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Is the world becoming uninsurable?

charleshughsmith.substack.com

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Re: Is the world becoming uninsurable?

#611

Post by trollbridge »

teeray wrote: post #605

The problem is that in American home-buying, insurance is often compulsory for a purchase with a mortgage. This makes sense from the bank's perspective--they want to insure their collateral. However, the system doesn't really have an answer for "what happens when their collateral becomes uninsurable?" Even though lenders have force-placed insurance, even those insurers can deny coverage in certain circumstances (e.g.…

If a property is uninsurable, it can be bought for cash. The actual land value can still be mortgaged, too.

Would you want to hold collateral that has a high risk of becoming worthless? You would effectively be self insuring it and would have to price that into a loan you offered.

Re: Is the world becoming uninsurable?

#612

Post by prmoustache »

lazystar wrote: post #595
prmoustache wrote: post #578

I think the best solution is to own much less. People keep wanting to live in huge space that they barely use, then buy a fuckton of appliances they use once or twice a month at the maximum and hoard stuff like there is no tomorrow. Then they cry when they lose everything or that nobody want to insure their pile of crap. Just insure the minimum to live comfortably. It is much lower than what you can think of. Since I…

> Then they cry when they lose everything Yes, that's a normal human response. It's ok to have emotions.

Yes but OTOH between drugs/addiction, homelessness, traffic, healthcare, consequences of global warming, loneliness epidemy, crime, it is hard to have empathy when you see a whole country complaining of self induced misery.

Re: Is the world becoming uninsurable?

#613

Post by NoMoreNicksLeft »

infecto wrote: post #467
tobyhinloopen wrote: post #283

American, living in area prone to natural disasters: "Is the WHOLE WORLD becoming uninsurable?" The answer is obviously "no" since there are other parts of the world that don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires.

Honest question. Why when people describe wood framed homes do they always phrase it like houses made from "firewood", "sticks", "twigs" etc? It at least for me always detracts from the argument at hand. You could just as easily build a wood framed home with an exterior shell that is fire resistant using modern materials or brick.

>Honest question. Why when people describe wood framed homes do they always phrase it like houses made from "firewood", "sticks", "twigs" etc?

Europeans are jealous that they clearcut all their forests 1000 years ago and want to brag up their cinderblock homes that no one can actually afford to buy anymore. 40% down on their 50 year mortgages yadda yadda.

Re: Is the world becoming uninsurable?

#614

Post by briffle »

api wrote: post #499
tobyhinloopen wrote: post #283

American, living in area prone to natural disasters: "Is the WHOLE WORLD becoming uninsurable?" The answer is obviously "no" since there are other parts of the world that don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires.

There were houses that survived recent wildfires because they were built to be in a fire zone and survive fires. I’m sure there was damage but nowhere near total loss. I’m sure when homes are rebuilt the majority will not be fire resistant. It’s possible to build for hurricanes and floods too but few do it. They build houses that get blown away and then tap insurance. Insurance rates for properties not built to withs…

we had a huge wildfire in my area in 2021 that burned through a few small towns. In one town, the only houses that survived where the ones that followed the guides out there for creating defensible space. They were also newer homes, which is obviously easier then retro-fitting an existing home, but the town got rebuilt essentially the same as it was, which is kind of sad to see.

https://www.fema.gov/sites/default/files/documents/fema_mars...

Re: Is the world becoming uninsurable?

#615

Post by api »

briffle wrote: post #614
api wrote: post #499

Earlier quoted context omitted.

There were houses that survived recent wildfires because they were built to be in a fire zone and survive fires. I’m sure there was damage but nowhere near total loss. I’m sure when homes are rebuilt the majority will not be fire resistant. It’s possible to build for hurricanes and floods too but few do it. They build houses that get blown away and then tap insurance. Insurance rates for properties not built to withs…

we had a huge wildfire in my area in 2021 that burned through a few small towns. In one town, the only houses that survived where the ones that followed the guides out there for creating defensible space. They were also newer homes, which is obviously easier then retro-fitting an existing home, but the town got rebuilt essentially the same as it was, which is kind of sad to see. https://www.fema.gov/sites/default/fil…

We don't do this in e.g. aviation, where after every crash we study it and make changes if possible. Not sure why we don't seem to care in housing.

Re: Is the world becoming uninsurable?

#616

Post by jobs_throwaway »

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…

> With no price caps, no one will be able to buy insurance even if required by law

I very strongly doubt that say Elon Musk or Jeff Bezos wouldn't be able to afford market-rate insurance costs. They would just choose not to because its too expensive. Which is the point of letting the market set the rate

Re: Is the world becoming uninsurable?

#617

Post by _fat_santa »

teeray wrote: post #605

The problem is that in American home-buying, insurance is often compulsory for a purchase with a mortgage. This makes sense from the bank's perspective--they want to insure their collateral. However, the system doesn't really have an answer for "what happens when their collateral becomes uninsurable?" Even though lenders have force-placed insurance, even those insurers can deny coverage in certain circumstances (e.g.…

What I see happening in the future is builders will stop building homes in highly disaster prone areas because those places cant secure insurance and thus potential owners won't be able to secure a mortgage, and the only folks living there will be the very wealthy that can afford to self-insure.

There are some areas like CA where natural disaster risk can be mitigated through forest management and I think those places will continue to grow, but for places where we can't do anything to impact a natural disaster (ie hurricane's in florida), those places will start to have "off limit" zones for any type of insurable construction. These places will still be accessable, we will just build parks, beaches and other things there for the public, just not homes or commercial structures.

I think a big part of why natural disasters have gotten so bad is one climate change but also the fact that we're building places we shouldn't and in the future most will learn the lesson to no build in a certain area unless they are made of money and are aware of the risks of building their.

Re: Is the world becoming uninsurable?

#618

Post by Retric »

alistairSH wrote: post #576
skywhopper wrote: post #540

Earlier quoted context omitted.

Where is “here”? Are you sure you aren’t confusing hurricanes and tornados? Hurricanes rarely destroy houses in the US, either.

How are you making this claim? Every time a hurricane hits Florida, there are photos of entire neighborhoods devastated by wind and storm surge. How many people were permanently displaced by Katrine? Etc. Maybe many of the homes weren't technically "destroyed", but each storm brings millions or billions in damage.

Hurricanes are common. The general case is they hit hundreds or thousands of square miles and destroy none or at worst a tiny fraction of the homes they hit.

Take Katrina from my friends and family living in New Orleans, you’ll find city streets where none of the houses go significantly damaged. They lost power long enough you don’t want to open the fridge, but most of the city was fine in the hardest hit city from one of the most expensive storms on record.

Re: Is the world becoming uninsurable?

#619

Post by erikerikson »

marcosdumay wrote: post #575
aquaticsunset wrote: post #496

Earlier quoted context omitted.

Comments like the last here irritate me. No, we all learn that wood is the only appropriate building material and the Salesforce tower in San Francisco required a whole forest of trees to construct. The root comment is based on a very dated concept. Of course we can built earthquake resistant megastructures from steel and concrete. A lot of that building technology was created in California. It's either naive or will…

Hy from Brazil... You know, a poor country. We make single-level houses with a reinforced concrete structure, because it's cheap. You know what isn't cheap? Wood. Wood is incredibly expensive to put into a shape, even if you are willing to cut forests down to get it.

This was surprising because here in the US, concrete is expensive to build with. I'm considering a build and by far log homes seem my cheapest option.

Re: Is the world becoming uninsurable?

#620

Post by vantassell »

marcosdumay wrote: post #565
chillfox wrote: post #525

Earlier quoted context omitted.

It’s possible that solve the hurricane problems with proper building regulations and lower the risk of huge wildfires with controlled burning. But the US as always prefers to pretend that there’s nothing to be done when other parts of the world has figured it out. We have cyclones here similar to the hurricanes in the US and usually it just blows over some trees maybe causes a power outage. The absolute worst I have…

It's so interesting to see the people in awe of that "fire hurricane" video in L.A.... We had a way more intense drought than they in my city last year (theirs are not that intense). We also had 50 km/h winds. We also had higher temperatures... And all of those to levels that we never saw before. Also, we have more trees in our cities. We had new "fire hurricane" videos every week (normally, every other year somebody…

You’re comparing apples to oranges.

A Santa Ana wind is extremely dry and this one hit 100kmh (not 50). And it hasn’t really rained for 8 months (since May 2024). And we had a very wet winter last year, so there’s extra growth to fuel any fire. And finally, there’s 10 million people live in LA County, it’s a target rich space.

Please let me know where else is having the same sort of fire without destroying homes.

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