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Is the world becoming uninsurable?

charleshughsmith.substack.com

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Re: Is the world becoming uninsurable?

#711

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…

when i hear stories like that i think it's a ripple of effect of paying out for others but then i also recall seeing how much the industry started paying out to political interests after citizens united, too

Re: Is the world becoming uninsurable?

#712

Earlier quoted context omitted.

Well, we are commenting on an article specifically about the spread of fire in urban areas, as we've seen in LA this week. Here in the seismically stable UK, we had problems with fire spreading in urban areas [1] in 1666. So we banned wood exteriors on buildings. It works pretty well if you don't need to worry about earthquakes or hurricanes; brick doesn't burn. This lesson is taught in history classes to 10 year old…

Less about the question (that has been asked so much now its tiring) but more on how when people do ask it, they always ask in such a negative way. Its not why are so many homes built out of timber/wood but rather why are they built out of sticks?

It draws a compelling portrait in people's minds. Everybody knows how easily sticks burn.

Re: Is the world becoming uninsurable?

#713
post #517

Earlier quoted context omitted.

I never understood this. We build in Europe, over earthquake-risk zones, with bricks and steel and we follow rules to make them earthquake resistant. It is not a problem anymore since like the 1980. We now have also methods to make old and very old brick buildings earthquake resistant without demolishing them

What? What earthquake zone in Europe is similar to the fault lines in California? We are talking about entire cities wiped out by earthquakes just 120 years ago.

Southern Italy. I believe the rest of Europe is quite seismically stable.

Re: Is the world becoming uninsurable?

#714
post #604

Earlier quoted context omitted.

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

Spain just had the worst flooding ever, Australia has massive wildfire issues, coastal areas all over the world are flooding, inland areas are dealing with drought. It's definitely not just the US.

Climate change is gonna be really expensive. Some people have tried to point this out.

Re: Is the world becoming uninsurable?

#715

Earlier quoted context omitted.

You’re ignoring one critical difference between these two scenarios. Humans, and all human related activities, produce heat as a waste product. It’s much easier, and consumes less additional energy, to heat an occupied space, than to cool it. Thanks to the fact that your average human produces 80W of heat just to stay alive. So every human in your cold space is 80W fewer watts of energy you need to produce to heat th…

This is a good point that I had not considered, and I will add a few additional thoughts: * In cold weather, solar heat gain can work in your favor as well. Much of the effect will depend on the orientation, shading, and properties of your windows, though. On the other hand, as another commenter pointed out, more sun in southern, cooling-dominated climate can also mean more, cheaper electricity. * If you have a heat…

There’s some element of comfort vs necessity here, I think… really, people could be keeping their houses at, like… 55F and they’d be totally fine. They just need to get acclimated to it.

On the other hand, depending on the humidity, heats over like 85F start becoming a health risk for some activities.

Re: Is the world becoming uninsurable?

#716

Earlier quoted context omitted.

> What's the average monthly leccy bill in Phoenix during the summer? $400? The average high temperature in Phoenix in July is 106.5F (41.4C). If you are cooling to 70.0F (21.1C), that's a difference of 36.5F (20.3C). The average January low in Berlin is 28.0F (-2.2C). If you are heating to 65.0F (18.3C), that's a difference of 37.0F (20.5C). I feel like many people living in climates that don't require air condition…

You’re ignoring one critical difference between these two scenarios. Humans, and all human related activities, produce heat as a waste product. It’s much easier, and consumes less additional energy, to heat an occupied space, than to cool it. Thanks to the fact that your average human produces 80W of heat just to stay alive. So every human in your cold space is 80W fewer watts of energy you need to produce to heat th…

> So cooling a living space is always more costly than heating a living space

Nope. That's precisely wrong. Tl;dr heating normally uses less efficient technology than cooling and has to work across a higher temperature difference.

In Alberta or Minnesota, where the delta in the winter can be as high as 60 degrees centigrade (-40 outside, +20 inside) but only 20 degrees centigrade at most in the summer (+45 outside, +25 inside), heating is far more costly. Even accounting for waste heat from appliances. Most heating is done with furnaces, not heat pumps. Air conditioners are heat pumps and are 3x as efficient as a furnace. There are also less energy intensive cooling methods - shading, fans, swamp coolers - commonly used in the developing world and continental Europe.

On the other hand in a place with warm winters and hot summers, such as south east Asia, obviously cooling is more expensive because heating is unnecessary.

The highest temperature ever recorded is around 60 degrees centrigrade, a mere 23 degrees above the human body. The low temperature record is like -90, 127 degrees below body temperature. Needing to heat large deltas is way more common than needing to cool high deltas. And cooling is done with heat pumps, which are more efficient than the technologies used most commonly for heating (resistive or combustion).

> when cooling a space, you have to cool everything, regardless of if it’ll impact the comfort of the occupants.

Keep the house at 25 degrees centigrade and run a ceiling fan. 23 if you're a multi-millionaire. You'll be far more comfortable outdoors if your house is closer to the outside temperature. The North American need to have sub-arctic temperatures in every air conditioned space in the summertime is bizarre (don't even get me started on ice water).

Re: Is the world becoming uninsurable?

#717

the world is always insurable the more volatile it is (and the less you've mitigated the risks), the more expensive your insurance gets

This seems willfully naive.

As with any market, there will be a price that the market cannot bear; and if your 'floor', your minimum policy price offering, is too high for your market, then insurance (as an asset class) no longer has product-market fit.

QED.

Re: Is the world becoming uninsurable?

#718

Earlier quoted context omitted.

This was the whole issue. California made it illegal for insurance companies to raise rates, so the insurance companies stop renewals. Leaving everybody uninsured. Homeowners couldn't buy insurance at any price.

It’s regulated, not illegal. “Experts say the insurance landscape in California is particularly tricky because, in addition to the wildfire risk, the state has a law that adds extra approval measures, including board approval and review by the insurance commissioner, if an insurance company wants to raise the rate of insurance by more than 7%. That’s been in effect since the 1980s.” https://www.cnbc.com/2024/02/05/wh…

Illegal seems fine as shorthand though. Same with housing -- "illegal" to build in many instances. Not technically illegal of course, but enough hurdles makes it effectively so.

Re: Is the world becoming uninsurable?

#719

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.

Meh, couple this with articles about drone inspection of roofs and properties, and the trend of insurance getting harder to come by emerges.

Re: Is the world becoming uninsurable?

#720
post #666

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.

It does seem to be backward. In my opinion, "insurance" is strictly about compensation for loss, and should absolutely be a private transaction, while preventative and emergency systems should probably be public. Healthcare coverage, despite being called "insurance," is really a system of preventative and emergency services, while California's state-run home insurance is the former. But this is what they get for trying to have price controls.
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