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Insurers Are Deserting Homeowners as Climate Shocks Worsen

nytimes.com

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Re: Insurers Are Deserting Homeowners as Climate Shocks Worsen

#11

Post by idbehold »

The climate is changing and is affecting regions we knew would be impacted by climate change 30+ years ago. The insurance companies cannot make a profit (and thus would not choose to operate) in these areas now that they're being impacted by climate change. On one hand this seems like the market working exactly as it should be. People should've moved out of these regions in the last 30 years given the information about climate change, but they didn't.

On the other hand many of the people living in these regions don't really have the means to move away and they're the ones disproportionately affected by all of this.

Re: Insurers Are Deserting Homeowners as Climate Shocks Worsen

#12

Post by yardie »

prmoustache wrote: post #4

So if property price drops completely because insurance do not want to insure, it should make buying houses in cash and avoid mortgage easier right? House becomes a cheap commodity, everybody can then buy a house again, insurers can insure them again because they are cheap. The market correct itself. Problem solved?

"A deal too good to be true" will reveal it's ugly head in this case. Insurance wants to cover a near sure thing. You can trick buyers into buying something uninsurable, once. And then they'll be forced to sell at a large loss. Once those stories start making it into media buyers will be far more cautious.

Most likely, these houses will get bought by corporations to be rented out. They'll have the resources to self-insure. And at the next natural disaster the building falls down, renters are homeless, and what gets built in it's place will be 2x the price.

Re: Insurers Are Deserting Homeowners as Climate Shocks Worsen

#13

Post by japhyr »

prmoustache wrote: post #4

So if property price drops completely because insurance do not want to insure, it should make buying houses in cash and avoid mortgage easier right? House becomes a cheap commodity, everybody can then buy a house again, insurers can insure them again because they are cheap. The market correct itself. Problem solved?

> insurers can insure them again because they are cheap

I believe the main part of what the insurance payout covers is rebuilding. And rebuilding is what's expensive, moreso now than ever. So I think housing prices would crash in an uninsurable area because you might be able to buy cheaply, but you couldn't afford to rebuild when something happens.

In the end, we'll all be climate refugees?

Re: Insurers Are Deserting Homeowners as Climate Shocks Worsen

#14

Post by alex_duf »

prmoustache wrote: post #4

So if property price drops completely because insurance do not want to insure, it should make buying houses in cash and avoid mortgage easier right? House becomes a cheap commodity, everybody can then buy a house again, insurers can insure them again because they are cheap. The market correct itself. Problem solved?

>Problem solved?

It depends if the problem is the insurance or the climate

Re: Insurers Are Deserting Homeowners as Climate Shocks Worsen

#16

Post by badpun »

jddj wrote: post #5
badpun wrote: post #3

Earlier quoted context omitted.

That's how it works in Poland. A client required me to get an insurance for my 1-person contracting company, and I was able to get a policy that only covers trivial things like spilling hot coffee on someone, but none of the software risks. The client was satisfied (they're a giant bureucracy, and the the contractor procurement people just needed any policy to be able to tick a box), while I spent minimal cash.

I would hate this, I think. The relatively low (and I have to tick boxes for most of the high risk industries on the form) amount that I pay each year for what seems to be a nice PI policy is easily worth it for the peace of mind.

I would too I think, if I lived in the US. But the culture around law in Poland is pretty much opposite of the US. People just aren't lawsuit-happy, probably partially because the courts are inefficient and you can wait a long time for a verdict, and partially because the courts often don't award that much in those verdicts (and those absurd multi-million verdicts for trivial things that are a thing in the US would never happen here). Here, I've never heard of a software contractor even being sued by a client, let alone lose and have to pay anything - and I've been in the game for 20 years. First time I hear it does happen, I'll reconsider getting a better policy.

The requirement for the policy some clients have are only there because they're multinationals and it's a company-wide policy. Local clients never expect contractors to have a policy.

Re: Insurers Are Deserting Homeowners as Climate Shocks Worsen

#19

Post by mikrl »

idbehold wrote: post #11

The climate is changing and is affecting regions we knew would be impacted by climate change 30+ years ago. The insurance companies cannot make a profit (and thus would not choose to operate) in these areas now that they're being impacted by climate change. On one hand this seems like the market working exactly as it should be. People should've moved out of these regions in the last 30 years given the information abo…

How do you feel about the denialist argument that since people still buy expensive waterfront property, climate change is not a big deal?

My interpretations would probably be some combination of

- information asymmetry leading to demand distorting upward

- the people who are buying the property have priced in the loss relative to their utility and will be relatively unaffected should they be left holding the watery bag

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