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Is the world becoming uninsurable?

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Re: Is the world becoming uninsurable?

#51

Post by csomar »

mgiampapa wrote: post #22
underwater wrote: post #16

Earlier quoted context omitted.

Price caps always seem like such a transparent political move.

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.

Sure. Because the response of a failure in governance is more government? What you are proposing is "unfair". You are essentially suggesting that the rest of the country subsidize a subset who wants to live near high-risk areas. Me too want to live in a dense forest and also have my house by the edge of the river.

You could make the argument for this for healthcare, since no one can choose which illness he is born with. But choosing your housing location is a "choice". And you can/should move somewhere else where it is less risky.

Re: Is the world becoming uninsurable?

#52

Post by Arainach »

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…

>We don't live in a world like in 1905 where an earthquake would lead to a fire that burns down an entire city

I'm not convinced that that's true, and even if it is a huge chunk of population (world, US, pick your area, it applies broadly) keep fighting to regress us to these periods.

People complaining about rules they don't understand is in some sense as old as the existence of rules, but the internet has dramatically increased the number of people who consider themselves experts on politics, healthcare, construction, electrical code, and every other topic on the sun, and who are proud of ignoring the science and the rules and who go out of their way to avoid permits, inspections, etc.

At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.

So you have a huge mix of things which are old and degrading, things which were never built right, and things which people are actively modifying in dangerous ways. People have a false sense of confidence build during the years where we were enforcing these rules; I do not believe that confidence is still warranted.

Re: Is the world becoming uninsurable?

#53

Post by amazingamazing »

TheOtherHobbes wrote: post #47
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…

i unironically believe the insurance is a great signal for pricing externalities. if you want, imo, a comfortable planet, you should want everyone to have to pay, out of pocket, for the risk they’re taking.

the result would be people not living in areas that a risky, engaging in behaviors or risking, or partaking in things the contribute to the world becoming more volatile.

Re: Is the world becoming uninsurable?

#54

Post by toast0 »

mgiampapa wrote: post #22
underwater wrote: post #16

Earlier quoted context omitted.

Price caps always seem like such a transparent political move.

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.

Most regulated insurance markets do have profit caps. California certainly does, but there was still a price cap added.

Re: Is the world becoming uninsurable?

#55

Post by sadeshmukh »

zeroonetwothree wrote: post #31
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…

Clearly it’s not true that “no one” could afford to live there. And if demand was low then the housing would become more affordable

No one can truly afford to live there, if you price in the cost of insurance. The only reason people live there is because they haven't hit the 1/100 chance yet.

Re: Is the world becoming uninsurable?

#56

Post by franciscop »

I'm not sure I follow this: "why are we subsidizing people to rebuild in places that are clearly no longer habitable"

Does/Why would the insurance assume the subsidy is for people rebuilding in the same place? Money is fungible and so it doesn't need to be in the same place, at all. What I'd expect is that insurance for those hard-to-insure places would skyrocket and thus a new balance would be achieved.

Re: Is the world becoming uninsurable?

#57

Post by epistasis »

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…

I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks of climate change and how insurance will have to change. Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything. When in reality, insurance is one of the rare areas where risks are very well assessed, not just by the initial insurer but also by a second party when reinsurance is purchased. And often those exits from the insurance markers are due to inability to purchase reinsurance.

Of course, explaining anything in detail is likely to make people think you work in the industry (I do not) and get accused of being a shill. All of which proves to me that older generations had a much easier life because nobody so financially ignorant today is in any sort of position to be able to buy a home.

All that said, I don't think it's actually a price ceiling. It's a limitation of what factors can be taken into account to set rates, and constitutional amendment from Prop 108 prevents the legislature from changing it.

Re: Is the world becoming uninsurable?

#58

Post by whatever1 »

No it’s just that the insurance companies want mandated insurance pools for which they just receive checks.

In health insurance they don’t cover the elderly, and until Obama they did not cover people with prior conditions.

For home insurance they don’t cover flood get your are mandated to carry one if you have a mortgage.

In life insurance they do not cover you if you have a disease.

It’s more like a lottery rather than insurance.

Re: Is the world becoming uninsurable?

#59

Post by Enginerrrd »

michpoch wrote: post #49
Dig1t wrote: post #23

Earlier quoted context omitted.

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.

Earthquakes make this a much more expensive option. To give you some idea, the design seismic acceleration for my house is like 3g. That's more sideways than down. The forces involved are the weight of the structure times this value. Concrete ways a LOT more. It absolutely can be done, but it's not clearly a superior material compared to wood.

Re: Is the world becoming uninsurable?

#60

Post by greenthrow »

apsec112 wrote: post #50
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.

Did you miss the part where I said the public has been lied to for the past 50 years?

I didn't say we shut off all the gas pumps tomorrow. It will obviously take time to transition off. I said we seize their assets and use the proceeds for climate relief. We can keep the revenue coming and using the profits for disaster relief while we transition off fossil fuels. It's not that hard to understand.

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