Last week, newspapers worldwide reported that July 3rd marked the hottest day ever recorded. This week, USA Today published an article titled "Heat record after heat record will be broken in 2023," that noted the dizzying frequency with which weather records are being smashed this summer worldwide. The article quotes Michael Mann, a professor at the University of Pennsylvania, stating, “It is actually almost a certainty that this will be the warmest year globally,.” Elaborating further, Moore added, “We can expect that combination of factors to supercharge weather events this summer in the form of extreme heat waves, drought, wildfire and flooding events."
Among the factors contributing to these extreme events, marine heatwaves have garnered attention. The National Oceanographic and Atmospheric Administration (NOAA) warns that marine heatwaves may come to envelop 50% of the world's oceans and seas – a significant jump from 40% in June. This rise in marine heatwaves, fueled by factors like global warming and El Niño, exacerbates the frequency of extreme weather events.
With El Niño intensifying in the Eastern Pacific Ocean and the ongoing impact of global warming, the supercharging effect on extreme weather events becomes evident. Scientists from Berkeley Earth assign a 54% probability to “2023… [becoming] a new record warm year.” This data highlights the pressing need for immediate action to address the impact of climate change.
Scientists determine the global average temperature via the use of various data sources that include satellite observations, land-based weather stations, and oceangoing ships. This multifaceted approach allows scientists to reconstruct temperature data dating back to around 1850. Based on this historical data, we are experiencing the warmest period since humans began measuring the Earth's temperature.
It almost goes without saying that 2023’s scorching hot temperatures constitute significant physical risks to business operations throughout the world. An analysis conducted by Moody's on over 5,000 publicly-listed companies illuminates the substantial threat of heat risks to major industries.
Moody’s estimates that 88-93% of utility assets in Latin America and the Caribbean, and 80-85% of assets in North America are vulnerable to excess heat extreme weather events. Moreover, utilities in several European countries, such as Italy and Austria also have a large concentration of assets that may be susceptible to heat stress. Extreme heat events can reduce the efficiency of electrical grids and make it challenging to cool power plants, which can lead to reduced energy transmission that in turn creates added operational risks for utilities. The report also notes that the retail trade sector faces significant exposure to excess heat risks and wildfires.
Given the undeniable impact of climate change, Arbol Insurance Services recognizes the urgent need for solutions to combat rising temperatures and their associated risks. Our high temperature product provides protection against loss of revenue due to high temperatures, ensuring financial resilience in an era of escalating climate challenges.
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Arbol Insurance Services is a d/b/a of Climate Risk Insurance Solutions LLC. CA License #6006415. Some products may only be available in certain states. Arbol Insurance Services does not solicit from the public.