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The insurance companies themselves would have to be regulated. This moves regulation up one meta level, and makes it a simple matter of verifying they have the

The insurance companies themselves would have to be regulated. This moves regulation up one meta level, and makes it a simple matter of verifying they have the assets necessary to pay out. As opposed to having the regulators figure out what building materials are good, and every other detail about the construction industry. Insurance companies are usually themselves insured. If they go bankrupt, e.g. a natural disaster or something unexpected happens, another insurance company has to cover it. This is possible because they insure multiple industries and geographic regions, so can take a few hits. The details will need to be worked out, but I don't see why it would be anywhere near as complicated as working out the details of building codes. Regulations are complicated, we already accept that. This is just a way to significantly simplify it.

makomk 10y ago
Figuring out whether the insurance companies have the assets necessary to pay out is never a simple matter. They don't have the assets to pay out if every policy is fully claimed at once, almost by definition, which means that it's a complicated matter of assessing how many policies are likely to be claimed at once, which requires figuring out details like whether the construction industry is making widespread use of a potentially dangerous material. Insuring the insurers can only help so much; Lloyd's was the insurers' insurer of last resort, and as dalke points out asbestos claims wreaked havoc on them.
- dalke 10y ago
  Or when Hurricane Andrew hit Florida in '92. 11 insurance companies went bankrupt after 600,000 insurance claims were filed. Almost 1 million people lost insurance coverage. One of the results was a stricter and statewide building code instead of piecemeal codes. Successive hurricanes helped give evidence for the usefulness of the new code. Another was state trust fund to ensure sufficient insurance capacity.

makomk 10y ago

Figuring out whether the insurance companies have the assets necessary to pay out is never a simple matter. They don't have the assets to pay out if every policy is fully claimed at once, almost by definition, which means that it's a complicated matter of assessing how many policies are likely to be claimed at once, which requires figuring out details like whether the construction industry is making widespread use of a potentially dangerous material. Insuring the insurers can only help so much; Lloyd's was the insurers' insurer of last resort, and as dalke points out asbestos claims wreaked havoc on them.

dalke 10y ago
Or when Hurricane Andrew hit Florida in '92. 11 insurance companies went bankrupt after 600,000 insurance claims were filed. Almost 1 million people lost insurance coverage. One of the results was a stricter and statewide building code instead of piecemeal codes. Successive hurricanes helped give evidence for the usefulness of the new code. Another was state trust fund to ensure sufficient insurance capacity.