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What they are really saying is that they can’t effectively model the risk. Say you were an insurer… would you want to take risk for Florida hurricane losses kn

What they are really saying is that they can’t effectively model the risk. Say you were an insurer… would you want to take risk for Florida hurricane losses knowing what we know? If we want a functional insurance market in these places, we need a student loan type solution - make the Feds the reinsurer and have the insurance company mostly administer the policy.

brookst 3y ago
You’re quite right, but I’m not sure it’s a practical solution. While those are populous states, as someone not living in either it is not super attractive to start subsidizing people who choose to live in increasingly disastrous zones. Yes, flood insurance and some other examples, but my objection isn’t based on platonic ideals of equally bad policy for everyone, it’s based on pragmatic ideals of not extending bad policy more widely. Let the market price insurance. At most I might support a mandatory tax on profits that is set aside to cover exceptional future losses, kind of FDIC-like.
- jghn 3y ago
  > it is not super attractive to start subsidizing people who choose to live in increasingly disastrous zones At the risk of taking this down a political path, I'll take this a step further. States like FL who fall into this bucket are further aggravating as they are also the ones that espouse personal responsibility & small government. I'm not personally against subsidizing these things. But I am against people screaming until they're blue in the face that they hate socialism and then cry foul when their insurance rates are too expensive for them to afford.
  - pc86 3y ago
    What does a small government ideology have to do with a private insurance company making a business decision? You're injecting politics because you don't like the politics of Florida as you see them, which is fine, but it doesn't really fit here.
    - jghn 3y ago
      When their insurance rates get to be unaffordable and/or their homes are destroyed without insurance the complaints tend to shift to being that the government should do something to help them out of the predicament. I'm 100% fine with an individual choosing to not pay going insurance rates and choosing to live in a risky environment. I'm also 100% fine with that person eschewing the idea that government should be subsidizing anything. I'm 0% fine with such people coming back and complaining that the leopards ate their face.
deleted 3y ago
[deleted]
Analemma_ 3y ago
Floridians who want me to shoulder the bill for insuring their beachfront property against hurricane damage can go to hell. Pay for the insurance yourself or move to a place where disasters aren’t common.
- tfandango 3y ago
  I live in Oklahoma. Contrary to popular belief, getting your house destroyed by a tornado is unlikely. But hailstorms are on the rise and roof replacements are becoming more frequent because of them. Insurance has gone up A LOT for everyone, regardless of insurer, and for me despite installing hail resistant shingles last time. I am wondering what happens when people here can no longer afford insurance even though these are not luxury second homes. My agent told me that Texas and Oklahoma are becoming the most expensive states to insure.
  - bushbaba 3y ago
    one solution is to exclude hail damage to roofs from basic home insurance policy. Similar to how earthquake and flooding is a separate policy.
    - tfandango 3y ago
      It would likely be required by mortgage companies because a new roof is 20-30k on the low end. Otherwise the risk of losing their investment is quite high.
  - mechagodzilla 3y ago
    It's more that those states are becoming the most expensive to maintain intact houses in, with the increased insurance a side effect of that. I know someone in TX that has needed a new roof like 6-7 times in 10 years because of hail damage - the insurance company has been bleeding money on their house for a decade, but that's because the house has actually been sustaining significant damage every single year. The only answers to that over any length of time must be: 1) improve roofing so that they're not sustaining damage so frequently (even if it increases costs), 2) decrease the value of housing so much that replacing the roof out-of-pocket every year just becomes 'cost of doing business', or 3) stop living there because it's just intrinsically expensive. "Pay $1k yearly insurance and average $10k yearly damage" for a whole region is not going to last much longer.
elteto 3y ago
There already is a federal program for uninsurable properties (for flooding only, I believe). They take whatever insurers reject. By my understanding, people just keep building on the same spot, even if it floods constantly, therefore they are a huge drain on the program. I don’t see a solution honestly. With global warming large parts of the world will become uninsurable. And we shouldn’t expect insurance companies/the government to carry that burden just because someone decided to live there.
- selectodude 3y ago
  That federal program is broke as a joke, and it generally comes with extremely high deductibles and poor payouts. It’s easy for states to regulate insurance companies for political points, which you’re seeing in California and Florida. However, insurance markets collapse slowly and then very very quickly when the math stops working out.
  - elteto 3y ago
    IIRC, it’s broke because only a small handful of properties account for a disproportionate amount of the claims.
    - sokoloff 3y ago
      Isn't the essence of pooled-risk insurance that a vast minority of policies will represent a disproportionate number of the claims in any given time period?
      - harshitaneja 3y ago
        Yes. But not from the same group of people over and over again. At least not in the laissez faire style systems where the market would stop assuming uniform risk and increase insurance rates to the expected values based on the probabilities of the specific circumstance. In a dirigiste economy, state would choose certain social factors to protect and keep the distribution of costs uniform for the betterment of the whole society. But even in those systems, I am not sure we should have beachfront properties or similar as factors. (Sorry about my lack of proper vocabulary and jargon in this comment, I seem to have forgotten all of my vocabulary relating to sociology and economics.)
triceratops 3y ago
If the free market can't insure a risk, at any price, then maybe no one should be taking that risk. Or at least they ought to be left to fend for themselves if they suffer losses due to that.
- pc86 3y ago
  Maybe you shouldn't have beachfront South Florida real estate if you can't afford the out-of-pocket cost to fix it when it gets wrecked from a hurricane. Is that a controversial statement? Beachfront property is not a human right. If it's too expensive to insure, then it becomes available only to people who don't financially need insurance - or those who are willing to risk going without it even if they would need it financially.
bannedbybros 3y ago
[dead]
justin66 3y ago
> If we want a functional insurance market in these places, we need a student loan type solution - make the Feds the reinsurer and have the insurance company mostly administer the policy. If the problem is stated that way, I think a lot of Americans are going to realize how little they care about Florida's insurance market.

brookst 3y ago

You’re quite right, but I’m not sure it’s a practical solution. While those are populous states, as someone not living in either it is not super attractive to start subsidizing people who choose to live in increasingly disastrous zones. Yes, flood insurance and some other examples, but my objection isn’t based on platonic ideals of equally bad policy for everyone, it’s based on pragmatic ideals of not extending bad policy more widely. Let the market price insurance. At most I might support a mandatory tax on profits that is set aside to cover exceptional future losses, kind of FDIC-like.

jghn 3y ago
> it is not super attractive to start subsidizing people who choose to live in increasingly disastrous zones At the risk of taking this down a political path, I'll take this a step further. States like FL who fall into this bucket are further aggravating as they are also the ones that espouse personal responsibility & small government. I'm not personally against subsidizing these things. But I am against people screaming until they're blue in the face that they hate socialism and then cry foul when their insurance rates are too expensive for them to afford.
- pc86 3y ago
  What does a small government ideology have to do with a private insurance company making a business decision? You're injecting politics because you don't like the politics of Florida as you see them, which is fine, but it doesn't really fit here.
  - jghn 3y ago
    When their insurance rates get to be unaffordable and/or their homes are destroyed without insurance the complaints tend to shift to being that the government should do something to help them out of the predicament. I'm 100% fine with an individual choosing to not pay going insurance rates and choosing to live in a risky environment. I'm also 100% fine with that person eschewing the idea that government should be subsidizing anything. I'm 0% fine with such people coming back and complaining that the leopards ate their face.

deleted 3y ago

[deleted]

Analemma_ 3y ago

Floridians who want me to shoulder the bill for insuring their beachfront property against hurricane damage can go to hell. Pay for the insurance yourself or move to a place where disasters aren’t common.

tfandango 3y ago
I live in Oklahoma. Contrary to popular belief, getting your house destroyed by a tornado is unlikely. But hailstorms are on the rise and roof replacements are becoming more frequent because of them. Insurance has gone up A LOT for everyone, regardless of insurer, and for me despite installing hail resistant shingles last time. I am wondering what happens when people here can no longer afford insurance even though these are not luxury second homes. My agent told me that Texas and Oklahoma are becoming the most expensive states to insure.
- bushbaba 3y ago
  one solution is to exclude hail damage to roofs from basic home insurance policy. Similar to how earthquake and flooding is a separate policy.
  - tfandango 3y ago
    It would likely be required by mortgage companies because a new roof is 20-30k on the low end. Otherwise the risk of losing their investment is quite high.
- mechagodzilla 3y ago
  It's more that those states are becoming the most expensive to maintain intact houses in, with the increased insurance a side effect of that. I know someone in TX that has needed a new roof like 6-7 times in 10 years because of hail damage - the insurance company has been bleeding money on their house for a decade, but that's because the house has actually been sustaining significant damage every single year. The only answers to that over any length of time must be: 1) improve roofing so that they're not sustaining damage so frequently (even if it increases costs), 2) decrease the value of housing so much that replacing the roof out-of-pocket every year just becomes 'cost of doing business', or 3) stop living there because it's just intrinsically expensive. "Pay $1k yearly insurance and average $10k yearly damage" for a whole region is not going to last much longer.

elteto 3y ago

There already is a federal program for uninsurable properties (for flooding only, I believe). They take whatever insurers reject. By my understanding, people just keep building on the same spot, even if it floods constantly, therefore they are a huge drain on the program. I don’t see a solution honestly. With global warming large parts of the world will become uninsurable. And we shouldn’t expect insurance companies/the government to carry that burden just because someone decided to live there.

selectodude 3y ago
That federal program is broke as a joke, and it generally comes with extremely high deductibles and poor payouts. It’s easy for states to regulate insurance companies for political points, which you’re seeing in California and Florida. However, insurance markets collapse slowly and then very very quickly when the math stops working out.
- elteto 3y ago
  IIRC, it’s broke because only a small handful of properties account for a disproportionate amount of the claims.
  - sokoloff 3y ago
    Isn't the essence of pooled-risk insurance that a vast minority of policies will represent a disproportionate number of the claims in any given time period?
    - harshitaneja 3y ago
      Yes. But not from the same group of people over and over again. At least not in the laissez faire style systems where the market would stop assuming uniform risk and increase insurance rates to the expected values based on the probabilities of the specific circumstance. In a dirigiste economy, state would choose certain social factors to protect and keep the distribution of costs uniform for the betterment of the whole society. But even in those systems, I am not sure we should have beachfront properties or similar as factors. (Sorry about my lack of proper vocabulary and jargon in this comment, I seem to have forgotten all of my vocabulary relating to sociology and economics.)

triceratops 3y ago

If the free market can't insure a risk, at any price, then maybe no one should be taking that risk. Or at least they ought to be left to fend for themselves if they suffer losses due to that.

pc86 3y ago
Maybe you shouldn't have beachfront South Florida real estate if you can't afford the out-of-pocket cost to fix it when it gets wrecked from a hurricane. Is that a controversial statement? Beachfront property is not a human right. If it's too expensive to insure, then it becomes available only to people who don't financially need insurance - or those who are willing to risk going without it even if they would need it financially.

bannedbybros 3y ago

[dead]

justin66 3y ago

> If we want a functional insurance market in these places, we need a student loan type solution - make the Feds the reinsurer and have the insurance company mostly administer the policy. If the problem is stated that way, I think a lot of Americans are going to realize how little they care about Florida's insurance market.