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Is the world becoming uninsurable?

charleshughsmith.substack.com

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Re: Is the world becoming uninsurable?

#171

Post by Sabinus »

lazide wrote: post #156
Sabinus wrote: post #131

Earlier quoted context omitted.

Technology can't save you from famines when there isn't enough sunlight to grow crops for a season or two. One good supervolcano and civilization might collapse or at least take such a hit as to be utterly transformed. Billions dead, etc.

Literally grow lights and nuclear reactors? (Or plain old gas turbine generators) Technology is the only thing that can save anyone from that type of situation. Prayer sure wouldn’t help!

You think it's possible to put any decent percentage of our GLOBAL food production in greenhouses (remember with less light global temperatures go down) within ~6 months?

Billions would perish. If the luckier rich countries did not get nuked or invaded by armies or waves of endless starving refugees then they would be able to save a good amount of their population. At best world development goes back ~50-100 years. At worst, modern civilization basically ends from the combination of conflict and famine.

Re: Is the world becoming uninsurable?

#173

Post by chii »

doctorpangloss wrote: post #143
Sabinus wrote: post #112

Earlier quoted context omitted.

If the market is allowed to price insurance correctly then we can motivate building designs to be more disaster resist. If the McMansion can't get insurance but disaster resistant, modest homes do, then people will adapt.

Resistant homes will pay nearly the same prices as everyone else. So the cinder block home owner is subsidizing the sticks houses. Same happens in autos. Monitored safe driving nets at most 10-20% discounts. Biggest factor is age, and even then, difference between 20yo and 35yo driver is 38%. There are no tricks or deals to insurance.

> Resistant homes will pay nearly the same prices as everyone else.

but this means the insurance company is mispricing (or is being forced to misprice) the risk of resistant homes.

In theory, when correct pricing happens, these resistant homes should face less claims, and thus the premiums paid on them is high profit margin; ala, the customer is a good one, and the insurer should persue this customer more than another. This ought to results in a discount for said customer's premium, as more insurers vie for this customer over another.

Re: Is the world becoming uninsurable?

#174

Post by PaulDavisThe1st »

BeetleB wrote: post #165
nathanaldensr wrote: post #137

Earlier quoted context omitted.

https://www.clydeco.com/en/insights/2025/01/california-wildf... > The Bulletin was issued pursuant to California Insurance Code section 675.1(b)(1), which states that an insurer “shall not cancel or refuse to renew a policy of residential property insurance for a property located in any zip code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency . . . based solely on…

I imagine this won't apply if the insurer just leaves the state.

Yep. These are terms to operate as an insurance company in the state. If you don't want to do that, the rules have no bearing on you.

Re: Is the world becoming uninsurable?

#175

Post by gunian »

jmclnx wrote: post #67
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…

>Like we see in California, when the government sets a price ceiling, insurance companies just leave Does not answer the question. With no price caps, no one will be able to buy insurance even if required by law. So that means if you own a house in a risky area, you will be unable to sell it and your values will fall. The price caps are to prevent that. But to me, there should be big incentives to prevent building an…

Tangential but I have read about propaganda and social engineering but seeing human caused fires to control migration patterns is a level of diabolical I never thought I would live to see but can't blame them if the cheap rent and house prices don't do the job gotta do what you gotta do

Re: Is the world becoming uninsurable?

#177

Post by gunian »

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?

Any idea why Obamacare didn't follow the European model? Other than the freedom argument

People on HN always talk about European health insurance seems like an easier route than to murder people lol

Re: Is the world becoming uninsurable?

#178

Post by PaulDavisThe1st »

csomar wrote: post #51
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.

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 wi…

> Because the response of a failure in governance is more government?

Are you this incredulous when the response to a failure in "the market" is more "market" ? Or when companies fail, and the response is "more companies", do you question that in the same way?

I'm not taking a position on the meat of your point, but this particular angle strikes me as very strange.

Re: Is the world becoming uninsurable?

#179

Post by roenxi »

iandanforth wrote: post #133
Sabinus wrote: post #112

Earlier quoted context omitted.

If the market is allowed to price insurance correctly then we can motivate building designs to be more disaster resist. If the McMansion can't get insurance but disaster resistant, modest homes do, then people will adapt.

"Correctly" is doing a lot of work here. Some readers might miss that this is double edged. Insurance is a mandated product . You don't have a choice if you want a mortgage, or want to run a business. So while it is true that the sustainable price for insurance in many areas is higher than what current regulations allow, let's not forget what happens in an unregulated insurance market; price gouging.

If the regulators have defined 'price gouging' as a price substantially below the break even mark, literally any profitable insurance product is implicitly believed by them to be price gouging. The US does a weird thing where "insurance" no longer means pooling risk but some sort of transfer payment welfare system. If they're going to define "price gouging" as profitable activity it is hard to see how the economy is going to function.

Allowing insurers to make a profit and run a business without interference is going to be cheaper - and in most instances better - than whatever the politicians are trying to build here. If you get rid of all the mandatory-this and price-gouging-thats then to stay in business insurers have sell products that people want to buy at a competitive yet sustainable price. It works for food, it'd work here too.

Re: Is the world becoming uninsurable?

#180

Post by _3u10 »

bigstrat2003 wrote: post #5
_3u10 wrote: post #2

No 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.

I see that as a regulatory issue, but of course, the end result is the same. I'm familiar with services being effectively unavailable as a result of regulation from living in Canada. (Health insurance / not being allowed to buy healthcare).
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