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Is the world becoming uninsurable?

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Re: Is the world becoming uninsurable?

#261

Post by jpalawaga »

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…

You do realize health insurers have federally mandated caps on their profits, which simply incentivizes creative accounting to make money in more oblique ways, right?

Re: Is the world becoming uninsurable?

#262

Post by hnburnsy »

forgetfreeman wrote: post #110
hnburnsy wrote: post #97

Earlier quoted context omitted.

Not just the rates are managed, but also deductibles. I'd gladly have a 5 figure deductble to keep my or miums lower, but regulators think this is unfair to some.

Given over half of all households in the country have less than $20k in savings I'd say concerns over equality of access may be well founded. Edit: No? The poors can go fuck themselves? Alright then I guess.

How does just offering higher deductibles, hurt the 'poors'? Nobody said do away with lower deductibles. Are you saying they are not sophisticated enough to understand a proper deductible for their situation?

Re: Is the world becoming uninsurable?

#263

Post by rented_mule »

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…

At some level, insurance is about spreading out financial risk. Insurance companies would love for every policy to be profitable, but if we let it go that far, it's merely a savings account with negative interest rates. At another level, insurance is about analyzing risk and making it more expensive to take bigger risks. Where do we want the tradeoff between these things? Whatever we choose, we have to have some ability to predict / evaluate risk.

In the face of climate change, places that have been safe for a very long time are becoming unsafe. But I don't see a reason these shifts won't happen over and over as climate change unfolds. It might be worse than mass migrations... migrations to locations which later become dangerous, turning into recurring mass migrations.

How well can we predict where it will be safe in the coming decades and where it won't. Coastal land at or below current sea level (plus storm surge) is fairly predictable, especially where there isn't the population density (and money) to support building sea walls. But with things like rivers changing course (e.g., https://en.wikipedia.org/wiki/Alsek_River), it might become very difficult to predict what's going to be safe down the road. Today we talk about things like 100-year flood plains, but how will we establish flood probabilities when the river that might flood in 10 or 20 years doesn't even exist today?

Are the people who get unlucky with predictions just screwed because their home equity is gone? Or are we going to decide to shoulder the burden together? We're going to find out a lot about humanity, the role of government, etc. as we go through all of this.

Re: Is the world becoming uninsurable?

#264

Post by Panzer04 »

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…

Why is the burden on insurance companies to make up for individual poor decisions?

In some cases it makes sense to socialise the losses, but I'm not convinced this is one of them.

Re: Is the world becoming uninsurable?

#265

Post by hnburnsy »

CalRobert wrote: post #198
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.

For what it’s worth, you can get a house with no insurance or mortgage. They tend to be cheap. I had an uninsured thatched cottage for a while, it was 68k

What did you do for liability insurance?

Re: Is the world becoming uninsurable?

#266

Post by Panzer04 »

mgiampapa wrote: post #224
donavanm wrote: post #209

Earlier quoted context omitted.

> 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 tr…

The people are risk pay less, all of the other people forced to participate in your general insurance pay more.

If I live in the middle of a city in an apartment block should I pay the same rates to insure against wildfire as someone in the middle of a dry forest? Probably not, but govenrment-mandated insurance programs force me to.

Re: Is the world becoming uninsurable?

#268

Post by throwawayqqq11 »

roenxi wrote: post #179
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.

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…

This sounds like a very US-centric view and id strongly disagree that only the profit motive keeps economies and people going.

You almost said it yourself, "The US does a weird thing where insurance no longer means pooling risk". Why? Is it the profit motive or gov. regulation?

My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose, insurance companies are justified with.

Free markets have down sides and failure conditions too and only principled gov. regulation can fix it.

Re: Is the world becoming uninsurable?

#269

Post by matwood »

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…

Since you mentioned FL, we have mostly solved hurricane level wind resistant building codes. Hurricane ties are cheap and they work. Anything built post hurricane Andrew has these. There's also materials like Hardi Plank siding, which does add a bit more cost, but effectively surrounds the house in a thin layer of concrete. Flooding is a mixed bag. My house is built substantially up and off the ground above the '100 year flood line'. Even if a flood didn't enter the dwelling proper, it would still be devastating.

The problem is storms are getting bigger and more frequent from climate change and hitting areas they normally don't.

Re: Is the world becoming uninsurable?

#270

Post by Panzer04 »

mgiampapa wrote: post #231
csomar wrote: post #51

Earlier quoted context omitted.

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…

I'm not saying everyone pays the same, I'm saying you take away the for excessive profit nature of insurance. If you live in a tinderbox you are going to have more risk and more costs. Yeah somebody has to model the risk and set a price, but I'm saying it shouldn't be someone who has an incentive to make as much profit as possible.

Your seem to be under the misapprehension the problem is insurers charging usurious prices. The reality is Paul in the forest got used to paying whatever 5kpa to insure against a 100 year fire, not 50kpa to insure against a 10 year fire.

It sounds like a lot, but if the risk is actually that high then the prices will be too. Houses aren't cheap. Insurance is a very competitive market, it's easy to comparison shop. The root problem is the high risk, not "unfair" private profit.

(Numbers picked out of thin air to make a point)

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