Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Is the world becoming uninsurable?

charleshughsmith.substack.com

Post reply on HN
Print view View original

71–80 of 1001 posts

Re: Is the world becoming uninsurable?

#71

Post by ericd »

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…

We need a high per-ton carbon tax, with all revenue dividended out per-capita to offset the inflation. This would eliminate the green premium on a great number of clean alternatives and avoid the problems of the government picking where to invest, letting the market handle that instead.

And if those companies don't find other things to do (they'd be quite good at geothermal, or durable carbon sequestration, with all their drilling and fracking expertise), then they'll go bankrupt without needing to do anything so extreme as nationalizing/seizing/whatever.

Re: Is the world becoming uninsurable?

#72

Post by Aurornis »

epistasis wrote: post #57
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 compa…

> 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

I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies are making.

When I ask people how much cheaper they think their insurance (health, home, etc) would be if we forced insurance company profits to zero they usually have some extreme guess like 50%. When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. The discourse is so cooked that everyone who just assumes insurers are making unbelievable profits without ever checking.

Like you said, when I try to bring numbers into the discussion I get accused of being a shill (or a “bootlicker” if the other person is young).

The environment this creates has opened the door for some really bad politics to intervene in ways that aren’t helpful. I wouldn’t be surprised if the eventual outcome in a lot of these places is that politicians pass legislation putting the local government on the hook for insurance after they squeeze regular insurers so hard they have to back out to avoid losing money in those markets. The consequences won’t manifest for several years, potentially after the politicians have left office, but could be financially burdensome. Similar to how many local governments were very generous with pension plans because politicians knew the consequences would only be felt by their successors.

Re: Is the world becoming uninsurable?

#73

Post by paleotrope »

paleotrope wrote: post #44

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?

Ok so the source, https://www.ncei.noaa.gov/access/billions/time-series/US says,

"tornado outbreaks, high wind, hailstorms"

So most of this cost is roof damage. Which is an area rife with insurance fraud and getting worse.

Re: Is the world becoming uninsurable?

#74

Post by incrudible »

“Losses rise with inflation, of course, but the losses are rising far above background inflation.”

Losses are very much in line with asset price inflation. If a house rises in value for no good reason other than loose monetary policy, so does the compensation. At the same time, insurers struggle to find safe yields to match these cost increases when that same monetary policy keeps interest rates low.

Looking at the chart pictured, one would expect that extreme weather events have increased dramatically after 2000, but that is not the case:

https://ourworldindata.org/natural-disasters

Re: Is the world becoming uninsurable?

#75

Post by Dig1t »

defrost wrote: post #32
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…

Steel frame, flame retardant insulation and cladding, rammed earth, .. these are all options. Flammable trees well away from a leaf free clean guttered (or no gutter) house are also no compromise requirements. See: https://research.csiro.au/bushfire/ and https://www.csiro.au/en/work-with-us/services/testing-and-ce... for the rabbit hole of Australian Bushfire housing certification and testing. Burning Down the House:…

Yes absolutely, and as another poster pointed out, earthquake codes exist. Metal framing is probably a bit easier to adapt to the same earthquake codes that timber framing has.

Re: Is the world becoming uninsurable?

#76

Post by throw0101a »

Aurornis wrote: post #72
epistasis wrote: post #57

Earlier quoted context omitted.

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 compa…

> 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 I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies a…

> When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.

Meanwhile, the health care providers:

> But if you look at the list of companies with the highest [return on equity], you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers.

* https://www.noahpinion.blog/p/insurance-companies-arent-the-...

Re: Is the world becoming uninsurable?

#77

Post by floatrock »

franciscop wrote: post #56

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.

You would expect that in a rational market. But go down a reading hole about flood insurance. tl;dr: in many places in the US, the only company that offers flood insurance is the US government because everyone else has pulled out. And people do tend to use the money to rebuild in the same location -- reasons as varied as "I like my beachhouse" to "my entire community was born and lived in this parish and I aint leaving".

Now that the physics of insolvency are starting to overcome political pressure of keeping Daddy Bailout-Bucks around, and people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.

Re: Is the world becoming uninsurable?

#78

Post by sdiupIGPWEfh »

defrost wrote: post #32
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…

Steel frame, flame retardant insulation and cladding, rammed earth, .. these are all options. Flammable trees well away from a leaf free clean guttered (or no gutter) house are also no compromise requirements. See: https://research.csiro.au/bushfire/ and https://www.csiro.au/en/work-with-us/services/testing-and-ce... for the rabbit hole of Australian Bushfire housing certification and testing. Burning Down the House:…

> flame retardant insulation

Which are almost definitely known to the state of California to cause cancer.

Re: Is the world becoming uninsurable?

#79

Post by ladberg »

tomrod wrote: post #27
ladberg wrote: post #24

Earlier quoted context omitted.

Insurance companies have pretty thing profit margins regardless, even in areas where profits are not capped. It's a competitive marketplace!

I'm not sure I believe your factoid. Can you cite? UHC is one of the wealthiest companies in the world.

Health insurance does have profit caps, so like the sibling commenter said their margins are small (6%) but also decently under the cap (20%) in the first place.

Re: Is the world becoming uninsurable?

#80

Post by wuiheerfoj »

Aurornis wrote: post #72
epistasis wrote: post #57

Earlier quoted context omitted.

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 compa…

> 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 I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies a…

>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs

Do you have any source for this?

I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems

Post reply on HN