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Is the world becoming uninsurable?

charleshughsmith.substack.com

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Re: Is the world becoming uninsurable?

#671

Post by MajimasEyepatch »

hallway_monitor wrote: post #639
wrfrmers wrote: post #635

Earlier quoted context omitted.

Public insurance. For housing, healthcare, maybe even cars (since the coprorate political complex insists that we HAVE to drive everywhere). At some point, we have to accept that the middlemen are siphoning value, not providing any. Vanguard it and let elected admins set the codes.

It does seem like it's time to stop letting this "industry" profit off the misfortune of its customers. Making all of these a public service instead of private industry makes sense at this point.

The profit margins on insurance are usually pretty slim. Insurance companies are generally not well differentiated from one another, so they have few avenues to compete other than on price. A state-run insurance plan also has to operate at a profit/surplus or else it will have to be subsidized by the taxpayers. The effect is the same either way.

Re: Is the world becoming uninsurable?

#672

Post by trollbridge »

teeray wrote: post #656
trollbridge wrote: post #611

Earlier quoted context omitted.

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.

> Would you want to hold collateral that has a high risk of becoming worthless? Of course not, the problem is that all parties were a-okay with the purchase in the first place, and the banks are trying to change the terms when they realize their hand is a losing one after many turns of the game. Sometimes that’s life, and the corporations should be forced to lose instead of changing the rules so the homeowner loses i…

The rules are that you have to maintain casualty insurance in your property in order to keep the mortgage. If you don’t want to do that, the lender will try to obtain insurance on its own and bill you for it.

The bank is actually the loser here. Property becomes uninsurable, they still hold the collateral, and the borrower can simply walk away on a non-recourse state like California.

Re: Is the world becoming uninsurable?

#673

Post by doug_durham »

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.

Look at houses in California. Most have fire resistant stucco exteriors. It's the style out here.

Re: Is the world becoming uninsurable?

#674

Post by trollbridge »

pc86 wrote: post #634
trollbridge wrote: post #501

Earlier quoted context omitted.

Wildfires can be avoided by not building wood structures in places that historically have had frequent wildfires. A good way to incentivise this is very high insurance costs, which lenders will require before granting a mortgage. Governments can also enact fire codes. Buildings can be built out of less fire prone materials, and surrounding non native vegetation avoided which feeds fires. This does mean someone can’t…

Wildfires can also be avoided by letting forest management people dictate forest management policies instead of environmental activists, and by prioritizing the people that live there over the animals.

Forestry management seems like a suitable state level activity that should have civilian/legislative oversight but also a fair bit of freedom for experts to do their jobs.

Re: Is the world becoming uninsurable?

#675

Post by doug_durham »

mtalantikite wrote: post #648
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.

One thing I haven't seen mentioned in here is the ornamental planting of non-native plants all over LA, like eucalyptus which is highly flammable, as opposed to the native coastal oak, which is not. All those iconic, non-native palm trees are fire hazards.

That's because that wasn't a material effect in this situation. It was hurricane force winds blowing over native shrubs and scrub land. It wasn't forests of eucalyptus that caused this. California has a decades long effort to restore native plants in areas. Eucalyptus groves are being torn out. The problem is that the native shrubs and grass are pretty flammable. They evolved to burn and regrow. They aren't resistant.

Re: Is the world becoming uninsurable?

#676

Post by Retric »

jamroom wrote: post #653
Retric wrote: post #618

Earlier quoted context omitted.

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 o…

Over 200,000 homes were damaged or destroyed in Katrina: https://en.wikipedia.org/wiki/Reconstruction_of_New_Orleans Not sure how that is a "tiny fraction" of homes. $125 billion in damage (2005).

Moving the goalposts from destroyed to damaged gives different results.

The issue is most to the city only sustained water damage, a solid chunk of the city is above the water level and was absolutely fine. Moving outside the city most homes in Louisiana, Texas, Alabama etc don’t need to worry about flooding.

Re: Is the world becoming uninsurable?

#677

Post by bytwhytyte »

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…

Let's not forget insurance company greed. They are traded on the stock market and must provide returns to their investors. Let's not pretend they are not also part of the problem. Same with health insurance, it should never be for-profit, IMHO.

But I do agree they should be able to set the premiums, otherwise they just go bankrupt. People should not live in idiotically constructed neighborhoods in danger zones if they can't afford it. But they shouldn't be gouged.

Re: Is the world becoming uninsurable?

#678

Post by doug_durham »

gibsonf1 wrote: post #650
vantassell wrote: post #636

Earlier quoted context omitted.

You’re a fire management expert? What did LA do wrong?

1. Santa Ynez Reservoir right above Palisades was empty for the past year, depriving fire hydrants of water. (State incompetence) 2. La City defunded fire department removing 100 fire trucks from service due to maintenance. (City Incompetence) 3 Severe fire warnings reported days in advance of the fire. Rather than take precautions and position fire trucks and equipment etc as was done in the past, the Mayor flew off…

This is nonsense disinformation. Citations? This wasn't a forest fire so forest management isn't an issue. California makes massive investments in wild lands maintenance. It hasn't "stopped". Also most forest land in California is Federally owned. Perhaps our incoming president will invest some money in maintaining the peoples forests. This disaster deserves better responses.

Re: Is the world becoming uninsurable?

#680

Post by 404mm »

I live in North Texas, and I see a similar pattern in home and car insurance as well. Our main local threat is hail. Well, and the tornadoes, but while very destructive, tornadoes create fairly geographically limited damage. Hail can cover whole cities at a time.

Car insurance became quite expensive. My premium is about $2,200 / 6mo (no accidents, no speeding, no claims in about 10 years) for two cars and two drivers. For some reason, 80% of people choose to park outside while they have a 2-car garage available. Usually packed with crap. They find it easier to have their cars totaled every 4-6 years.

For home insurance, my policy is almost $4,800/yr now! While making some coverage adjustments, I noticed that my insurance company no longer offers a choice of lower deductibles for hail/wind. It’s a fixed percentage relative to my property value, currently showing as nearly $15k as the cheapest option. That’s more than 50% of the replacement cost! (I know that because I had my roof replaced twice in the last 10 years.)

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