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> there is no price that makes them a good risk for an insurer To a naive mind that doesn't know much about insurance this sounds untrue. I'd be willing to ins
by vasco 3y ago
> there is no price that makes them a good risk for an insurer
To a naive mind that doesn't know much about insurance this sounds untrue. I'd be willing to insure houses myself with as many funds as I could get at 33% of the property value per year, for example.
- lumost 3y agoHow much do you need in savings to handle the maximum number of properties destroyed in a once per hundred year, bad year? If the number is greater than 100% of home value, clients are better off holding savings funds.
- rich_sasha 3y agoThere's also the correlated risk issue. Say 10% of your claims are against some natural disaster, and they will either not get triggered at all, or all get triggered at the same time. That's an uncomfortable situation - this is what is called catastrophe risk. Ideally as an insurer you want lots of uncorrelated risks and the strong law of large numbers is on your side. Insurers typically outsource such catastrophy risks (to some extent anyway) to reinsurers, ie insurers to insurers, but (a) that's not a hard guarantee of risk mitigation and (b) they still have to pay for it. I can imagine that in this whole quagmire, and considering what people would pay for insurance, it's easier to just pass.
- __turbobrew__ 3y agoThat is what reinsurance is for
- ahahahahah 3y agoOh gee. Thanks for repeating what the parent said...
- lozenge 3y agoWho's going to pay that much for insurance though?
- mhb 3y agoNo one. That's the point of using a market to tell you where it makes economic sense to build a house.