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I don't know about Florida specifically but IIRC from a recent podcast I was listening to, the biggest problem in the US is insurance companies have to follow s

I don't know about Florida specifically but IIRC from a recent podcast I was listening to, the biggest problem in the US is insurance companies have to follow state law and often state law limits the amount insurance companies can raise prices annually. The insurance company can pull out so often thats what happens, they are not allowed to raise rates to match the risk so then they pull out, the state is then pressured to try and provide a state insurance pool which is never as good as the commercial alternative. Effectively subsidizing the insurance and making people who live in these high risk areas happy for the short term. I realize Florida does have actual issues with hurricanes and projected flooding but I think the above is important to call out too. Seems to be impacting insurance across the US.

toomuchtodo 3y ago
Florida is my primary residence, my insurance is ~$4k/year (up from $1800/year most recently) on a ~$400k home ~40 years old. 90 feet above sea level, far enough from the coast that wind speeds never exceed 40mph even with a near direct hit from a hurricane (2017). My insurer is the state high risk pool ("Citizens"). They are phasing in mandatory flood insurance for all properties they insure over the next several years, even if no flood risk [1]. The risk repricing causes are: rampant litigation [2], climate risk [3], and the drastic increase in building costs [4]. The new prices are not unreasonable, the old prices were underpriced. If you limit premium increases, insurers will leave when they can't price the risk appropriately. And they should. Long term, prices signals should be sent to communicate where it is too expensive to obtain insurance (regardless of peril insured), destroying demand where it is unaffordable to do so. [1] https://www.citizensfla.com/-/20230803-flood-insurance-requirements-for-coverage-limit https://www.citizensfla.com/-/20230803-flood-insurance-requi... [2] https://www.axios.com/local/miami/2022/10/03/florida-property-insurance-crisis-litigation https://www.axios.com/local/miami/2022/10/03/florida-propert... [3] https://www.axios.com/local/miami/2023/09/20/report-real-estate-climate-bubble-florida https://www.axios.com/local/miami/2023/09/20/report-real-est... [4] https://www.wptv.com/money/real-estate-news/new-homes-in-florida-getting-more-expensive-and-taking-longer-due-to-labor-material-shortages https://www.wptv.com/money/real-estate-news/new-homes-in-flo...
- fasteo 3y ago
  For comparison, I pay 600€ per year for a 500K € 20 year old home, about 240 square meters (that's about 2580 square feet for my fellow Americans). This is Madrid, Spain. Small town outside the city.
  - deleted 3y ago
    [deleted]
  - toomuchtodo 3y ago
    I would like to hear more about your experience. Permission to get in touch?
  - glimshe 3y ago
    I suppose you don't get a lot of hurricanes in Madrid, do you? My premium in the US for a 4000sq ft home in an area with mild hurricane risk (Cat 1-2 possible, but uncommon) is around $1400/year. Florida is a very high risk area, so it makes sense that premiums are high.
    - fasteo 3y ago
      >>> I suppose you don't get a lot of hurricanes in Madrid, do you? It works different in Spain. No standard home insurance policy will cover any natural disaster. Instead, there is a higher state organization (Consorcio de Compensación de Seguros) that will cover damages from natural disasters, terrorism, riots, revolts, etc
sharemywin 3y ago
most of the major insurers pulled out a of Florida a long time ago. If you want to figure out what's really going on with climate change ask the actuaries at insurance companies.
- infecto 3y ago
  I was listening to an economist podcast about insurance and they were interviewing a woman representing some segment of the insurance companies. She said that climate change played a role in pricing but the vast majority of problems were because of 1) Higher construction costs and 2) states not allowing insurance companies to raise rates to match the actual risk so they pull out.
  - sharemywin 3y ago
    "Higher construction costs" I'm sure states new immigration stance will help with that. that's ok I guess the retirees and snow birds could get part time jobs. I'm sure they would do great lifting singles up a roof.
polski-g 3y ago
Price fixes cause shortages. There is never a time in history when this is not the case.
- tzs 3y ago
  That's only true when raising prices can lead to an increase in supply. There have been times when that is not the case, such as in the United States during WW II.
  - MichaelZuo 3y ago
    Can you link a source?
    - tzs 3y ago
      I don't really have anything specific. I'm just remembering a few things I read about what happened to the economy during WWII. With a large number of people leaving the workforce for the military, and with many goods being diverted to the military, there were both labor shortages and goods shortages for civilians. Normally when shortages cause prices to rise that is suppose to attract new producers or get existing producers to increase output, thus alleviating the shortage. Same with rising wages and labor. But with the war taking so much people didn't have the resources to actually start new factories to make civilian goods or excess capacity to increase production--if they had it would have went toward increasing military production. In that environment wage and price increases don't lead to significant labor or goods availability--they just shuffle things around. This can lead to a wage and price spiral where wages and prices just keep going up without any meaningful change in the supply of labor or goods. To stop that in WWII they implemented wage and price controls for key industries and goods.
      - MichaelZuo 3y ago
        Eventually the spiral would have plateaued as people from other countries would become willing to take even heavy risks and rush to fill the jobs, regardless of the prospects of legal immigration. So the principle would have still held, though obviously deleterious to the average consumer in terms of pricing.

toomuchtodo 3y ago

Florida is my primary residence, my insurance is ~$4k/year (up from $1800/year most recently) on a ~$400k home ~40 years old. 90 feet above sea level, far enough from the coast that wind speeds never exceed 40mph even with a near direct hit from a hurricane (2017). My insurer is the state high risk pool ("Citizens"). They are phasing in mandatory flood insurance for all properties they insure over the next several years, even if no flood risk [1]. The risk repricing causes are: rampant litigation [2], climate risk [3], and the drastic increase in building costs [4]. The new prices are not unreasonable, the old prices were underpriced. If you limit premium increases, insurers will leave when they can't price the risk appropriately. And they should. Long term, prices signals should be sent to communicate where it is too expensive to obtain insurance (regardless of peril insured), destroying demand where it is unaffordable to do so. [1] https://www.citizensfla.com/-/20230803-flood-insurance-requirements-for-coverage-limit https://www.citizensfla.com/-/20230803-flood-insurance-requi... [2] https://www.axios.com/local/miami/2022/10/03/florida-property-insurance-crisis-litigation https://www.axios.com/local/miami/2022/10/03/florida-propert... [3] https://www.axios.com/local/miami/2023/09/20/report-real-estate-climate-bubble-florida https://www.axios.com/local/miami/2023/09/20/report-real-est... [4] https://www.wptv.com/money/real-estate-news/new-homes-in-florida-getting-more-expensive-and-taking-longer-due-to-labor-material-shortages https://www.wptv.com/money/real-estate-news/new-homes-in-flo...

fasteo 3y ago
For comparison, I pay 600€ per year for a 500K € 20 year old home, about 240 square meters (that's about 2580 square feet for my fellow Americans). This is Madrid, Spain. Small town outside the city.
- deleted 3y ago
  [deleted]
- toomuchtodo 3y ago
  I would like to hear more about your experience. Permission to get in touch?
- glimshe 3y ago
  I suppose you don't get a lot of hurricanes in Madrid, do you? My premium in the US for a 4000sq ft home in an area with mild hurricane risk (Cat 1-2 possible, but uncommon) is around $1400/year. Florida is a very high risk area, so it makes sense that premiums are high.
  - fasteo 3y ago
    >>> I suppose you don't get a lot of hurricanes in Madrid, do you? It works different in Spain. No standard home insurance policy will cover any natural disaster. Instead, there is a higher state organization (Consorcio de Compensación de Seguros) that will cover damages from natural disasters, terrorism, riots, revolts, etc

sharemywin 3y ago

most of the major insurers pulled out a of Florida a long time ago. If you want to figure out what's really going on with climate change ask the actuaries at insurance companies.

infecto 3y ago
I was listening to an economist podcast about insurance and they were interviewing a woman representing some segment of the insurance companies. She said that climate change played a role in pricing but the vast majority of problems were because of 1) Higher construction costs and 2) states not allowing insurance companies to raise rates to match the actual risk so they pull out.
- sharemywin 3y ago
  "Higher construction costs" I'm sure states new immigration stance will help with that. that's ok I guess the retirees and snow birds could get part time jobs. I'm sure they would do great lifting singles up a roof.

polski-g 3y ago

Price fixes cause shortages. There is never a time in history when this is not the case.

tzs 3y ago
That's only true when raising prices can lead to an increase in supply. There have been times when that is not the case, such as in the United States during WW II.
- MichaelZuo 3y ago
  Can you link a source?
  - tzs 3y ago
    I don't really have anything specific. I'm just remembering a few things I read about what happened to the economy during WWII. With a large number of people leaving the workforce for the military, and with many goods being diverted to the military, there were both labor shortages and goods shortages for civilians. Normally when shortages cause prices to rise that is suppose to attract new producers or get existing producers to increase output, thus alleviating the shortage. Same with rising wages and labor. But with the war taking so much people didn't have the resources to actually start new factories to make civilian goods or excess capacity to increase production--if they had it would have went toward increasing military production. In that environment wage and price increases don't lead to significant labor or goods availability--they just shuffle things around. This can lead to a wage and price spiral where wages and prices just keep going up without any meaningful change in the supply of labor or goods. To stop that in WWII they implemented wage and price controls for key industries and goods.
    - MichaelZuo 3y ago
      Eventually the spiral would have plateaued as people from other countries would become willing to take even heavy risks and rush to fill the jobs, regardless of the prospects of legal immigration. So the principle would have still held, though obviously deleterious to the average consumer in terms of pricing.