Is the world becoming uninsurable? • Hacker News Board

Re: Is the world becoming uninsurable?

#221

Post by EGreg » Fri, Jan 17, 2025, 6:15 AM UTC

rafram wrote: post #186

EGreg wrote: post #102

Earlier quoted context omitted.

Can’t you say that about any part of LA? Once a fire gets going, it grows and can destroy any neighborhood. Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists). I would also make sure that the live video footage would be used only for that purpose. It would use AI at the edge to flag…

> Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists). This is a terrible way to deal with fire. The issue isn’t preventing fires from starting at all, because small fires are all over the place. A dropped cigarette can light a city block on fire if the wind is just right. The issue i…

And those precautions are… putting out the fire before it spreads, right?

Re: Is the world becoming uninsurable?

#222

Post by School-Cotton » Fri, Jan 17, 2025, 6:16 AM UTC

rewgs wrote: post #197

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…

Insurance should not be for profit, and things like e.g. State Farm suddenly cancelling people's renters/fire insurance just two weeks before the fires (I am one of those people) are what people hate about insurance. No one is arguing that insurance is bad at risk assessment, but rather how they wield their proficiency with it.

Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so?

To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX?

If State Farm didn’t exist and the state ran insurance instead, and were willing to insure all comers, they’d be subsidizing people who can’t be insured profitably. That’s not crazy on its face (the state subsidizes lots of different things), but it’s at least worth asking why we should be paying for people to live in high-fire-risk areas rather than any number of other things the state could be spending those resources on.

Re: Is the world becoming uninsurable?

#223

Post by tsimionescu » Fri, Jan 17, 2025, 6:19 AM UTC

chii wrote: post #185

hattmall wrote: post #138

Earlier quoted context omitted.

Health Insurance IS a huge racket. Insurance profits are only a small slice. Executive compensation isn't part of profits. The profits of the required sole source medical supplies company isn't part of insurance profits. The contracts, salaries, benefit packages, overpayments, and waste of healthcare systems and pharmaceutical companies aren't reflected in insurance profits. Just looking at the raw profit percentages…

> There is no legitimate reason for healthcare prices to be so insane. these profit margins are why some people claim that the US is actually subsidizing the rest of the world's low cost health outcomes. These companies make money in the US, at high margins, which enables them to operate at low margins in other more regulated countries.

This might apply to Pharma, which actually operates in international markets, but not to US health insurers, PBMs, or for-profit Healthcare providers.

Re: Is the world becoming uninsurable?

#224

Post by mgiampapa » Fri, Jan 17, 2025, 6:20 AM UTC

donavanm wrote: post #209

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.

> 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. Youre about 20-30 years late to the game, but arrive in time to see the conclusion does not match your assumption. See california for fire, florida for fstorm damage, and everywhere in the us for federal flood coverage…

In all of those examples you have the for profit private insurance leaving the market because it's not profitable enough. When you take away excessive profits and allow the governmental pool to compete with for profit insurance, risk is leveled across the pool and consumers pay less. If the big private insurance companies can't be more efficient or have better risk models than the government, well they should stop trying to sell policies.

Re: Is the world becoming uninsurable?

#225

Post by derektank » Fri, Jan 17, 2025, 6:20 AM UTC

chii wrote: post #170

iandanforth wrote: post #133

Earlier quoted context omitted.

"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.

> unregulated insurance market; price gouging. with sufficient competition, it is impossible to price gouge. So if there is supposed price gouging, then there must be insufficient competition. Therefore, the source of the lack of competition would need to be removed (ostensibly, by gov't - such as increasing business loans so that new insurance companies can be started).

I mean, there's sometimes simply not enough capital available to support the creation of further competition in a sector. And government subsidies in the form of cheap business loans are sort of robbing Peter to pay Paul. You're simply allocating capital from one sector (the one being taxed) to another

Re: Is the world becoming uninsurable?

#226

Post by dr_dshiv » Fri, Jan 17, 2025, 6:20 AM UTC

kstenerud wrote: post #188

chii wrote: post #170

Earlier quoted context omitted.

> unregulated insurance market; price gouging. with sufficient competition, it is impossible to price gouge. So if there is supposed price gouging, then there must be insufficient competition. Therefore, the source of the lack of competition would need to be removed (ostensibly, by gov't - such as increasing business loans so that new insurance companies can be started).

Or, you need to be pragmatic, realize that you're not gods and won't create a perfect system that can't be exploited, and instead tackle the issue from multiple angles while revising your approach as the exploiters attack. Don't let the perfect be the enemy of good enough.

Or, the market lets the gods do their work, rather than the government acting like one.

—esoteric capitalism

Re: Is the world becoming uninsurable?

#227

Post by _factor » Fri, Jan 17, 2025, 6:21 AM UTC

urhmbutwait wrote: post #113

orange_joe wrote: post #94

Earlier quoted context omitted.

worse, you’ll be paying to bail them out in the name of solidarity.

That’s insurance? Change the euphemism from government to private insurance to satisfy capitalism gods and keep their giant foot from squishing us… still “on the books” as a co-mingled pool of funds to shift around to solve problems. Aw …sad… other people exist and need resources too. Not just about your first world skin suit playing temp host to a run of the mill electromagnetic field effect.

I’m building my next house right on an active volcano. Thank you for subsidizing my idiocy. You should see the view!

Re: Is the world becoming uninsurable?

#228

Post by School-Cotton » Fri, Jan 17, 2025, 6:22 AM UTC

gunian wrote: post #177

bitcurious wrote: post #34

Earlier quoted context omitted.

> 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

First of all there isn’t one “European model”, every country in Europe has its own system.

To answer the substantive point, it’s extremely difficult to pass substantial laws in the US due to the structure of its political system. The mandatory coalition of the president + 60% of the senate + 50% of the House of Representatives is a much higher bar than any other democracy. So laws aren’t written to be optimal policy, they are written to satisfy this extremely high coalition requirement — Obamacare in particular was very fundamentally weakened from some of the more expansive initial proposals to address the concerns of one or two senators and get them on board.

Re: Is the world becoming uninsurable?

#229

Post by cloverich » Fri, Jan 17, 2025, 6:22 AM UTC

ahupp wrote: post #214

iandanforth wrote: post #133

Earlier quoted context omitted.

"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.

The big risk that we need regulation for is not that insurance charges too much, but too little. There will always be the temptation to charge less than the other guy, get lots of customers and hope nothing really bad happens.

This is a great callout, although I suspect the two main things insurers need but can't get today, due to regulations:

    1. Ability to raise price based on risk. Regulation example: State won't let insurance company modify their fire risk maps. I believe this has come up in central Oregon for example. 
    2. Ability to drop people out right. i.e. if they think risk of home insurance is 50/50 next 10 years, they won't insure at all.

1 can accommodate for 2, but then its basically insurer charging the actual price of the home, year one. Maybe they can work out a deal though, like you get the money back if it doesn't burn down. (Mostly parroting things I've heard that seems to make sense).

Re: Is the world becoming uninsurable?

#230

Post by _tariky » Fri, Jan 17, 2025, 6:24 AM UTC

Animats wrote: post #107

Not uninsurable, but buildings are going to have to become tougher. It's happened before. Chicago's reaction to the Great Fire was simple - no more building wooden houses. Chicago went all brick. Still is, mostly. The trouble is, brick isn't earthquake resistant. Not without steel reinforcement. I live in a house built of cinder block filled with concrete reinforced with steel. A commercial builder built this as his…

In Yugoslavia, in 1969, one of the biggest earthquakes occurred, destroying several cities. After that, the country’s leaders decided to change building codes. Even today, although Yugoslavia no longer exists, the countries that adopted those codes have homes capable of withstanding earthquakes up to 7.5 on the Richter scale.

My main point is that if we face major natural disasters, we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.