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Is the world becoming uninsurable?

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Re: Is the world becoming uninsurable?

#691

Post by marcosdumay »

nradov wrote: post #627
marcosdumay wrote: post #575

Earlier quoted context omitted.

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.

Wood is incredibly cheap in North America. We're not cutting down forests for it, either. Much of the wood used for residential construction is milled from trees grown specifically for that purpose.

> We're not cutting down forests for it, either.

The largest share of the illegal wood extracted from Brazil goes to the US.

Re: Is the world becoming uninsurable?

#692

Post by ashryan »

In my NYC neighborhood, we seem to be going through a whole slew of businesses closing shop within the last year and change.

One obvious reason is rent hikes.

But as one of my favorite local bars was closing, one of the staff mentioned that insurance was really starting to kill them.

We don't live in a flood-prone part of NYC, so I'm curious: is insurance for retail space really going up dramatically across the board in NYC, or was this a single, subjective understanding of a situation?

Re: Is the world becoming uninsurable?

#693

Post by bdndndndbve »

ben_w wrote: post #666
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.

As a British citizen by birth, I'm amused by the idea that Americans may get National Insurance for houses before they do for healthcare.

[flagged]

Re: Is the world becoming uninsurable?

#694

Post by greenthrow »

AlexandrB wrote: post #123
x0x0 wrote: post #41

Earlier quoted context omitted.

> The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change I saw an article on npr [1] which basically agrees with the chart on the blogpost. I 1980, there were 3 disasters a year that cost $1B, inflation adjusted. In 2024, 24. The second chart in the npr article is pretty terrifying. [1] https://www.npr.org/2024/…

Without accounting for population growth in high risk areas this is meaningless. If the population and housing units in a floodplain doubles, a $500M 1980s disaster becomes a $1B 2024 disaster. That's not to mention the above-inflation increase in the cost of housing which probably bumps these numbers up as well.

That is a red herring. The frequency and intensity of the wildfires has increased. Stop repeating fossil fuel talking points meant to distract from climate change.

Re: Is the world becoming uninsurable?

#695

Post by bee_rider »

blharr wrote: post #641
horsawlarway wrote: post #551

Earlier quoted context omitted.

Hurricanes are mostly just flood damage in the US, and some wind/debris damage exactly like the blown over trees you mention. Houses generally aren't destroyed by hurricanes in the sense of "the storm literally ripped them up", they're made uninhabitable by storm surges (flood). The scary ones are tornados. And tornados do genuinely fuck shit up. Even in those "enlightened" parts of the world you think have proper bu…

Tornados might be more intense but only for a short period of time and in a small area. I don't see any of those where the tornado is lasting days, causing sustained damage. There are some where there are multiple tornadoes in a span, but each individual tornado is itself quick and violent but localized within a mile or so at most. Compare some incidents with, Hurricane Sandy, for example, where it traveled across th…

Yes.

Tornadoes seem like a phenomenon for which insurance is actually a pretty good part of the solution. I mean, it is very unlikely for anything in particular to get hit by a tornado, but it is really devastating. It might take an unreasonable amount of work to build everything to the level where it can sustain a direct hit by a tornado. The expected value of tornado damage is quite low overall, we just need to deal with the individual catastrophes that occur.

Hurricanes… I mean, there are different sized hurricanes in different areas. For the ones that hit Florida, part of the solution is probably legitimately that we should have fewer people living there, because there’s going to be a widespread devastation there occasionally. And if you live in a hurricane-prone area, you are going to get hit by one eventually. (So like what’s the bet here? The insurance company knows they’ll probably have to pay out eventually).

Just to put a number to it, 2024 was apparently an unusually busy year for tornadoes, around $6B. That isn’t nothing! But one single hurricane cost $7B in 2024… and there was a $34B one… and a $79B one… who’s insuring the southern coast of the US? Seems rough.

Re: Is the world becoming uninsurable?

#696

Post by _heimdall »

404mm wrote: post #680

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…

What's the rough value for your two cars?

I live in a similar climate where hail and tornados are both a risk, though hail is a little less likely here than where you are.

Admittedly we have cheap cars, but our car insurance for two drivers is closer to $850 for the year (full coverage with a reasonable deductible).

Insurance costs have seemed to adjust to a combination of more severe weather conditions, but they also have to fix much more complicated and expensive cars today too. A simple fender bender can be thousands to fix, heck I recently heard about a $5,500 bill when a newer Ford got water in the headlight and fried pretty much the entire electrical system.

Re: Is the world becoming uninsurable?

#697

Post by marcosdumay »

vantassell wrote: post #620
marcosdumay wrote: post #565

Earlier quoted context omitted.

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.

The 50 km/h was sustained, not peak, but ok, I don't think we reached 100.

We have 7 million people living around, and yeah, only 6 months without a single drop of rain (19X days, where I don't remember what X was). Fire often destroys some homes, we got luck last year.

Re: Is the world becoming uninsurable?

#698

Post by mossTechnician »

rsynnott wrote: post #583
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.

America isn't the only place having an uptick in extreme weather events, though.

"Pakistan floods: One third of country is under water - minister"

https://www.bbc.com/news/world-europe-62712301

Re: Is the world becoming uninsurable?

#699

Post by jlarocco »

ashryan wrote: post #692

In my NYC neighborhood, we seem to be going through a whole slew of businesses closing shop within the last year and change. One obvious reason is rent hikes. But as one of my favorite local bars was closing, one of the staff mentioned that insurance was really starting to kill them. We don't live in a flood-prone part of NYC, so I'm curious: is insurance for retail space really going up dramatically across the board…

It's possible insurance prices were rising specifically for them - because they had a lot of claims, for example - and not necessarily for everybody.

Re: Is the world becoming uninsurable?

#700

Post by LeifCarrotson »

horsawlarway wrote: post #551
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…

Hurricanes are mostly just flood damage in the US, and some wind/debris damage exactly like the blown over trees you mention. Houses generally aren't destroyed by hurricanes in the sense of "the storm literally ripped them up", they're made uninhabitable by storm surges (flood). The scary ones are tornados. And tornados do genuinely fuck shit up. Even in those "enlightened" parts of the world you think have proper bu…

The real problem is that we're politically/socially unwilling to transfer the risk to the people who are responsible for creating it: Wealthy coastal landowners believe that the cost of home insurance should be about $2000/year. If their properties actually cost $200,000 per year to insure, then that's what they should have to pay! If they don't like it, they should either build something cheaper (that's the other half of the product) or move to somewhere with less risk.

Tornados are almost the perfect example of an insurable hazard: Very low probability, very high damage, very widely distributed across the affected areas:

https://mrcc.purdue.edu/gismaps/cntytorn#

Click around that neat interactive map, you'll see that the tornado is typically a few miles long and a few hundred yards wide, there are a few thousand severe tornadoes scattered all over the Midwest and somewhat fewer on the east coast in the past 70 years. It's not feasible to build houses everywhere that will stand up to an F5 tornado throwing cars. But they only cause a total loss of a tiny fraction of all houses in the country, and there are relatively few choices anyone east of Texas can make that would meaningfully impact their risk.

You could price insurance premiums at the risk of a tornado times the cost of the insured assets, plus a 10% administrative fee/profit margin, and those rates would be affordable. Maybe a handful of people would choose to live in Colorado instead of a few hundred miles east in Kansas because the cost of this 'tornado insurance' was higher in Kansas, but even in Tornado Alley it wouldn't be unaffordable.

Conversely, if you look at the hurricane incidence and storm surge risk map:

https://coast.noaa.gov/hurricanes/#map=4/32/-80

https://experience.arcgis.com/experience/203f772571cb48b1b8b...

and population density along the gulf coast:

https://luminocity3d.org/WorldPopDen/#7/28.541/-88.011

It's clear that people are choosing to build houses in the narrow strip of low-lying land that's right along the coast and vulnerable to high-probability storm surges! If insurance was priced at cost of assets + administration times risk of loss, it would be really, really expensive.

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