7 ms·

I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks of climate change and how insuranc

I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks of climate change and how insurance will have to change. Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything. When in reality, insurance is one of the rare areas where risks are very well assessed, not just by the initial insurer but also by a second party when reinsurance is purchased. And often those exits from the insurance markers are due to inability to purchase reinsurance. Of course, explaining anything in detail is likely to make people think you work in the industry (I do not) and get accused of being a shill. All of which proves to me that older generations had a much easier life because nobody so financially ignorant today is in any sort of position to be able to buy a home. All that said, I don't think it's actually a price ceiling. It's a limitation of what factors can be taken into account to set rates, and constitutional amendment from Prop 108 prevents the legislature from changing it.

Aurornis 2y ago
> Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies are making. When I ask people how much cheaper they think their insurance (health, home, etc) would be if we forced insurance company profits to zero they usually have some extreme guess like 50%. When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. The discourse is so cooked that everyone who just assumes insurers are making unbelievable profits without ever checking. Like you said, when I try to bring numbers into the discussion I get accused of being a shill (or a “bootlicker” if the other person is young). The environment this creates has opened the door for some really bad politics to intervene in ways that aren’t helpful. I wouldn’t be surprised if the eventual outcome in a lot of these places is that politicians pass legislation putting the local government on the hook for insurance after they squeeze regular insurers so hard they have to back out to avoid losing money in those markets. The consequences won’t manifest for several years, potentially after the politicians have left office, but could be financially burdensome. Similar to how many local governments were very generous with pension plans because politicians knew the consequences would only be felt by their successors.
- throw0101a 2y ago
  > When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. Meanwhile, the health care providers: > But if you look at the list of companies with the highest [return on equity], you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers. * https://www.noahpinion.blog/p/insurance-companies-arent-the-main https://www.noahpinion.blog/p/insurance-companies-arent-the-...
  - rcpt 2y ago
    Definition of "healthcare provider" really confuses me. Why is my nurse lumped together with people researching drugs? Is the CEO of the hospital a "provider"?
- wuiheerfoj 2y ago
  >When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs Do you have any source for this? I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems
  - nradov 2y ago
    You can literally read the 10-K statement from any of several publicly traded medical insurance companies. Average industry profit margin is about 3%. There are also some non-profit insurers but their fees generally aren't any lower.
  - jwagenet 2y ago
    The issue in the US is that there is no price regulation for different procedures (other than Medicare), plus the providers (hospital chains) are intertwined* with insurance. The end result is everyone charges as much as they can and the premiums need to be high, even if insurance technically negotiates the rates down from the “sticker” price. Insurance companies are willing to take a small percent of profit because there is so much money being taken from customers. * https://www.statnews.com/2024/11/25/unitedhealth-higher-payments-optum-providers-converts-expenses-to-profits/ https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...
donavanm 2y ago
> I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks Its not just the insurance costs either. My neighbor is an architect who now does planning/consultation with the RFS (rural fire service, australia). Its basically de rigueur for people to try and avoid or evade fire sensitive planning controls. Just the most basic concepts like defensible space, eve guards, or nonflammable finishes, let alone adequate on site water storage or site access. People are intentionally building in bushland because they want to be “in trees”, unless they block the view of course. Even if they understand the concepts and remember black saturday, or a few years back!, it doesnt apply to them. Theres no concept of personal risk & consequences, and theyre right. They will probably get bailed out by volunteers and socialized losses. Just like new developments along riverine flood ways.
rewgs 2y ago
Insurance should not be for profit, and things like e.g. State Farm suddenly cancelling people's renters/fire insurance just two weeks before the fires (I am one of those people) are what people hate about insurance. No one is arguing that insurance is bad at risk assessment, but rather how they wield their proficiency with it.
- School-Cotton 2y ago
  Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so? To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX? If State Farm didn’t exist and the state ran insurance instead, and were willing to insure all comers, they’d be subsidizing people who can’t be insured profitably. That’s not crazy on its face (the state subsidizes lots of different things), but it’s at least worth asking why we should be paying for people to live in high-fire-risk areas rather than any number of other things the state could be spending those resources on.
  - snacksmcgee 2y ago
    [flagged]
    - School-Cotton 2y ago
      Why?
  - rewgs 2y ago
    > Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so? They don't, but they have the courtesy of giving myself and thousands of others a proper heads up. Perhaps any heads up? They quite literally just dropped me, no email, no letter, no nothing. This type of thing should be given 3 months minimum. > To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX? Alright, you just lost me, not even bothering to read the rest of your post. To answer your utterly moronic question: because they aren't in the business of insurance. I award you no points, and may god have mercy on your soul.
rented_mule 2y ago
At some level, insurance is about spreading out financial risk. Insurance companies would love for every policy to be profitable, but if we let it go that far, it's merely a savings account with negative interest rates. At another level, insurance is about analyzing risk and making it more expensive to take bigger risks. Where do we want the tradeoff between these things? Whatever we choose, we have to have some ability to predict / evaluate risk. In the face of climate change, places that have been safe for a very long time are becoming unsafe. But I don't see a reason these shifts won't happen over and over as climate change unfolds. It might be worse than mass migrations... migrations to locations which later become dangerous, turning into recurring mass migrations. How well can we predict where it will be safe in the coming decades and where it won't. Coastal land at or below current sea level (plus storm surge) is fairly predictable, especially where there isn't the population density (and money) to support building sea walls. But with things like rivers changing course (e.g., https://en.wikipedia.org/wiki/Alsek_River https://en.wikipedia.org/wiki/Alsek_River), it might become very difficult to predict what's going to be safe down the road. Today we talk about things like 100-year flood plains, but how will we establish flood probabilities when the river that might flood in 10 or 20 years doesn't even exist today? Are the people who get unlucky with predictions just screwed because their home equity is gone? Or are we going to decide to shoulder the burden together? We're going to find out a lot about humanity, the role of government, etc. as we go through all of this.
- snacksmcgee 2y ago
  Soon, people will realize that the entire economic system that caused climate change in the first place will not save us. Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
  - gruez 2y ago
    >Soon, people will realize that the entire economic system that caused climate change in the first place will not save us. Disagree. "the entire economic system that caused climate change in the first place" is also responsible for the green transition, including cheap electric cars and renewable energy. >Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA". Alright, what's your solution to "the entire economic system that caused climate change in the first place" that aren't just "lol just stop capitalism"?
deleted 2y ago
[deleted]
greenavocado 2y ago
The issue is not that people believe that insurance companies are not pricing risk correctly. It's that because there is so little competition in the market, people are aware that insurance companies can charge higher premiums because they operate as an oligopoly.
- epistasis 2y ago
  Your statements contradict each other, don't they? In the many many complaints I have heard about the insurance industry, nobody has complained about them acting as an oligopoly or about a lack of competition. Further, pricing is extremely regulated in terms of what can be factored in, so being an oligopoly doesn't have much impact on that.

Aurornis 2y ago

> Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies are making. When I ask people how much cheaper they think their insurance (health, home, etc) would be if we forced insurance company profits to zero they usually have some extreme guess like 50%. When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. The discourse is so cooked that everyone who just assumes insurers are making unbelievable profits without ever checking. Like you said, when I try to bring numbers into the discussion I get accused of being a shill (or a “bootlicker” if the other person is young). The environment this creates has opened the door for some really bad politics to intervene in ways that aren’t helpful. I wouldn’t be surprised if the eventual outcome in a lot of these places is that politicians pass legislation putting the local government on the hook for insurance after they squeeze regular insurers so hard they have to back out to avoid losing money in those markets. The consequences won’t manifest for several years, potentially after the politicians have left office, but could be financially burdensome. Similar to how many local governments were very generous with pension plans because politicians knew the consequences would only be felt by their successors.

throw0101a 2y ago
> When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. Meanwhile, the health care providers: > But if you look at the list of companies with the highest [return on equity], you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers. * https://www.noahpinion.blog/p/insurance-companies-arent-the-main https://www.noahpinion.blog/p/insurance-companies-arent-the-...
- rcpt 2y ago
  Definition of "healthcare provider" really confuses me. Why is my nurse lumped together with people researching drugs? Is the CEO of the hospital a "provider"?
wuiheerfoj 2y ago
>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs Do you have any source for this? I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems
- nradov 2y ago
  You can literally read the 10-K statement from any of several publicly traded medical insurance companies. Average industry profit margin is about 3%. There are also some non-profit insurers but their fees generally aren't any lower.
- jwagenet 2y ago
  The issue in the US is that there is no price regulation for different procedures (other than Medicare), plus the providers (hospital chains) are intertwined* with insurance. The end result is everyone charges as much as they can and the premiums need to be high, even if insurance technically negotiates the rates down from the “sticker” price. Insurance companies are willing to take a small percent of profit because there is so much money being taken from customers. * https://www.statnews.com/2024/11/25/unitedhealth-higher-payments-optum-providers-converts-expenses-to-profits/ https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...

donavanm 2y ago

> I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks Its not just the insurance costs either. My neighbor is an architect who now does planning/consultation with the RFS (rural fire service, australia). Its basically de rigueur for people to try and avoid or evade fire sensitive planning controls. Just the most basic concepts like defensible space, eve guards, or nonflammable finishes, let alone adequate on site water storage or site access. People are intentionally building in bushland because they want to be “in trees”, unless they block the view of course. Even if they understand the concepts and remember black saturday, or a few years back!, it doesnt apply to them. Theres no concept of personal risk & consequences, and theyre right. They will probably get bailed out by volunteers and socialized losses. Just like new developments along riverine flood ways.

rewgs 2y ago

Insurance should not be for profit, and things like e.g. State Farm suddenly cancelling people's renters/fire insurance just two weeks before the fires (I am one of those people) are what people hate about insurance. No one is arguing that insurance is bad at risk assessment, but rather how they wield their proficiency with it.

School-Cotton 2y ago
Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so? To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX? If State Farm didn’t exist and the state ran insurance instead, and were willing to insure all comers, they’d be subsidizing people who can’t be insured profitably. That’s not crazy on its face (the state subsidizes lots of different things), but it’s at least worth asking why we should be paying for people to live in high-fire-risk areas rather than any number of other things the state could be spending those resources on.
- snacksmcgee 2y ago
  [flagged]
  - School-Cotton 2y ago
    Why?
- rewgs 2y ago
  > Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so? They don't, but they have the courtesy of giving myself and thousands of others a proper heads up. Perhaps any heads up? They quite literally just dropped me, no email, no letter, no nothing. This type of thing should be given 3 months minimum. > To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX? Alright, you just lost me, not even bothering to read the rest of your post. To answer your utterly moronic question: because they aren't in the business of insurance. I award you no points, and may god have mercy on your soul.

rented_mule 2y ago

At some level, insurance is about spreading out financial risk. Insurance companies would love for every policy to be profitable, but if we let it go that far, it's merely a savings account with negative interest rates. At another level, insurance is about analyzing risk and making it more expensive to take bigger risks. Where do we want the tradeoff between these things? Whatever we choose, we have to have some ability to predict / evaluate risk. In the face of climate change, places that have been safe for a very long time are becoming unsafe. But I don't see a reason these shifts won't happen over and over as climate change unfolds. It might be worse than mass migrations... migrations to locations which later become dangerous, turning into recurring mass migrations. How well can we predict where it will be safe in the coming decades and where it won't. Coastal land at or below current sea level (plus storm surge) is fairly predictable, especially where there isn't the population density (and money) to support building sea walls. But with things like rivers changing course (e.g., https://en.wikipedia.org/wiki/Alsek_River https://en.wikipedia.org/wiki/Alsek_River), it might become very difficult to predict what's going to be safe down the road. Today we talk about things like 100-year flood plains, but how will we establish flood probabilities when the river that might flood in 10 or 20 years doesn't even exist today? Are the people who get unlucky with predictions just screwed because their home equity is gone? Or are we going to decide to shoulder the burden together? We're going to find out a lot about humanity, the role of government, etc. as we go through all of this.

snacksmcgee 2y ago
Soon, people will realize that the entire economic system that caused climate change in the first place will not save us. Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
- gruez 2y ago
  >Soon, people will realize that the entire economic system that caused climate change in the first place will not save us. Disagree. "the entire economic system that caused climate change in the first place" is also responsible for the green transition, including cheap electric cars and renewable energy. >Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA". Alright, what's your solution to "the entire economic system that caused climate change in the first place" that aren't just "lol just stop capitalism"?

deleted 2y ago

[deleted]

greenavocado 2y ago

The issue is not that people believe that insurance companies are not pricing risk correctly. It's that because there is so little competition in the market, people are aware that insurance companies can charge higher premiums because they operate as an oligopoly.

epistasis 2y ago
Your statements contradict each other, don't they? In the many many complaints I have heard about the insurance industry, nobody has complained about them acting as an oligopoly or about a lack of competition. Further, pricing is extremely regulated in terms of what can be factored in, so being an oligopoly doesn't have much impact on that.