel big enough to accommodate nine large residential homes. Some 105 fans deliver gusts of 175 miles per hour, destroying dwellings built precisely for this purpose. … It’s a tough time to be in the $500 billion U.S. property insurance business. Storms are happening in places they never happened before, at intensities they have never reached before and at times of year when they didn’t used to happen. Those bizarre weather patterns damage not just homes but also insurance companies’ financials. If seas rise and houses flood, insurers pay. If winds shift and buildings blow down, they also pay. If temperatures rise and crops fail, same thing. The industry hasn’t reached a consensus on what’s causing weird weather. “It’s hard to really deny that global warming exists,” said Karen Clark, chief executive of Boston-based Karen Clark & Co., which helps insurance companies forecast natural disasters. “You can accept that and that’s fine, but that doesn’t mean we can quantify the impacts.” … The implications are profound for consumers as well as insurers. If hundred-year storms are now at risk of happening every 40 years or every three, it is difficult to know how much property insurance should cost. The last couple of months underscore just how much climate seems to be changing. Queensland state in Australia has suffered a virtual apocalypse — flooding in December, flooding in January and tropical cyclones in February that inundated at least 30,000 homes and crippled the local coal industry. Meanwhile in the United States, snow fell on Christmas Day in a number of southern cities for the first time since at least the 1880s. Los Angeles got six months’ worth of rain in three weeks, causing some of the worst flooding in the state’s history. The New York metropolitan area had an unprecedented blizzard the day after Christmas and a month later got almost the same, breaking historical records. …

Special report: Extreme weather batters the insurance industry