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Is the world becoming uninsurable?

charleshughsmith.substack.com

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Re: Is the world becoming uninsurable?

#781

Post by JumpCrisscross »

wrfrmers wrote: post #635
crawftv wrote: post #596

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.

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.

> Public insurance. For housing

This is California’s FAIR plan [1]. It’s a wealth transfer from non-homeowners to homeowners, homeowners in low-risk areas to high-risk homeowners, and from low-value homeowners to rich ones.

[1] https://en.m.wikipedia.org/wiki/California_FAIR_Plan

Re: Is the world becoming uninsurable?

#782

Post by danielmarkbruce »

thrance wrote: post #690
danielmarkbruce wrote: post #621

Earlier quoted context omitted.

The companies are leaving because of mandated price caps from the government. In every other market when cost > price and they can't control cost, companies increase price. You can only ignore the reality of government interference in the insurance market for so long.

I meant that at some point, with ever more costly and numerous disasters, the premium insurance companies would have to charge to be able to properly insure their clients would be too much for said clients to stomach, which would prevent anyone from getting anything insured. This has nothing to do with government interference . At some point the equation simply doesn't work anymore.

It still won't cause that. People will own less expensive things if the all in cost of owning them goes up. This is econ 101. People buy cheaper houses when interest rates go up and vice versa.

Re: Is the world becoming uninsurable?

#783

Post by danielmarkbruce »

csours wrote: post #752
danielmarkbruce wrote: post #628

Earlier quoted context omitted.

Can't think for yourself? This is econ 101. People will try to drive down the cost by: 1) Buying/building smaller houses that cost less to insure. 2) Building using different materials which are less prone to burn. 3) Moving to areas less prone to fires/hurricanes etc 4) Voting for representatives who take this more seriously and install better infrastructure to fight fires/floods. These are all good ideas which have…

> "The government needs to just stay out of it." 0) Elect people who claim they can make the voters' existing lifestyle affordable. I agree that sometimes nothing or not very much is the best thing for the government to do, but a crisis is a very bad time to say that, because the other side will just claim they will fix things. After all, deflation is not good, but claiming that you will bring down grocery prices doe…

Sure - "politics is a tough game" is absolutely true.

Re: Is the world becoming uninsurable?

#784

Post by JumpCrisscross »

smileysteve wrote: post #681
sandworm101 wrote: post #570

Earlier quoted context omitted.

Wildfires are not the problem. They happen all the time without causing billion-dollar insurance claims. Insurance is always assets x risk. The issue is expensive flamable housing (assets) in a wildfire area (risk). We ask for trouble when we create million-dollar wooden houses surrounded by manicured gardens in desert enviroments. And build on a slope facing pervailing winds. The answer is concrete/brick houses with…

A forward looking (part of a) solution for Malibu would be the county acquiring and maintaining beach paths every few houses. Prescribed 10' wide fire breaks. This solves the fire problem AND the limited access to a public resource that is common in Malibu. Ideally a permeable surface without any growth, cleared at least 2x a year.

> the county acquiring and maintaining beach paths every few houses. Prescribed 10' wide fire breaks

Ooh, and make a bailout conditional on homeowners (or counties) agreeing to eminent domain.

Re: Is the world becoming uninsurable?

#785

Post by trgn »

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.

pretty much any area can get flooded though by freak rainfall

Re: Is the world becoming uninsurable?

#786

Post by account266928 »

Animats wrote: post #107

Not uninsurable, but buildings are going to have to become tougher. It's happened before. Chicago's reaction to the Great Fire was simple - no more building wooden houses. Chicago went all brick. Still is, mostly. The trouble is, brick isn't earthquake resistant. Not without steel reinforcement. I live in a house built of cinder block filled with concrete reinforced with steel. A commercial builder built this as his…

Relatedly, door locks sometimes seem to be "insurance rated", as in insurance companies give their opinion on what sort of lock one should use. If you couple that with the belief that no lock is 100% secure, it sort of suggests that a collaboration with insurance companies to decrease the odds they'll have to foot huge reconstruction bills (via stuff like you said, construction techniques, firefighting capacity, etc.) could alleviate this conflict somewhat.

Re: Is the world becoming uninsurable?

#787

Post by sandworm101 »

doug_durham wrote: post #669
sandworm101 wrote: post #570

Earlier quoted context omitted.

Wildfires are not the problem. They happen all the time without causing billion-dollar insurance claims. Insurance is always assets x risk. The issue is expensive flamable housing (assets) in a wildfire area (risk). We ask for trouble when we create million-dollar wooden houses surrounded by manicured gardens in desert enviroments. And build on a slope facing pervailing winds. The answer is concrete/brick houses with…

That doesn't align with the reality of these areas. To get insurance in these areas you have to demonstrate that you have created a defensible space around your house. This is enforced by local fire department inspections. I know this because I live near a fire prone area. Despite these things the area still burned. The problem isn't "lawns" or "wooden houses". In the case of the LA fires you would have had the burne…

Those protections are all about keeping a structure from catching fire. That is different than designing a structure not to burn. A wooden house surrounded by fire protection is OK under current rules. But it is still wood and will, eventually, burn when faced by a wild fire on all sides. A house built out of rock/brick/concrete/sand will not. We need to go beyond flamability and start reducing the actual number of calories availible to be burned.

Re: Is the world becoming uninsurable?

#788

Post by andrewclunn »

Get rid of the federal guarantee for homes that are deemed too risky for private insurance. Stop privatizing gains with publicly backed safety nets and people will engage in less risky behavior. But get ready to be labelled as heartless if you back or even suggest such.

Re: Is the world becoming uninsurable?

#789

Post by bparsons »

chillfox wrote: post #525
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.

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…

Wildfire structure losses can be mitigated with cutting firebreaks, building material selection and removing flammable trees and plants from properties. A lot of communities in western Canada have learned this the hard way.

Re: Is the world becoming uninsurable?

#790

Post by mempko »

rondini wrote: post #682
Sabinus wrote: post #112

Earlier quoted context omitted.

If the market is allowed to price insurance correctly then we can motivate building designs to be more disaster resist. If the McMansion can't get insurance but disaster resistant, modest homes do, then people will adapt.

Let's just consider Los Angeles for a second. For decades working class immigrants were pushed to the foothills in Altadena by redlining policies which placed them at risk for wildfires. Today their risk is exponentially greater due to the effects of unchecked climate change, and many cannot afford insurance even now. How exactly do you expect these people to adapt? Many live in multigenerational households and could…

People don't understand the exponential change. As you correctly stated, the effects of climate change are exponential. Why? Because if you take a normal distribution and shift it linearly, the area on the edges grows exponentially. This is why even a linear shift in temperature can lead to an exponential rise in disasters.

Math is hard for people, even on HN.

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