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Someone here that is sceptical to climate change maybe can shed some light. To me the fact that insurers aren’t insuring natural disasters due to climate chang

by maCDzP 3y ago

Someone here that is sceptical to climate change maybe can shed some light. To me the fact that insurers aren’t insuring natural disasters due to climate change is a good argument that it’s real. Otherwise they would just sell the insurance to a premium and collect free money? Or do you guys think that it’s just some companies being dumb and are likely to go out of business?

baggy_trough 3y ago
Much simpler than that. Price controls cause supply shortages.
swader999 3y ago
There's certainly less effort to fight wild fires this season. I know several helicopter pilots who say they have to get approval for each bucket drop where before they just flew agreed on hours. They say it's a joke, completely budget driven. They'd have several fires they worked on out sooner if they were not subject to this. On the ground it's the same, extreme focus on safety, not working over time, not using quads, heli attack crews cancelled. Only getting intense when it gets close to structures. So you get record fires here in Canada. Lowest area burned in USA in decades. Politicians save budget, don't get called to account because of course it's climate change. Bringing in the insurance angle, they are suffering more losses, the areas are built up more in fire prone forested land, houses are more expensive and there is less labour to fight fire. Poor history of fuel management too. So they are raising rates and I don't blame them. It's easy to just say climate change. Maybe it's a way to appropriate the land back to the elites.
isaacremuant 3y ago
The problem with your supposed argument is that just because companies don't want to insure against eventd of type Y because they think they're likely or costly does not mean that they're caused by reason X. Your argument is, on logical merits, not good enough to create a causation between, what I presume is "human influenced global warming increase" and "natural disaster increase". Now I realize this being a politically charged topic that people look at in an absolutist way, a response that looks only at the logical proposition of your comment, might not be well received.
flangola7 3y ago
Insurance firms are one of the few capitalistic entities that have a financial incentive to invest deep budgets finding and highlighting unpleasant empirical facts, rather than burying them. This is secondhand. I have been told property insurance experts lean semi-conservative politically but almost all of them firmly believe not only climate change is real, but incoming catastrophe.
- salawat 3y ago
  Not...really. Take PBM. (Pharmacy Benefits Management). Money is "found" in not paying out claims, or chasing the "cheapest to the company" treatment while passing on the more burdensome long term maintenance costs to consumers. Insurers can be a positive surfacer of unpleasantness. Not before much more unpleasantness is waded through however. See Cigna getting dinged for using an algorithm that 100% rejected first encountered prior auth claims rather than processing them in good faith. https://www.propublica.org/article/cigna-pxdx-medical-health-insurance-rejection-claims https://www.propublica.org/article/cigna-pxdx-medical-health...
lgleason 3y ago
Skeptic here. I don't deny that the climate is changing. It always has been. However the notion that all of this is based on human activity is not something I subscribe to. Climate change and the green initiatives have become a sort of religion which and a great way for certain people in power to drive their own business interests. There have been extreme weather cycles in the past and in some areas we had a period of calm for a number of years. In addition to that we had a period of cheap money and other factors that lead to development in areas that have a much higher likelihood of having a natural disaster destroy it over longer periods of time. Government natural disaster assistance for damage to these areas made it worse because there was not incentive to NOT develop homes in areas prone to issues or to take necessary precautions to adequately construct homes to be able to sustain the forces of a disaster. Now that we are in a cycle where there are more events, the actuarials are looking at the tables and determining that the risk it too high to insure based on current trends. Climate change is just the current in vogue cause so the insurance companies can use it for PR cover. "It's not our fault we can no longer insure your house.....climate change!"
- bobsmooth 3y ago
  >However the notion that all of this is based on human activity is not something I subscribe to. Do you think the massive amount of CO2 pumped into the atmosphere since the industrial revolution has had no affect on the planet?
  - lgleason 3y ago
    It's tough to say what the effect is. The science has been corrupted by political interests instead of an actual scientific discovery. The overblown histrionic predictions of doom from the activists/climate change believers does not help to give credibility of any effects that climate change may actually be having. Back in the 70s and 80s they were predicting an ice age by the early 2000's. That of course extreme scenario also did not occur. Once I started to understand what was happening to scientific research, the special interests, corporate and political interests on both sides of this equation an extreme view on either side naturally sets off my internal BS meter.
xormapmap 3y ago
> To me the fact that insurers aren’t insuring natural disasters due to climate change is a good argument that it’s real. The only thing I conclude from this is that they think this move will be profitable and that is independent from whether climate change is real.
- EricE 3y ago
  "they think this move will be profitable and that is independent from whether climate change is real" Exactly. It provides excellent coverage for their moves since anyone daring to question climate change is a heretic worthy of being burned at the stake.
supertrope 3y ago
It's not quite that simple. Insurance is a financial product and social construct. It depends on market conditions and supply and demand as much as pure actuarial risk. The scientific consensus is that disastrous climate change happens over generations. They project out to 2100. What used to be a 100 year storm (1% probability per annum) might now have 3% probability per year due to rising ocean levels, and warmer oceans providing more energy. https://www.pbs.org/newshour/show/how-climate-change-is-loading-the-dice-for-more-perilous-hurricanes https://www.pbs.org/newshour/show/how-climate-change-is-load.... In Florida the biggest factor in the market death spiral is actually excessive litigation not hurricanes. Regulations require insurers to pay to replace a damaged roof not pay for the depreciated value. Florida customers file 80% of the insurance lawsuits in the whole country but they are obviously not 80% of the customers. https://www.insurancejournal.com/news/southeast/2021/04/14/609721.htm https://www.insurancejournal.com/news/southeast/2021/04/14/6.... Roofers who chase storms will sell customers on signing over assignment of benefits to them and they will file the lawsuit for them. The recent rise in interest rates has made insurance a less attractive capital sink. Why buy a disaster bond or invest in reinsurance when sovereign or investment grade corporate bonds yield 5%? Over long periods of time return on equity must keep up with interest rates. The trickles down to reinsurance costs for insurers and finally higher premiums and pickier underwriting for you and I. In a previous insurance market cycle a bad year of storms ironically was followed by lower reinsurance prices. Why? Because interest rates were low and there was strong competition between reinsurers.
tbrownaw 3y ago
If $bad_thing happens more often, that doesn't mean it stops being insurable. It just means the rates go up. Things become uninsurable when either they're unpredictable in aggregate (I can't predict when your house will catch fire from leaving the stove on, but a decent actuary can say how many houses that will happen to next year), or when the government sets price controls to forbid them charging high enough rates. . "More fires" does not prevent fire insurance, unless the government imposes price controls. "Fewer bigger fires" might, since they'd be harder to average out.

by maCDzP 3y ago

baggy_trough 3y ago

Much simpler than that. Price controls cause supply shortages.

swader999 3y ago

There's certainly less effort to fight wild fires this season. I know several helicopter pilots who say they have to get approval for each bucket drop where before they just flew agreed on hours. They say it's a joke, completely budget driven. They'd have several fires they worked on out sooner if they were not subject to this. On the ground it's the same, extreme focus on safety, not working over time, not using quads, heli attack crews cancelled. Only getting intense when it gets close to structures. So you get record fires here in Canada. Lowest area burned in USA in decades. Politicians save budget, don't get called to account because of course it's climate change. Bringing in the insurance angle, they are suffering more losses, the areas are built up more in fire prone forested land, houses are more expensive and there is less labour to fight fire. Poor history of fuel management too. So they are raising rates and I don't blame them. It's easy to just say climate change. Maybe it's a way to appropriate the land back to the elites.

isaacremuant 3y ago

The problem with your supposed argument is that just because companies don't want to insure against eventd of type Y because they think they're likely or costly does not mean that they're caused by reason X. Your argument is, on logical merits, not good enough to create a causation between, what I presume is "human influenced global warming increase" and "natural disaster increase". Now I realize this being a politically charged topic that people look at in an absolutist way, a response that looks only at the logical proposition of your comment, might not be well received.

flangola7 3y ago

Insurance firms are one of the few capitalistic entities that have a financial incentive to invest deep budgets finding and highlighting unpleasant empirical facts, rather than burying them. This is secondhand. I have been told property insurance experts lean semi-conservative politically but almost all of them firmly believe not only climate change is real, but incoming catastrophe.

salawat 3y ago
Not...really. Take PBM. (Pharmacy Benefits Management). Money is "found" in not paying out claims, or chasing the "cheapest to the company" treatment while passing on the more burdensome long term maintenance costs to consumers. Insurers can be a positive surfacer of unpleasantness. Not before much more unpleasantness is waded through however. See Cigna getting dinged for using an algorithm that 100% rejected first encountered prior auth claims rather than processing them in good faith. https://www.propublica.org/article/cigna-pxdx-medical-health-insurance-rejection-claims https://www.propublica.org/article/cigna-pxdx-medical-health...

lgleason 3y ago

Skeptic here. I don't deny that the climate is changing. It always has been. However the notion that all of this is based on human activity is not something I subscribe to. Climate change and the green initiatives have become a sort of religion which and a great way for certain people in power to drive their own business interests. There have been extreme weather cycles in the past and in some areas we had a period of calm for a number of years. In addition to that we had a period of cheap money and other factors that lead to development in areas that have a much higher likelihood of having a natural disaster destroy it over longer periods of time. Government natural disaster assistance for damage to these areas made it worse because there was not incentive to NOT develop homes in areas prone to issues or to take necessary precautions to adequately construct homes to be able to sustain the forces of a disaster. Now that we are in a cycle where there are more events, the actuarials are looking at the tables and determining that the risk it too high to insure based on current trends. Climate change is just the current in vogue cause so the insurance companies can use it for PR cover. "It's not our fault we can no longer insure your house.....climate change!"

bobsmooth 3y ago
>However the notion that all of this is based on human activity is not something I subscribe to. Do you think the massive amount of CO2 pumped into the atmosphere since the industrial revolution has had no affect on the planet?
- lgleason 3y ago
  It's tough to say what the effect is. The science has been corrupted by political interests instead of an actual scientific discovery. The overblown histrionic predictions of doom from the activists/climate change believers does not help to give credibility of any effects that climate change may actually be having. Back in the 70s and 80s they were predicting an ice age by the early 2000's. That of course extreme scenario also did not occur. Once I started to understand what was happening to scientific research, the special interests, corporate and political interests on both sides of this equation an extreme view on either side naturally sets off my internal BS meter.

xormapmap 3y ago

> To me the fact that insurers aren’t insuring natural disasters due to climate change is a good argument that it’s real. The only thing I conclude from this is that they think this move will be profitable and that is independent from whether climate change is real.

EricE 3y ago
"they think this move will be profitable and that is independent from whether climate change is real" Exactly. It provides excellent coverage for their moves since anyone daring to question climate change is a heretic worthy of being burned at the stake.

supertrope 3y ago

It's not quite that simple. Insurance is a financial product and social construct. It depends on market conditions and supply and demand as much as pure actuarial risk. The scientific consensus is that disastrous climate change happens over generations. They project out to 2100. What used to be a 100 year storm (1% probability per annum) might now have 3% probability per year due to rising ocean levels, and warmer oceans providing more energy. https://www.pbs.org/newshour/show/how-climate-change-is-loading-the-dice-for-more-perilous-hurricanes https://www.pbs.org/newshour/show/how-climate-change-is-load.... In Florida the biggest factor in the market death spiral is actually excessive litigation not hurricanes. Regulations require insurers to pay to replace a damaged roof not pay for the depreciated value. Florida customers file 80% of the insurance lawsuits in the whole country but they are obviously not 80% of the customers. https://www.insurancejournal.com/news/southeast/2021/04/14/609721.htm https://www.insurancejournal.com/news/southeast/2021/04/14/6.... Roofers who chase storms will sell customers on signing over assignment of benefits to them and they will file the lawsuit for them. The recent rise in interest rates has made insurance a less attractive capital sink. Why buy a disaster bond or invest in reinsurance when sovereign or investment grade corporate bonds yield 5%? Over long periods of time return on equity must keep up with interest rates. The trickles down to reinsurance costs for insurers and finally higher premiums and pickier underwriting for you and I. In a previous insurance market cycle a bad year of storms ironically was followed by lower reinsurance prices. Why? Because interest rates were low and there was strong competition between reinsurers.

tbrownaw 3y ago

If $bad_thing happens more often, that doesn't mean it stops being insurable. It just means the rates go up. Things become uninsurable when either they're unpredictable in aggregate (I can't predict when your house will catch fire from leaving the stove on, but a decent actuary can say how many houses that will happen to next year), or when the government sets price controls to forbid them charging high enough rates. . "More fires" does not prevent fire insurance, unless the government imposes price controls. "Fewer bigger fires" might, since they'd be harder to average out.