Here’s How We Know the Water Supply for Millions of Earth’s Inhabitants Is in Danger

Groundwater is critical to the survival of two billion people around the globe. Here's how climate change is depleting the well — literally.

By: Elisa Ludwig | February 5, 2019

As the largest freshwater source for drinking and crop cultivation, groundwater — the moisture in soil and rock — is critical to the survival of two billion people around the globe. Yet like many natural resources, it’s being threatened by climate change.

So much so that scientists are calling it an “overlooked time bomb.” While focus has been on sea level rise and extreme weather changes, groundwater supply is slowly depleting.

In just a hundred years, we’re likely to lose half of the planet’s freshwater.

What We Know

A recent study in Nature Climate Change estimated that rainfall variation associated with climate disruption could prevent groundwater “recharge” in up to 44 percent of the planet’s underground aquifers.

The term “recharge” refers to the groundwater’s natural process to replenish itself. As a result of losing that ability, available water supply for millions of people could be gone within a century.

The researchers, lead by Cardiff University research fellow Mark Cuthbert, said the effects of extreme weather, like flooding and drought, will manifest differently over time.

“The effect we are having now is going to have this really long lag-time in terms of climate change,” Cuthbert told AFP.

“This could be described as an environmental time bomb because any climate change impacts on recharge occurring now, will only fully impact the baseflow to rivers and wetlands a long time later.”

Here’s Where the Biggest Impacts Will Be

The Cardiff team demonstrated the difference in “hydraulic memory,” or the land’s ability to buffer climate impacts. By doing this, they could map global groundwater supply and model responses over time, allowing them to see where on earth might be hit the hardest.

The study found the most humid and typically the most responsive areas, such as the Florida Everglades and the Amazon river basin — those with water tables where aquifers lie close to the surface — have the shortest hydraulic memory.

As such, they would be most affected by changes, negatively impacting their recharge and their ability to recover from drought events.

Drier areas, including the Sahara Desert, have longer hydraulic memory, meaning they might appear to be more resilient initially but current changes in climate could have a slow-burning impact that would only emerge within hundreds or thousands of years from now, leaving a debt for future generations.

“Parts of the groundwater that’s underneath the Sahara currently is still responding to climate change from 10,000 years ago when it was much wetter there,” Cuthbert said in an interview. “We know there are these massive lags.”

The Bottom Line

Previous studies didn’t take into account groundwater levels and shifts, making this new research and its implications for human survival more alarming.

In bringing it to light, the authors suggest that any climate adaptation strategies going forward take the groundwater risks into account, particularly in regards to water resource planning.

With the water supply for millions of earth’s inhabitants at stake, it’s a call that should be heeded. &

Elisa Ludwig is a contract writer based outside Philadelphia. She has written extensively about cybersecurity issues for the Junto blog on the eRiskHub. She can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.