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Home insurers are dropping customers based on aerial images

wsj.com

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Re: Home insurers are dropping customers based on aerial images

#361

Post by pxeboot »

RomanAlexander wrote: post #315
tptacek wrote: post #310

Earlier quoted context omitted.

You (say) have a trampoline. I do not. We share an insurer. Our insurer asked, when you applied, if you had a trampoline. Your trampoline materially increases the risk that insurance is going to have to pay to cover a lawsuit on your property. You lied, and said you didn't. I am now paying to subsidize your trampoline. Why shouldn't I want them to be running drones over our houses? Worrying times... for pirate trampo…

Wouldn't said trampoline simply not be covered by the policy since you lied about it? The agents are checking a box and the underwriter is sticking in a boilerplate "Customer said no trampoline therefore trampolines are excluded from this policy" text

> Wouldn't said trampoline simply not be covered by the policy since you lied about it?

This doesn't stop expensive lawsuits, even if they ultimately don't pay the claim.

Re: Home insurers are dropping customers based on aerial images

#362

Post by EligibleDecoy »

londons_explore wrote: post #351

> If your roof is 20 years old and one hailstorm is going to take it off, It amazes me that people in the US would even consider installing a roof that would only last 20 years. In the UK, you wouldn't consider reroofing anything that your grandparents remember being installed. Ie. Stuff doesn't get reroofed till it's 100 years old. Even then, you'll normally inspect and only replace the damaged bits. My 350 year old…

It’s called “money.” That is the reason. Slate roofs are common in the UK, and using synthetic slate is $7-12/sqft, whereas bitumen/asphalt shingles which are common in the USA cost $0.50-$1.00/sqft. Average home in the USA is 2,200 sq ft with a roof size of 1,700 sq ft. So $1,700 vs $11,900 is quite a difference (and that was being most generous, excluding installation costs, etc) So basically, average person who owns a house has a big house, and big roofs are already expensive. Regardless of wanting to get a high quality roof that would last more than 30 years, that requires capital - more than the average owner really has access too. Sources: https://www.architecturaldigest.com/reviews/roofing/slate-ro... https://www.architecturaldigest.com/reviews/roofing/shingle-... https://www.rocketmortgage.com/learn/average-square-footage-... https://www.rubyhome.com/blog/roofing-stats/

Re: Home insurers are dropping customers based on aerial images

#363

Post by majormajor »

londons_explore wrote: post #351

> If your roof is 20 years old and one hailstorm is going to take it off, It amazes me that people in the US would even consider installing a roof that would only last 20 years. In the UK, you wouldn't consider reroofing anything that your grandparents remember being installed. Ie. Stuff doesn't get reroofed till it's 100 years old. Even then, you'll normally inspect and only replace the damaged bits. My 350 year old…

Different types of storm are one thing.

I think the biggest difference, though, is that the stereotypical single family US home of the 19th/20th century US expansion is on a large plot of land and has - so far - been one to get remodeled/expanded/revised several times in a hundred years. Houses are generally treated as mutable things, and people also often expect to move within a few decades, spending more to put in something that will hold up a hundred years instead of twenty seems foolhardy to many. If you sell it the buyer will likely want a cosmetic refresh; if you keep it, you likely will too.

Re: Home insurers are dropping customers based on aerial images

#364

Post by TylerE »

cortesoft wrote: post #285
tomp wrote: post #231

Earlier quoted context omitted.

Mathematically, if you sell insurance at break even, you're guaranteed to go bankrupt - on an infinite time scale, the "spike" of a random walk martingale (this last word means, it doesn't make a profit) will exceed every level, i.e. it will wipe out any amount of collateral / capital / equity the company might have. https://en.wikipedia.org/wiki/Law_of_the_iterated_logarithm

This is why you have re-insurance https://en.wikipedia.org/wiki/Reinsurance If the final insurer is the government, you don't have the risk of ruin because you have control of the money printer.

If money printer goes brr… you’re losing, not winning.

Re: Home insurers are dropping customers based on aerial images

#365

Post by tptacek »

skissane wrote: post #353
NovemberWhiskey wrote: post #325

Earlier quoted context omitted.

It’s worse than that actually; say the liar’s house burns down and the insurance adjuster finds the trampoline in the garden after the fact. As I understand it, the insurer can void the entire contract.

It isn’t always fraud or lying - you apply for insurance. Insurer asks you a million questions. One is “do you have a trampoline”? You honestly answer “No”. The fine print of the application form says you have to tell them if at any time your answers change. After a while, you forget it even asked you about a trampoline. Then, you get your kid a trampoline. Per insurance fine print, you are suppose to inform the insu…

This is not a good example of "fine print", because trampolines are notorious sources of injury. It's like if you added a pool to your property and didn't tell your insurer because you "forgot the fine print". You can plead that, but if I was your neighbor, I'd be rooting for the insurer. Knowing about the dangers of things you set up on your property is on you.

Re: Home insurers are dropping customers based on aerial images

#366

Post by AnthonyMouse »

lazide wrote: post #235
AnthonyMouse wrote: post #160

Earlier quoted context omitted.

If there is such an asymmetry in bargaining power then why do most people pay less than the statutory maximum? If there are multiple insurance companies, how is it not the consumer who has the bargaining power, since they can just take the lowest price? The actual reason is that some consumers are extremely high risk, the market rate for those consumers is correspondingly extreme, and then they whine to legislators t…

Eh, or without regulation when people switch risk categories due to a loss they get completely screwed because no company will insure them anymore. At which point, there is strong incentive to only claim the most outrageously bad losses, and for people to only actually get insurance if they have real reason to suspect a loss that is non obvious to others. It’s a market type that is fundamentally messy and prone to ab…

> Eh, or without regulation when people switch risk categories due to a loss they get completely screwed because no company will insure them anymore.

This only happens when regulations cap premiums, because otherwise there is always a rate at which selling insurance is profitable. Even if you have a 50% risk of a claim (extremely high), you'd still be able to buy $100,000 in insurance for a little over $50,000. Of course, you may not be able to afford this, but then maybe if your risk is that high you should just refrain from engaging in that activity eh?

> At which point, there is strong incentive to only claim the most outrageously bad losses

That's what insurance is for. If you have a 20% chance of losing $100 every year, you don't need to pay $21/year for an insurance policy, you just lose $100 once every five years.

> and for people to only actually get insurance if they have real reason to suspect a loss that is non obvious to others.

The reason to get insurance is if there is a low probability high cost risk, like a house fire. You don't expect it to happen, but it could, and you'd rather pay $1000/year, have it and not need it, than lose the value of your house in the event of a random accident.

Re: Home insurers are dropping customers based on aerial images

#367

Post by tptacek »

gxs wrote: post #350
tptacek wrote: post #294

I don't really understand the privacy concern here. To wit: insurers can demand actual inspection of your home when making underwriting decisions. The condition of your house is very much their business. Why is an aerial photograph of your roof, which everybody in the world already has on Google Maps, such a big deal?

In these cases, the argument is always of the type you just mentioned. “What’s the big deal the data is already available, relax”. On top of that, it comes with an air of condescension as if no one had ever thought about that before. One concern with things like this is that it’s different when you have to send someone out to inspect a home vs inspecting thousands of homes at a time. Once you have data in that volume…

Again: insurers can and do demand home inspections when underwriting. This is strictly less intrusive than common existing practices in insurance.

Re: Home insurers are dropping customers based on aerial images

#368

Post by TylerE »

mopenstein wrote: post #247
Hendrikto wrote: post #184

Earlier quoted context omitted.

[flagged]

Very few people hate having insurance in case of accidents but a lot of people hate having guns stuck in their back and told to pay up for other people. I pay a rate based on my risk factors which I actively work to maintain as low as possible. I don't want to be forced to pay for every reckless idiot in my country (of which there are too many to count). But I also hate non-voluntary anything, so I'm weird.

Those reckless idiots destroy your property so you’re paying for them anyway.

Re: Home insurers are dropping customers based on aerial images

#369

Post by trogdor »

wombatpm wrote: post #340
worik wrote: post #298

Earlier quoted context omitted.

The problem is the culling Insurance companies are very keen to get as much risk as possible off their books before the climate gets even more extreme in its volatility Good goes with bad, so long as the bad goes, some good going too is undesirable but OK because they are aware if the catastrophic climate events looming The insurance companies are behaving logically, probably legally IANAL, but for people who are sim…

Insurance companies want money to come in and never go out. If they could they would sell life insurance to dead people and homeowners insurance to the homeless.

Businesses want to maximize profits, but an insurance company that doesn’t pay claims will quickly have no customers.

Re: Home insurers are dropping customers based on aerial images

#370

Post by jjtheblunt »

stalfosknight wrote: post #326
jjtheblunt wrote: post #291

Earlier quoted context omitted.

In insurance companies?

In most publicly traded for-profit organizations.

i think "most" isn't necessarily right since selection bias applies : ones not making money get delisted from public trading, so don't pull down an average, skewing it.

another couple quirks: stock buybacks generally inflate the value of remaining shares (not bought back) for the public traded company shareholders...what they hoped for when acquiring shares. some companies increase dividends to return value, rather than fiddle with share prices.

but, yeah, agreed to your general observation.

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