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Is the world becoming uninsurable?

charleshughsmith.substack.com

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Re: Is the world becoming uninsurable?

#41

Post by x0x0 »

greenthrow wrote: post #25

An hour in and nobody in these comments is addressing climate change? The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change. Should people be forced to abandon their homes because the fossil fuel companies lied and misled the public and bought out our governments for the last 50 years? IMHO we should be seizing…

> The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change

I saw an article on npr [1] which basically agrees with the chart on the blogpost. I 1980, there were 3 disasters a year that cost $1B, inflation adjusted. In 2024, 24. The second chart in the npr article is pretty terrifying.

[1] https://www.npr.org/2024/10/08/nx-s1-5143320/hurricanes-clim...

Re: Is the world becoming uninsurable?

#42

Post by amazingamazing »

jmyeet wrote: post #37

The California (and Florida) situation is easily explainable [1]. As this video points out you have these forces in play: 1. The state who sets insurance price caps for political expediency, basically to increase house prices (because they'd go down if insurance prices could float freely). BTW we have examples of areas that are uninsurable like the Florida Keys; 2. The homeowners who want their house prices to go up…

a lot of this here is really what the problem is. for whatever reason, california wants to try to micromanage this particular microeconomy (insurance), but it will fail.

Re: Is the world becoming uninsurable?

#43

Post by ggm »

greenthrow wrote: post #25

An hour in and nobody in these comments is addressing climate change? The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change. Should people be forced to abandon their homes because the fossil fuel companies lied and misled the public and bought out our governments for the last 50 years? IMHO we should be seizing…

Don't agree. Well partially. I also think the privatise the profits socialise the losses story is strong, and the coal and oil interests should pony up more remediation costs.

But insurance is one of the best signals we have to true risk/consequence/likelihood, which commercial interests pay attention to

The best long term outcome here would be rebuilding safer but the downside will be "which excludes the poor" -that's where I think state and federal policy should apply the lever: require socialised housing outcomes.

Price controls on insurance forces socialised losses. Better is some middle ground: mandate insurance, demand adequate mitigations and defences. But losing the price signal is bad.

Re: Is the world becoming uninsurable?

#44

Post by paleotrope »

It seems like "severe storms" have increased quite a bit, the other categories not so much. What does "severe storm" mean here? Doesn't seem to mean hurricanes or winter storms. So what gives? Is this just political patronage handed out under the cover of claiming a big storm knocked some trees down?

Re: Is the world becoming uninsurable?

#45

Post by _huayra_ »

amazingamazing wrote: post #12

my sadly hot (no pun intended) take is that insurance needs to be let free. price controls on insurance are doubly counterproductive - not only does it result in the companies leaving, it results in those who need the insurance losing their stuff when catastrophe inevitably hits. it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment. rather than price con…

Totally agree, though there should still be insurance commisions and controls to ensure that any company selling policies in a given area is solvent enough to pay out. Otherwise you'll have fly-by-night insurance companies selling sham policies for cheap then folding up shop during the next natural disaster saying "oopsies guess it's the state's responsibility now".

Re: Is the world becoming uninsurable?

#46

Post by layman51 »

atleastoptimal wrote: post #29

Every year, humanity grows richer, more resilient to natural disasters, and more capable of predicting natural disasters and their negative outcomes. The point of insurance is to spread the expected burden of calamities that will affect a minority of a population to the entire population, so that those affected will have a financial safety net. This principle works regardless of how disastrous or prone to calamity a…

I agree with your analysis of how insurance works. But, wouldn’t the burden of calamities only spread amongst the insurance holders? I am not sure what the factors are, but if a lot more people go without insurance (because they are independently wealthy or live in an uninsurable location), doesn’t change the calculation?

Re: Is the world becoming uninsurable?

#47

Post by TheOtherHobbes »

amazingamazing wrote: post #12

my sadly hot (no pun intended) take is that insurance needs to be let free. price controls on insurance are doubly counterproductive - not only does it result in the companies leaving, it results in those who need the insurance losing their stuff when catastrophe inevitably hits. it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment. rather than price con…

This is not an insurance problem, or a market problem, or an MBA econ problem.

It's a "Do we want cultural extinction or a relatively comfortable and habitable planet?" problem, which is not quite the same thing.

No amount of faith-based "We will adapt!" is going to make an impression until evidence appears that we are actually adapting in real, tangible ways.

Clearly, objectively, and empirically we are not. We are doing the opposite - pretending to ourselves the problem is going to be solved by continuing with the same mistakes which caused it.

Re: Is the world becoming uninsurable?

#48

Post by nradov »

bitcurious wrote: post #34
mgiampapa wrote: post #22

Earlier quoted context omitted.

How about profit caps? I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders. To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.

> To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums. This has baffled me ever since Obamacare was first passed - it seems that each year the insurance companies have an incentive to drive up the cost of healthcare, since that’s how they earn more money in absolute terms. Is it not so?

That is so, to an extent. But it's balanced against employer demands to hold down medical costs because they pay most of the bills. If your HR department can save 5% on employee medical costs by switching from Blue Cross to Cigna next year they'll absolutely do it.

Re: Is the world becoming uninsurable?

#49

Post by michpoch »

Dig1t wrote: post #23
bluedevil2k wrote: post #8

Like 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…

There should be a way to build fire resistant buildings to reduce the cost of insuring them, likely this would be the solution in California without price caps. You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof. These buildings would be realistically insurable in both California or Florida. They would cost more to build, not THAT much mor…

> You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof

Just like exactly the rest of the world? We, the non-USA folks, are looking yearly at either fires or hurricanes destroying these wooden houses there and people keep rebuilding them. Insanity.

Re: Is the world becoming uninsurable?

#50

Post by apsec112 »

greenthrow wrote: post #25

An hour in and nobody in these comments is addressing climate change? The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change. Should people be forced to abandon their homes because the fossil fuel companies lied and misled the public and bought out our governments for the last 50 years? IMHO we should be seizing…

If you ask Americans to vote to make gas more expensive to stop climate change (eg. the Washington carbon tax referenda), they say no. America burns lots of fossil fuels because it's what the voters want. If every private fossil fuel company shut down tomorrow, there would be riots in the streets, and then oil and gas would be imported from abroad.
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