Is the world becoming uninsurable?
charleshughsmith.substack.com
Is the world becoming uninsurable?
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Re: Is the world becoming uninsurable?
#2No it isn’t. It’s just unprofitable which means it can be fixed with higher rates.
Re: Is the world becoming uninsurable?
#3Re: Is the world becoming uninsurable?
#4> Like virtually all problems, it's been approached as a problem with a political solution: the state or federal government can force insurers to continue offering policies that put them on the hook for additional catastrophic losses, and / or become "insurers of last resort."
When you put a minimum on the price of wages the true minimum is zero. When you put a maximum on the price of insurance the true maximum is 1/0.
Re: Is the world becoming uninsurable?
#5No it isn’t. It’s just unprofitable which means it can be fixed with higher rates.
Sure, but state governments (in the US) also set what prices are allowed (disclaimer: I don't work in the industry but have friends that do so I might misunderstand). And that means that if the state says "you can only charge X for insurance", and it's still unprofitable, those customers are effectively uninsurable.
Re: Is the world becoming uninsurable?
#6No it isn’t. It’s just unprofitable which means it can be fixed with higher rates.
There are to components, breakeven price for profitability and the price that an or will be paid.
If it costs 10 million dollars to replace a house, the insurance will be out reach for most homeowners.
Re: Is the world becoming uninsurable?
#7Part of this is that homes are too fancy and large. All of that translates into elevated costs and risks.
Re: Is the world becoming uninsurable?
#8Like we see in California, when the government sets a price ceiling, insurance companies just leave. Same in Florida. If the free market truly was allowed run normally, the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there. Is that a bad thing? If someone was living in a house near where they tested missiles, we'd call them crazy. At what point can we say the same about people building and rebuilding over and over in these disaster areas.
Re: Is the world becoming uninsurable?
#9Like we see in California, when the government sets a price ceiling, insurance companies just leave. Same in Florida. If the free market truly was allowed run normally, the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there. Is that a bad thing? If someone was living in a house near where they tested missiles, we'd call them crazy. At what point can we…
Or some forms of housing in high-risk areas, like sprawling single-family houses, might get too expensive, and the only way for people to live in those places would be a smaller number of denser, more easily defended structures. Also a good thing.
Re: Is the world becoming uninsurable?
#10So let me try to put the author's argument in order:
(1) The author tried to get homeowner's insurance, but was denied because their home was a significant hurricane risk
(2) The author (maybe?) got insurance through a state-run FAIR program, but then cites news reports that these programs are close to insolvency (As are a significant amount of non-state-run homeowner insurance programs).
(3) The author is like, "well, if it's so hard to insure my house, maybe I should think about living somewhere else." And then generalizes to "a lot of places should be uninsurable and uninhabited - apocalypse here we come"