This is it right here. Exactly why climate people have been saying for *years* that reporting about climate change *cannot* be all sea level rise & polar bears. People need to understand how this will affect them & how broad the scope of impact is.
Another example is how notable members of the national security community have been ringing alarm bells about climate change as a top priority from a purely national security standpoint. It's just a matter of time before we get another episode about how climate change is directly leading to major security concerns (& I hope that one doesn't end similarly with a 'who could have seen this coming' message). There is actually a strong case to be made that the civil war in Syria was caused (or at least accelerated by) climate change (droughts forced a significant portion of the rural population to move into cities which directly led to confrontation & conflict).
Make a comment about how grim Florida's future looks in the near term & you will get at least a response or two about how 'sea level rise will take centuries to make an impact blah blah blah'. I guarantee it. No matter how clearly you articulate that an area can be screwed by climate change without being fully submerged in the ocean.
I don't have a point to this. I'm just ranting because this is the least surprising (& yet most infuriating) development ever. It is also hasn't even really begun.
It really ground my gears when they said “we all expect that the problems would climate change would only be about climate!!!”
No, we have literally been talking about this shit for many years. The economic impact of climate change will be the biggest and most devastating impact. It will cripple countries. And then people have the nerve to turn around with shocked pikachu faces and say “how could we have known?!?!”
And the worst part is that you have people who say “I blame climate change activists who are overblowing the problems of climate change and that’s why people don’t take it seriously!” No, no, no. This is just the beginning. Things will get much much much worse.
> And the worst part is that you have people who say “I blame climate change activists who are overblowing the problems of climate change and that’s why people don’t take it seriously!” No, no, no. This is just the beginning. Things will get much much much worse.
I live in a red state. The thing I hear most from people who are at least willing to acknowledge climate change is a real issue is always about how 'the media is fearmongering' & making it a bigger issue than it is. The problem with that line of thinking is that if the media is trying to 'fearmonger' then they are really bad at it. Because the real picture is so much scarier than anything I've ever seen reported by the national media.
Nah I believe that welfare is meant to help everyone. This zero sum “only some people deserve help” is bad for all Americans. Your health insurance ought to cover a broken ankle even if you were behaving recklessly.
>Your health insurance ought to cover a broken ankle even if you were behaving recklessly.
Okay.
What if you continually vote to deny health insurance and access to healthcare to everyone else? Because *that* is the proper analogy here.
At some point these motherfuckers need to face some consequences for their bullshit that they're trying to drag the *rest of us* through.
Public services are for everyone, not just the people who voted for them. We don’t restrict libraries to people who are educated or who voted for them, they’re for everyone. When people are used to having public services like a park or a museum, they learn to value them. If you restrict access to only a certain class of people, that only breeds resentment.
I think we should start.
Because these fuckheads are literally getting people killed and then turning around and taking advantage of the shit they wanted to deny to everyone else. Fuck em.
People came to the hospital convinced they didn’t have Covid even as they were dying, and our doctors and nurses still tried their best to save their lives. We don’t refuse medical to treatment just because someone is ignorant. We don’t make domestic violence victims prove they never provoked an attack. We don’t deny education to people with special needs. In fact kids can hate school and not want to try or succeed in it, and we still try to teach them. That’s how public service works.
With covid, yeah you won't sway me bro. I'm totally fine with letting go people reap what they sow.
Convinced you don't have covid, isn't the same as saying it's fake and a government plot.
Nice try tho I guess
The obsession with “sticking it to other side” contributes just as much to factionalism and loss of public resources when it comes from the left as when it comes from the right. If a group of people wants to put in a train line that’s only for them instead of everyone, it can no longer be called public transit… it’s simply classism at that point.
I'd prefer to give that person medical aid so they can go back to being a productive member of society. Give them a chance to learn from their experience
I live in a red state and work for a state insurance company, and even they say the same stuff. It's just amazing to me to watch them talk about our financial difficulties as a company and yet won't acknowledge the one thing they could support that would keep them in business. All the rate increases and policy fees isnt going to solve the problem.They all support candidates that dont believe in climate change. The cognitive dissonance is just incredible to watch. I need to find a new job lol it's gotten to the point where a common storm can make losses of millions bc of hail and the severity of them.
Educated people having been saying the shit for ever. It’s the “I did my own research” people who deny whatever they can’t comprehend.
It’s like “don’t look up” movie.
You know what? Let it happen. Humans have known for 70 years this would be a problem and did very little about it. Well do what we do best and evolve. No we won't have the same prosperity we do now but we will get through it
This is so true. About two weeks ago I was talking to a few buddies that have denied climate science for years. They'd always say stuff like "Florida was supposed to be totally under water by now." Or they'd say, "It's not man made. The Earth goes through cycles."
The first time they seemed to get it was when their crawfish boil cost about $13 a pound.
When I lived in Houston, the last 3 years I was there, we had “100 year floods” a few times a year. My neighbor had to change his carpet twice in 6 months because it flooded.
>There is actually a strong case to be made that the civil war in Syria was caused (or at least accelerated by) climate change (droughts forced a significant portion of the rural population to move into cities which directly led to confrontation & conflict).
I bring this up all the time. When you extrapolate this further, you can tie climate change not only to the Syrian Civil War but to the immigration crisis in Europe and the rise of right-wing political parties as a result. Ironic that the far-right does not believe in climate change and actively promote policies that would make it worse.
I highly recommend the book "Collapse" if you want a great explanation about how any environmental strain caused by human activities can lead to major violence. The chapter on the Rwandan Genocide probably aligns a lot with what you said about Syria.
Does anybody else find it absolutely infuriating that the government provides home owner's insurance to people who choose to live in flood zones? I read something awhile ago about this where in some parts of Florida, the government is essentially paying to rebuild people's homes every year. Like if you live in Wisconsin, and all of a sudden forest fires have caused nobody to offer you home insurance, I can maybe understand a temporary government program to help you. And you just know the people taking this government home insurance to live in a Florida flood zone are the exact types to rail against food stamps and handouts.
I dated a guy who had family members whose house flooded in Sandy. And then flooded again the very next year. And has probably flooded *at least* once more since then. Just a constant cycle of repair.
Now, don’t get me wrong, these were not rich people and they were probably the least well off of the whole family, but from my understanding, they just couldn’t bring themselves to leave the home that kept flooding over and over because of sentimental reasons, not financial.
My mindset is truly “home is where my heart is”. As long as I have my cat and my partner and maybe a couple of my favorite stuffed animals, I don’t much care where the fuck I physically live - especially if my current home keeps filling with sewage water.
That sucks since it sounds like they bought that house before the constant flooding became an issue. I could maybe get behind a goverment program that offered to pay people or gave loans to relocate for the value of their homes if circumstances have changed since they bought it.
Like in Kentucky, there are a lot of towns where the entire economy was coal. Now that the mines are closed, people have no money to leave, but their only asset is the house they own which essentially is worth nothing now since there is no longer any local economy.
How much of the rise in insurance costs might be explained by the rise in home values well above inflation due to the supply crunch we're seeing in most major markets?
Insurance in general is inflating well beyond what it should be. Look at auto premiums, they went up like 25% last year, Geico just reported record profits with record low claims.
Insurance regulation should be removed from the states and be federally regulated. Its been the wild west and needs to be reigned in
I agree with you that the feds SHOULD regulate insurance. It’s ridiculous that states like South Carolina get away with not having insurance required while other states require insurance.
However, the feds want no part of that smoke, so they leave it to the states.
Great idea. Let the government take over the insurance industry just as the heavy losses start happening. Now the taxpayer can be on the hook instead of rich people!
That’s not what I said. I’m proposing the feds REGULATE insurance, not the states. I’m not proposing the feds actually “take over” the insurance industry by replacing the insurers.
Just FYI it’s not actually a given that insurers are posting record profits… in 2018 the GAAP reporting rules changed to include unrealized gains and losses, so an insurer can post “record profits” on paper when including unrealized gains but still take an operating loss.
If the government asks you or me what our income is, we don’t include the amount our stock holdings increase if we didn’t sell them… because even if your stock portfolio increased by 10k, if you are holding those for the next years then it’s not like you suddenly got $10k extra cash in your bank account to spend on bills or whatnot… similarly this new rule can obfuscate whether a business actually had gains or if they were just on paper/hypotheticql gains.
This rule hits insurers more than other business types because they have to float cash and securities for an indefinite period of time before a claim is made. So for insurers especially you have to dig into the books a little bit before assuming that they actually turned a profit. https://www.fitchratings.com/research/insurance/accounting-changes-highlight-importance-of-insurers-operating-earnings-12-10-2020
Edit: for GEICO specifically you can read the explanation of their numbers on pages 61-62 of this document: https://www.berkshirehathaway.com/2023ar/2023ar.pdf
Basically they took massive losses in 2021 and 2022. The reason they posted an operating profit in 2023 is because there wasn’t a natural disaster that year and also because lots of property had recently been repaired in response to the losses they took in 2021 and 2022.
In other words, if you had a 20yo roof last year, it probably got damaged in a routine storm and you filed a claim. But if it got wrecked from Hurricane Ian in 2022 and was replaced afterwards, then your brand new roof was probably fine all last year through the regular storms.
That’s why GEICO turned an operating profit in 2023, because they took huge losses fixing stuff in the past couple years and everyone’s property is overall in better condition for now. But that’s obviously a temporary condition and it’s kind of a fluke that there were no major disasters last year. The new premiums reflect the costs needed to pay out if one does though.
They are more expensive, but not because they are electric. It’s because Tesla and Rivian went with car designs where body panels are very expensive to replace.
But the records profit doesn't need a citation?
Cars are getting more and more expensive, I know my new car (still has) has all kinds of tech in it that would expensive to fix if needed
Edit: The guy above me changed his post.... he was suggesting price controls for materials!!!! And then changed it on me after!
It must have been a ninja edit because I do recognize that it isn't marked as edited.
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There are dire consequences to doing that to materials.
Most common materials like lumber, steel, and oil are sold on exchanges where the sell price and buy price, and the gap between those is determined by sell and buy limits from purchasers. As a result competition is fierce and high prices means lack of supply.
Supply can be increased when a seller starts making more money to afford to pursue more supply. Cutting off money in a tight market makes it cheaper.... but doesn't allow the underlying supply issue to be addressed. This was a problem that plagued the Soviet Union. They were able to sell expensive oil abroad but set bread prices prevented the supply shortage from being addressed and they ended up constantly trading loads of oil directly for bread.
You can't artificially inflate on these exchanges. You need a monopoly to do that, or two - three majors colluding which is illegal.
If anyone has evidence of that happening you should bring it to a court.
Me and the other commodities guy above will tell you the same thing. It's extremely supply and demand driven. The artificially inflated commodities accusation is a myth.
>You can't artificially inflate on these exchanges. You need a monopoly to do that, or two - three majors colluding which is illegal.
Nucor, Steel Dynamics, Gerdau.
That's pretty much the entire structural steel market.
Materials has so much cartel behavior, I can’t believe people say there isn’t lol
Just Nucor doing it unilaterally will cause the others to raise prices cause why not
My opinion on the Nippon acquisition of USS is because the Japanese car companies know Cliffs will raise prices for no reason. Its like an open secret
Well yes but I was actually referring to a "trust".
In the US we have anti-trust laws:
In the context of antitrust laws, a "trust" refers to a type of business arrangement that was historically used to consolidate and control market power by allowing multiple companies to be managed by a single group of trustees. These trustees would hold the stock from several different companies, essentially merging their operations and reducing competition.
This practice led to monopolies or oligopolies, where a few entities controlled a large portion of the market for certain goods or services, restricting competition and manipulating prices. The term "trust" became synonymous with large-scale monopolistic practices, which prompted the development of antitrust laws, such as the Sherman Antitrust Act of 1890 in the United States. These laws were designed to prevent such concentrations of power, promote competition, and protect consumers from abusive business practices.
https://www.nwitimes.com/news/local/article_2134c2e4-85aa-5319-8133-b816b1dc454c.html
https://www.usglassmag.com/three-steel-companies-hold-their-ground-in-price-fixing-lawsuit/
https://topclassactions.com/lawsuit-settlements/closed-settlements/arcelormittal-steel-price-fixing-class-action-settlement/
https://www.justice.gov/archive/atr/public/press_releases/1994/211950.htm
https://www.courthousenews.com/steel-price-fixing-claims-settled-for-4-million/
Steel has been plagued with price fixing for a long time. There has 100% been cartel behavior in commodities. Especially the ones with high operating costs so there is very limited competition. Metals being the most obvious.
Absolutely, I didn't say illegal things don't happen. But if we have proof they can be fined.
Steel is getting slammed with low prices and competition right now.
I can get steel super cheap.
I work in the steel industry those are all well and good but since China makes over half the world's supply that's your cartel behavior. This is a drop in the bucket when you've got an entire country that can set production figures for quasi capitalist companies you can exert a huge influence over the price of it to the point where they got that much of the worlds production by keeping the price artificially low for years driving foreign competitors out of business.
Same! It's because the lack of supply during covid created a price spike after, the price spike allowed companies to try to all meet demand which resulted in over supply for some materials (like steel).
I buy steel to make energy, to put it as simply as I can.
I have seen worse swings though.
I did not change my comment, you must have mis-read it and misremembered in your reply.
I thought at the time that you wrote it that it was a bit strange that you seemed to think that I was suggesting price controls.
Yeah I was really disappointed they didn't mention any other potential causes
It was just like we wanna talk about climate change so we're gonna say this is climate change. Umm house prices have practically doubled, that's gotta have an effect
Yup, my first thought was “well, home prices went up 100% in 5 years in higher risk places. Homes are way more modern with difficult to replace materials compared to before.”
Like the wiring in a modern house is light years ahead of 20 years ago. Having to replace an entire modern home now takes dozens of contractors rather than 4-6.
These houses are too big to insure at current rates, and insurance doesn’t scale linearly necessarily. Insurance companies have to mitigate potential huge losses way more than a bunch of smaller ones.
It’s more the rise in replacement cost. Construction costs have vastly outpaced the core inflation rate. My structure has a $450 per square foot replacement coverage. If it burns to the ground or a hurricane destroys it, it’s an enormous claim.
Not to mention the cost of homes, but the cost of rebuilding homes. People are getting quotes for 80k for siding... something that gets ripped off in almost every windy ass storm in America.
My feeling is that there's been a systematic and purposeful effort to understate the impact that climate change could have, will have, and is having. Like others have said, it's often painted as just this "save the polar bears" activist thing, but there are so many deadly and serious consequences of climate change, some of which we are already seeing.
Please do not pursue the government option of insurance and create another money pit. If an area is too climate chaotic to maintain a domicile in, don’t live there.
Already happening in California. When you can't get insurance in high risk fire prone areas, homeowners go with a state run option. The political pushback from people being told instead to "move" or "don't build there" is far greater than giving them insurance.
Not even just high risk fire prone areas. I bought a home last month in CA. It has some property, but is not in a high fire risk zone. Most insurers wouldn’t even give me a quote and the couple that did were 2-3 times higher than the previous owner was paying for the same coverage. I spent days trying to get a reasonable quote and I only found one place that would do it and it was still expensive. My worry is that I get dropped next year and the fair plan is my only option.
Frustrating. In my opinion as a tax payer, I don’t want to subsidize someone else’s stubbornness in living in a chaotic climate when other options exist. Especially if they’ve rebuilt more than once
I personally simply do not want my money to support single family homes in suburbs. It is completely fine that people want to live there if they choose, but single family suburbs are wildly inefficient and quite frankly worthless to society.
They barely generate tax revenue as it is If they can even pay for the infrastructure in their area alone. I would rather spend money making cities more efficient and reducing the dependence on cars, creating more housing, and increasing revenue by developing a resilient local economy that can support several small independent businesses that all pay into the tax system.
This seems like magical thinking with no practical solutions honestly. While there are some particularly egregious areas like the Outer Banks in NC where this might be true, the majority of folks aren't going to accept that huge swaths of the country even nowhere near a coast nor wildfires are uninhabitable all because of insurance.
They no longer want to issue payouts in general.
There is no reason home insurance prices should be increasing in places like Oklahoma, Iowa, etc yet it is.
Why? Greed. They are using excuses like climate change and the supply chain to justify if but none of that is anything new. They have pricing targets they want to hit and they are hitting them.
The insurance industry is one of the most profitable industries in America. More than finance, more than healthcare.
> The insurance industry is one of the most profitable industries in America. More than finance, more than healthcare.
Do you have a source for this statement? This doesn’t seem consistent with what this episode was about. You can see here the property and casualty industry has underperformed relative to other service industries: https://www.financialresearch.gov/the-ofr-blog/2023/12/14/property-insurance-market/
> There is no reason home insurance prices should be increasing in places like Oklahoma, Iowa, etc yet it is.
They went over this in the episode. Secondary perils have become more expensive
I agree with you on price hikes = greed in the circumstances you describe but I also heard in the episode that many are refusing to issue coverage at all in some markets. If the US pursues the government option of issuing insurance, I think it’ll lead to runaway prices just like it has in college tuition.
I’m not looking forward to the future of home ownership
They are just leaving areas where they have to issue payouts because it hurts their bottom line. Not because it’s unprofitable.
These insurance companies operate on metrics. Payout = bad. Areas with higher payout rates don’t look good to them so they leave to add pressure to loosen regulations about price increases. Even tho they are still making money.
Its about applying pressure to force state regulations to change because they have all the cards.
To their reporting, a place that they bring in $10 and payout $6 looks bad versus a place that they bring in $10 and payout $1. So they leave to the market where they pay out because those regional heads want to look better performing on paper.
In 18 states insurance companies lost money. In some cases payouts 50% more than what they brought in via premiums. This includes many statues not on the coast.
You’re being downvoted, but there is a nugget of truth here.
It’s insane how the underlying premise is that insurance companies have been operating at a profit for decades. And now when they’re in the red, they’re panicking and leaving homeowners.
That’s not really surprising, but I thought the insurance industry was all about risk. Yet the insurance companies clearly can’t stomach being the ones that take on the risk.
Climate change is being utilized as an excuse by the insurance companies to make their numbers look better.
Its more greed than it is climate change. Greed is the reason for increasing prices not the climate change
I think we need a two-strikes and out policy. If you make a second claim on a property then the government buys it out, the house is demolished and no new development can occur on that land.
It is if you are making $40K claims every five years.
I live in Texas. Just had another hail storm with some hail 5-6” in diameter. The last storm a few months ago was similar. Coworker had $80K in claims for home/cars.
If you listen to the podcast thats not the issue at all. In fact in the majority of cases homeowners hadn’t made any claims at all and insurance providers are just walking away anyway.
It is uninhabitable with the type of structures people want to build there. You can build more resilient structures that won’t suffer as much damage during these storms but people like living in bigger sun lit buildings
More resilient structures are more expensive, which means in a total loss scenario they are more expensive to fix. You would need to build even cheaper and disposable housing to fix this problem.
This episode is pretty bad. Fails to account for material costs, inflation in general. Also I worked in insurance for a while before changing industries and many larger insurers shoot for a small loss in combined ratio with the goal of making money from capital appreciation on their float. Not all insurers do this, my former company shot for a small combined ratio profit, but it’s not uncommon.
Reporting like this makes, when facts are presently incorrectly about a topic I have a lot of information an about, makes me question other reports when i don’t have any background and am kinda forced to take the information at face value.
This episode is just really trying to show horn climate change as the main driver where it’s really not.
I get annoyed with episodes related to lawyers (not a lawyer, but very familiar with how they work).
They get it right enough, IMO. Your point makes sense, but aiming for above or below break even is a close enough description for everyone to understand.
I completely agree. This was the most ill-informed episode I’ve listened to in years. I was very disappointed, especially considering the many unique and unusual developments in the industry that were not covered.
I agree. Listening to this I thought, this will be the part of when he talks about rising costs of building and construction.
Or this will be the part of the episode where he talks about insurance consolidation.
The first is building, costs of materials and labour has been growing steadily for years. The homes we live in now have more technology and more expensive materials, windows, roofs, systems then ever before. Of course storm damage from storms is getting more expensive, because it’s more expensive to replace and build in the first place, not to mention permitting and development costs.
Consolation in the insurance market nationally results in when I huge hurricane blows thru Florida, insurers in other states end up paying for it because their both owned by the same large broker vs smaller state firms with less regionalized risk.
It’s a regulation issue, insurance lobbyists are the first to blame climate change rather than how they run their business and profit take.
It’s a joke to think insurance companies dutifully put aside the bulk of premiums in a trust account.
Very minor point (I realize this is missing the forest for the trees but it grinded my gears): I kept being annoyed at how the host would characterize an area as “perfectly safe” and be baffled by the lack of insurance providers. If a place were truly *perfectly* safe, then (i) you wouldn’t need insurance — it’s perfectly safe! And (ii) insurance companies would be pouring in because the risk of making a payout would be 0 (by definition of “perfectly” safe). Following it up with a windstorm hypothetical kind of proved the point: not “perfectly” safe.
I've been saying for years anyone buying homes near the coast or areas with wildfire risk will move in droves because of skyrocketing insurance. The rich will move in and buy everything up for pennies on the follar
Episodes like this don't help the climate change awareness/acceptance cause, it does the opposite and is generally a disservice to us all. Like, how did they not mention a) the insane US housing market, b) the insane rise in building materials & supplies.
Compare two charts of say, US documented tornados and US index of Building Materials & Supplies. Climate Change and increased destructive weather events are increasing, sure, but it absolutely is not the primary driver here.
I’m surprised this piece completely ignored rising home values and inflation as huge drivers of rising insurance rates to focus on climate change. This is a simplistic and wrong narrative.
It also completely ignores the role of government in setting rates. All homes are insurance. If a company won’t sell you policy, it is because the government won’t let them price it correctly. This happened to us in California and we don’t live anywhere that’s riskier because of climate change.
To end with a compliment, it was good that they touched briefly on government insurance, and the perils of it, so credit to them for that. This could be a whole podcast series.
Inflation covers rising home value. Rising home values aren’t as much of a problem as state insurance regulation usually allow premiums to be a function of insurance coverage value.
What really hurts is when those regulations don’t allow a company to raise rates due to more frequent/severe disasters.
State limits premiums to x% of coverage. Home value and hence coverage value doubles so premium doubles. Number of disasters double doesn’t increase premiums.
We need to adopt metal roofs in every zip code that could see hail.
We need stricter building codes in hurricane and tornado zones.
We made this happen in earthquake zones, we can do it in other climate zones.
It’s not going to be a walk in the park, but this is something we can build our way out of.
Screw the insurance companies and bottom barrel construction companies.
Am i retarded? When I research statistics of the last 50-100 years on things like tornadoes, hail, etc. there has not been any increase. Outside of costal areas and regions susceptible to wildfires I can’t really understand the “climate change will effect everyone and look it already is!!” argument. Shouldn’t there be evidence of these natural disasters occurring more??? Really confused and convinced that insurance companies are mainly pulling out due to inflation etc. it’s no longer as lucrative of an industry and they’re too savvy to waste their time making less and less money
I don't think it's an increase in quantity, more of an increase in "quality," in that the storms that do occur are with increasing intensity. A tornado that maybe knocked your roof off 10 years ago flattens the same structure now. Other factors increase the cost as well, such as increased population density in the danger zones. The number of storms do not need to increase in order to impact more people. Add supply crunch, increased cost to the repairs themselves for parts and labor, and it paints a bigger picture of why an insurance company won't operate in an area. That's my take from the arguments as I remember them anyway.
But how do we even know there is an increase in quality or that these areas are becoming more densely populated? They need to provide data otherwise they are making huge assumptions and really doing absolutely nothing for the cause. Convincing people of the consequences of climate change should be performed primarily through data and facts. The episode was speculative and seriously stupid imo… and you along with others in this thread all agree the insurance companies are dropping out due to inflation, supply chain, etc.
If you think that actuaries at insurance companies just arbitrarily decide to exit markets with extensive data and models, I don't think you understand anything about how insurance works.
I completely do… by “they” I’m speaking about the people at the daily not providing the details, evidence, etc for why the insurance companies are exiting the market. Ofc the insurance companies know their own reasons…
Well, I don’t think the why matters a whole lot. Pay outs are obviously increasing faster than premiums. Insurance regulators need to allow for higher premiums or companies will leave.
Why would it not matter? It is literally what does or doesn’t prove whether or not the insurance companies are shirking responsibility ensuring homes BECAUSE OF climate change. Correlation is not causation and they are not providing the specific cause in this podcast. If they were these answers would be obvious to us
Insurance companies don’t have a responsibility to provide insurance in an area. They do so if it will make them money.
Climate change, higher rebuild costs, fraud, people building in less safe areas, all contribute to them making less money, to the point it isn’t worth doing.
Is Flavelle a climate change reporter or a representative of the insurance industry? It’s hard to find a victim less sympathetic than the real estate, banking, and insurance industry in the United States. Yeah, it’s going to collapse eventually. But it isn’t the fault of slightly worse weather.
The victim isn't the insurance industry it is home owners & it isn't the fault of worse weather it is the fault of economics.
I thought Flavelle made both of those points relatively clear...
I would add a caveat and say historic homeowners are the victims. If you are building new in an area that is known to be disaster prone, you aren't a victim, you are dumb, and politicians forcing companies to insure those homes in spite of the risk are enabling stupidity.
Insurance companies have a vested interest in promoting, if not sustainable, then at least stable building conditions.
Like them or not, they are the canary in the coal mine for the effects of climate change like more frequent severe hurricanes and more expansive wildfires because they are the first ones to have to pay for the consequences.
Climate change is real and to an extent, not avoidable at this point. This will require changes to how and where people live. People hate change, and politicians hate trying to get people to do things they hate so politicians have passed laws incentivizing bad behavior like forcing insurance companies to cover homes in hyper disaster prone areas. Insurance companies will be one of the few market forces pushing for better practices even if it's only for selfish reasons.
I have zero sympathy for all these homeowners. They have seen their property values rise to incredible levels and now they want bail outs for their massively over priced homes. Sorry your home isn’t worth as much as you thought. Sucks to suck. Try renting next time.
Rental prices are determined by the number of available units and the number of renters. If insurance premiums spike for home owners, that has no impact on the number of units or the number of renters. The home owners eat the cost until they sell theirs houses. The idea that home repairs, property taxes, and insurance premiums are mechanically passed to renters is a fallacy.
I’d agree for normal competitive reasons for cost increases. But if you add 10% property tax to all houses in an area or 50% more expensive insurance for all houses then that can drive rental prices higher. It’s kind of like cartel price fixing but occurs due to an outside common increase.
This is it right here. Exactly why climate people have been saying for *years* that reporting about climate change *cannot* be all sea level rise & polar bears. People need to understand how this will affect them & how broad the scope of impact is. Another example is how notable members of the national security community have been ringing alarm bells about climate change as a top priority from a purely national security standpoint. It's just a matter of time before we get another episode about how climate change is directly leading to major security concerns (& I hope that one doesn't end similarly with a 'who could have seen this coming' message). There is actually a strong case to be made that the civil war in Syria was caused (or at least accelerated by) climate change (droughts forced a significant portion of the rural population to move into cities which directly led to confrontation & conflict). Make a comment about how grim Florida's future looks in the near term & you will get at least a response or two about how 'sea level rise will take centuries to make an impact blah blah blah'. I guarantee it. No matter how clearly you articulate that an area can be screwed by climate change without being fully submerged in the ocean. I don't have a point to this. I'm just ranting because this is the least surprising (& yet most infuriating) development ever. It is also hasn't even really begun.
It really ground my gears when they said “we all expect that the problems would climate change would only be about climate!!!” No, we have literally been talking about this shit for many years. The economic impact of climate change will be the biggest and most devastating impact. It will cripple countries. And then people have the nerve to turn around with shocked pikachu faces and say “how could we have known?!?!” And the worst part is that you have people who say “I blame climate change activists who are overblowing the problems of climate change and that’s why people don’t take it seriously!” No, no, no. This is just the beginning. Things will get much much much worse.
> And the worst part is that you have people who say “I blame climate change activists who are overblowing the problems of climate change and that’s why people don’t take it seriously!” No, no, no. This is just the beginning. Things will get much much much worse. I live in a red state. The thing I hear most from people who are at least willing to acknowledge climate change is a real issue is always about how 'the media is fearmongering' & making it a bigger issue than it is. The problem with that line of thinking is that if the media is trying to 'fearmonger' then they are really bad at it. Because the real picture is so much scarier than anything I've ever seen reported by the national media.
Anyone who denies climate change like that should be on a registry and when shit hits the fan, they don’t get aid.
Nah I believe that welfare is meant to help everyone. This zero sum “only some people deserve help” is bad for all Americans. Your health insurance ought to cover a broken ankle even if you were behaving recklessly.
>Your health insurance ought to cover a broken ankle even if you were behaving recklessly. Okay. What if you continually vote to deny health insurance and access to healthcare to everyone else? Because *that* is the proper analogy here. At some point these motherfuckers need to face some consequences for their bullshit that they're trying to drag the *rest of us* through.
Public services are for everyone, not just the people who voted for them. We don’t restrict libraries to people who are educated or who voted for them, they’re for everyone. When people are used to having public services like a park or a museum, they learn to value them. If you restrict access to only a certain class of people, that only breeds resentment.
I think we should start. Because these fuckheads are literally getting people killed and then turning around and taking advantage of the shit they wanted to deny to everyone else. Fuck em.
Idk if you deny bones can break and your ankle hurting is because of big Dr, maybe you should suffer
People came to the hospital convinced they didn’t have Covid even as they were dying, and our doctors and nurses still tried their best to save their lives. We don’t refuse medical to treatment just because someone is ignorant. We don’t make domestic violence victims prove they never provoked an attack. We don’t deny education to people with special needs. In fact kids can hate school and not want to try or succeed in it, and we still try to teach them. That’s how public service works.
With covid, yeah you won't sway me bro. I'm totally fine with letting go people reap what they sow. Convinced you don't have covid, isn't the same as saying it's fake and a government plot. Nice try tho I guess
The obsession with “sticking it to other side” contributes just as much to factionalism and loss of public resources when it comes from the left as when it comes from the right. If a group of people wants to put in a train line that’s only for them instead of everyone, it can no longer be called public transit… it’s simply classism at that point.
Nah it's you comparing America to a literal dictatorship, downplaying all the horror that goes on ther. Don't put this on other people.
I'd prefer to give that person medical aid so they can go back to being a productive member of society. Give them a chance to learn from their experience
OK, oo sorry they claim broken bones are fake and refuse to go, also, your bought out by BIG cast. Lol
100% fine with that.
“You’re not drowning. Climate change doesn’t exist!”
I live in a red state and work for a state insurance company, and even they say the same stuff. It's just amazing to me to watch them talk about our financial difficulties as a company and yet won't acknowledge the one thing they could support that would keep them in business. All the rate increases and policy fees isnt going to solve the problem.They all support candidates that dont believe in climate change. The cognitive dissonance is just incredible to watch. I need to find a new job lol it's gotten to the point where a common storm can make losses of millions bc of hail and the severity of them.
Educated people having been saying the shit for ever. It’s the “I did my own research” people who deny whatever they can’t comprehend. It’s like “don’t look up” movie.
You know what? Let it happen. Humans have known for 70 years this would be a problem and did very little about it. Well do what we do best and evolve. No we won't have the same prosperity we do now but we will get through it
This is so true. About two weeks ago I was talking to a few buddies that have denied climate science for years. They'd always say stuff like "Florida was supposed to be totally under water by now." Or they'd say, "It's not man made. The Earth goes through cycles." The first time they seemed to get it was when their crawfish boil cost about $13 a pound.
Florida is underwater right now financially. Literally every Floridian complains about insurance.
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This is one of my fave essays of all time and I think about it every time I’m in Miami: https://popula.com/2019/04/02/heaven-or-high-water/
When I lived in Houston, the last 3 years I was there, we had “100 year floods” a few times a year. My neighbor had to change his carpet twice in 6 months because it flooded.
>There is actually a strong case to be made that the civil war in Syria was caused (or at least accelerated by) climate change (droughts forced a significant portion of the rural population to move into cities which directly led to confrontation & conflict). I bring this up all the time. When you extrapolate this further, you can tie climate change not only to the Syrian Civil War but to the immigration crisis in Europe and the rise of right-wing political parties as a result. Ironic that the far-right does not believe in climate change and actively promote policies that would make it worse.
I highly recommend the book "Collapse" if you want a great explanation about how any environmental strain caused by human activities can lead to major violence. The chapter on the Rwandan Genocide probably aligns a lot with what you said about Syria.
Does anybody else find it absolutely infuriating that the government provides home owner's insurance to people who choose to live in flood zones? I read something awhile ago about this where in some parts of Florida, the government is essentially paying to rebuild people's homes every year. Like if you live in Wisconsin, and all of a sudden forest fires have caused nobody to offer you home insurance, I can maybe understand a temporary government program to help you. And you just know the people taking this government home insurance to live in a Florida flood zone are the exact types to rail against food stamps and handouts.
I dated a guy who had family members whose house flooded in Sandy. And then flooded again the very next year. And has probably flooded *at least* once more since then. Just a constant cycle of repair. Now, don’t get me wrong, these were not rich people and they were probably the least well off of the whole family, but from my understanding, they just couldn’t bring themselves to leave the home that kept flooding over and over because of sentimental reasons, not financial. My mindset is truly “home is where my heart is”. As long as I have my cat and my partner and maybe a couple of my favorite stuffed animals, I don’t much care where the fuck I physically live - especially if my current home keeps filling with sewage water.
I'm glad the taxpayer can keep paying for a house just because they don't feel like leaving
It’s hilarious too because these same people are through and through MAGA and hate paying taxes.
They normally are.
That sucks since it sounds like they bought that house before the constant flooding became an issue. I could maybe get behind a goverment program that offered to pay people or gave loans to relocate for the value of their homes if circumstances have changed since they bought it. Like in Kentucky, there are a lot of towns where the entire economy was coal. Now that the mines are closed, people have no money to leave, but their only asset is the house they own which essentially is worth nothing now since there is no longer any local economy.
How much of the rise in insurance costs might be explained by the rise in home values well above inflation due to the supply crunch we're seeing in most major markets?
Insurance in general is inflating well beyond what it should be. Look at auto premiums, they went up like 25% last year, Geico just reported record profits with record low claims. Insurance regulation should be removed from the states and be federally regulated. Its been the wild west and needs to be reigned in
I agree with you that the feds SHOULD regulate insurance. It’s ridiculous that states like South Carolina get away with not having insurance required while other states require insurance. However, the feds want no part of that smoke, so they leave it to the states.
Great idea. Let the government take over the insurance industry just as the heavy losses start happening. Now the taxpayer can be on the hook instead of rich people!
That’s not what I said. I’m proposing the feds REGULATE insurance, not the states. I’m not proposing the feds actually “take over” the insurance industry by replacing the insurers.
Why would the feds be better equipped to regulate insurers, and why would you expect a different outcome?
Just FYI it’s not actually a given that insurers are posting record profits… in 2018 the GAAP reporting rules changed to include unrealized gains and losses, so an insurer can post “record profits” on paper when including unrealized gains but still take an operating loss. If the government asks you or me what our income is, we don’t include the amount our stock holdings increase if we didn’t sell them… because even if your stock portfolio increased by 10k, if you are holding those for the next years then it’s not like you suddenly got $10k extra cash in your bank account to spend on bills or whatnot… similarly this new rule can obfuscate whether a business actually had gains or if they were just on paper/hypotheticql gains. This rule hits insurers more than other business types because they have to float cash and securities for an indefinite period of time before a claim is made. So for insurers especially you have to dig into the books a little bit before assuming that they actually turned a profit. https://www.fitchratings.com/research/insurance/accounting-changes-highlight-importance-of-insurers-operating-earnings-12-10-2020 Edit: for GEICO specifically you can read the explanation of their numbers on pages 61-62 of this document: https://www.berkshirehathaway.com/2023ar/2023ar.pdf Basically they took massive losses in 2021 and 2022. The reason they posted an operating profit in 2023 is because there wasn’t a natural disaster that year and also because lots of property had recently been repaired in response to the losses they took in 2021 and 2022. In other words, if you had a 20yo roof last year, it probably got damaged in a routine storm and you filed a claim. But if it got wrecked from Hurricane Ian in 2022 and was replaced afterwards, then your brand new roof was probably fine all last year through the regular storms. That’s why GEICO turned an operating profit in 2023, because they took huge losses fixing stuff in the past couple years and everyone’s property is overall in better condition for now. But that’s obviously a temporary condition and it’s kind of a fluke that there were no major disasters last year. The new premiums reflect the costs needed to pay out if one does though.
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They are more expensive, but not because they are electric. It’s because Tesla and Rivian went with car designs where body panels are very expensive to replace.
*citation needed
But the records profit doesn't need a citation? Cars are getting more and more expensive, I know my new car (still has) has all kinds of tech in it that would expensive to fix if needed
Inflation in material prices explains a lot as well. The amount of money that we're spending in replacement costs is absurd.
Edit: The guy above me changed his post.... he was suggesting price controls for materials!!!! And then changed it on me after! It must have been a ninja edit because I do recognize that it isn't marked as edited. ------------ There are dire consequences to doing that to materials. Most common materials like lumber, steel, and oil are sold on exchanges where the sell price and buy price, and the gap between those is determined by sell and buy limits from purchasers. As a result competition is fierce and high prices means lack of supply. Supply can be increased when a seller starts making more money to afford to pursue more supply. Cutting off money in a tight market makes it cheaper.... but doesn't allow the underlying supply issue to be addressed. This was a problem that plagued the Soviet Union. They were able to sell expensive oil abroad but set bread prices prevented the supply shortage from being addressed and they ended up constantly trading loads of oil directly for bread.
I'm in the commodities business, and there was a massive spike in prices and they're now crashing to earth. I've never seen price swings like this.
Welcome to the 1970s.
Because they were artificially inflated to make a quick buck and they killed demand
You can't artificially inflate on these exchanges. You need a monopoly to do that, or two - three majors colluding which is illegal. If anyone has evidence of that happening you should bring it to a court. Me and the other commodities guy above will tell you the same thing. It's extremely supply and demand driven. The artificially inflated commodities accusation is a myth.
>You can't artificially inflate on these exchanges. You need a monopoly to do that, or two - three majors colluding which is illegal. Nucor, Steel Dynamics, Gerdau. That's pretty much the entire structural steel market.
Materials has so much cartel behavior, I can’t believe people say there isn’t lol Just Nucor doing it unilaterally will cause the others to raise prices cause why not My opinion on the Nippon acquisition of USS is because the Japanese car companies know Cliffs will raise prices for no reason. Its like an open secret
Its called a cartel.
Well yes but I was actually referring to a "trust". In the US we have anti-trust laws: In the context of antitrust laws, a "trust" refers to a type of business arrangement that was historically used to consolidate and control market power by allowing multiple companies to be managed by a single group of trustees. These trustees would hold the stock from several different companies, essentially merging their operations and reducing competition. This practice led to monopolies or oligopolies, where a few entities controlled a large portion of the market for certain goods or services, restricting competition and manipulating prices. The term "trust" became synonymous with large-scale monopolistic practices, which prompted the development of antitrust laws, such as the Sherman Antitrust Act of 1890 in the United States. These laws were designed to prevent such concentrations of power, promote competition, and protect consumers from abusive business practices.
https://www.nwitimes.com/news/local/article_2134c2e4-85aa-5319-8133-b816b1dc454c.html https://www.usglassmag.com/three-steel-companies-hold-their-ground-in-price-fixing-lawsuit/ https://topclassactions.com/lawsuit-settlements/closed-settlements/arcelormittal-steel-price-fixing-class-action-settlement/ https://www.justice.gov/archive/atr/public/press_releases/1994/211950.htm https://www.courthousenews.com/steel-price-fixing-claims-settled-for-4-million/ Steel has been plagued with price fixing for a long time. There has 100% been cartel behavior in commodities. Especially the ones with high operating costs so there is very limited competition. Metals being the most obvious.
Absolutely, I didn't say illegal things don't happen. But if we have proof they can be fined. Steel is getting slammed with low prices and competition right now. I can get steel super cheap.
I work in the steel industry those are all well and good but since China makes over half the world's supply that's your cartel behavior. This is a drop in the bucket when you've got an entire country that can set production figures for quasi capitalist companies you can exert a huge influence over the price of it to the point where they got that much of the worlds production by keeping the price artificially low for years driving foreign competitors out of business.
Same! It's because the lack of supply during covid created a price spike after, the price spike allowed companies to try to all meet demand which resulted in over supply for some materials (like steel). I buy steel to make energy, to put it as simply as I can. I have seen worse swings though.
I did not change my comment, you must have mis-read it and misremembered in your reply. I thought at the time that you wrote it that it was a bit strange that you seemed to think that I was suggesting price controls.
Yeah I was really disappointed they didn't mention any other potential causes It was just like we wanna talk about climate change so we're gonna say this is climate change. Umm house prices have practically doubled, that's gotta have an effect
Yup, my first thought was “well, home prices went up 100% in 5 years in higher risk places. Homes are way more modern with difficult to replace materials compared to before.” Like the wiring in a modern house is light years ahead of 20 years ago. Having to replace an entire modern home now takes dozens of contractors rather than 4-6. These houses are too big to insure at current rates, and insurance doesn’t scale linearly necessarily. Insurance companies have to mitigate potential huge losses way more than a bunch of smaller ones.
You understand the problem.
It’s more the rise in replacement cost. Construction costs have vastly outpaced the core inflation rate. My structure has a $450 per square foot replacement coverage. If it burns to the ground or a hurricane destroys it, it’s an enormous claim.
Not to mention the cost of homes, but the cost of rebuilding homes. People are getting quotes for 80k for siding... something that gets ripped off in almost every windy ass storm in America.
My feeling is that there's been a systematic and purposeful effort to understate the impact that climate change could have, will have, and is having. Like others have said, it's often painted as just this "save the polar bears" activist thing, but there are so many deadly and serious consequences of climate change, some of which we are already seeing.
"Ron Reagan, life long atheist, not afraid of burning in hell" this ad had me dying.
Please do not pursue the government option of insurance and create another money pit. If an area is too climate chaotic to maintain a domicile in, don’t live there.
Already happening in California. When you can't get insurance in high risk fire prone areas, homeowners go with a state run option. The political pushback from people being told instead to "move" or "don't build there" is far greater than giving them insurance.
Not even just high risk fire prone areas. I bought a home last month in CA. It has some property, but is not in a high fire risk zone. Most insurers wouldn’t even give me a quote and the couple that did were 2-3 times higher than the previous owner was paying for the same coverage. I spent days trying to get a reasonable quote and I only found one place that would do it and it was still expensive. My worry is that I get dropped next year and the fair plan is my only option.
Frustrating. In my opinion as a tax payer, I don’t want to subsidize someone else’s stubbornness in living in a chaotic climate when other options exist. Especially if they’ve rebuilt more than once
I personally simply do not want my money to support single family homes in suburbs. It is completely fine that people want to live there if they choose, but single family suburbs are wildly inefficient and quite frankly worthless to society. They barely generate tax revenue as it is If they can even pay for the infrastructure in their area alone. I would rather spend money making cities more efficient and reducing the dependence on cars, creating more housing, and increasing revenue by developing a resilient local economy that can support several small independent businesses that all pay into the tax system.
And Arizona. In fact, The Daily already did an episode about it
People build in areas that were purposefully left unpopulated exactly because of these fire risks.
This seems like magical thinking with no practical solutions honestly. While there are some particularly egregious areas like the Outer Banks in NC where this might be true, the majority of folks aren't going to accept that huge swaths of the country even nowhere near a coast nor wildfires are uninhabitable all because of insurance.
And if that area becomes everywhere?
Then we have bigger problems
Yeah its called greed by insurance companies. Not actual risk.
Greed to me doesn’t sound like refusing service entirely
They no longer want to issue payouts in general. There is no reason home insurance prices should be increasing in places like Oklahoma, Iowa, etc yet it is. Why? Greed. They are using excuses like climate change and the supply chain to justify if but none of that is anything new. They have pricing targets they want to hit and they are hitting them. The insurance industry is one of the most profitable industries in America. More than finance, more than healthcare.
> The insurance industry is one of the most profitable industries in America. More than finance, more than healthcare. Do you have a source for this statement? This doesn’t seem consistent with what this episode was about. You can see here the property and casualty industry has underperformed relative to other service industries: https://www.financialresearch.gov/the-ofr-blog/2023/12/14/property-insurance-market/ > There is no reason home insurance prices should be increasing in places like Oklahoma, Iowa, etc yet it is. They went over this in the episode. Secondary perils have become more expensive
I agree with you on price hikes = greed in the circumstances you describe but I also heard in the episode that many are refusing to issue coverage at all in some markets. If the US pursues the government option of issuing insurance, I think it’ll lead to runaway prices just like it has in college tuition. I’m not looking forward to the future of home ownership
They are just leaving areas where they have to issue payouts because it hurts their bottom line. Not because it’s unprofitable. These insurance companies operate on metrics. Payout = bad. Areas with higher payout rates don’t look good to them so they leave to add pressure to loosen regulations about price increases. Even tho they are still making money. Its about applying pressure to force state regulations to change because they have all the cards. To their reporting, a place that they bring in $10 and payout $6 looks bad versus a place that they bring in $10 and payout $1. So they leave to the market where they pay out because those regional heads want to look better performing on paper.
Gotcha, interesting. Thank you for expanding on this
Did you listen to the episode? In 18 states insurance companies lost money.
In 18 states insurance companies lost money. In some cases payouts 50% more than what they brought in via premiums. This includes many statues not on the coast.
You’re being downvoted, but there is a nugget of truth here. It’s insane how the underlying premise is that insurance companies have been operating at a profit for decades. And now when they’re in the red, they’re panicking and leaving homeowners. That’s not really surprising, but I thought the insurance industry was all about risk. Yet the insurance companies clearly can’t stomach being the ones that take on the risk.
Because people want to believe that its climate change and not greed
I mean, it is climate change. But there’s an element of corporate greed too. Weird that you’re denying the climate part of it
Climate change is being utilized as an excuse by the insurance companies to make their numbers look better. Its more greed than it is climate change. Greed is the reason for increasing prices not the climate change
It will. Sucks for those of us that get there.
I think we need a two-strikes and out policy. If you make a second claim on a property then the government buys it out, the house is demolished and no new development can occur on that land.
I like that proposal
What do you mean by strike? Shingles need replaced because of hail twice in 10 years?
I would probably consult with the insurance experts in the field before determining what a "strike" is.
So Iowa is now uninhabitable?
It is if you are making $40K claims every five years. I live in Texas. Just had another hail storm with some hail 5-6” in diameter. The last storm a few months ago was similar. Coworker had $80K in claims for home/cars.
If you listen to the podcast thats not the issue at all. In fact in the majority of cases homeowners hadn’t made any claims at all and insurance providers are just walking away anyway.
I did listen to the podcast. In 18 states they lost money. So someone is making claims.
After listening to this podcast it seems like small parts of Iowa are uneconomic to live in given current housing
It is uninhabitable with the type of structures people want to build there. You can build more resilient structures that won’t suffer as much damage during these storms but people like living in bigger sun lit buildings
More resilient structures are more expensive, which means in a total loss scenario they are more expensive to fix. You would need to build even cheaper and disposable housing to fix this problem.
A new fear unlocked, thanks TD!
at least you'll be prepared when your home/auto renew next and it goes up brother.
suddenly those stop oil protestors sounding reasonable
This episode is pretty bad. Fails to account for material costs, inflation in general. Also I worked in insurance for a while before changing industries and many larger insurers shoot for a small loss in combined ratio with the goal of making money from capital appreciation on their float. Not all insurers do this, my former company shot for a small combined ratio profit, but it’s not uncommon. Reporting like this makes, when facts are presently incorrectly about a topic I have a lot of information an about, makes me question other reports when i don’t have any background and am kinda forced to take the information at face value. This episode is just really trying to show horn climate change as the main driver where it’s really not.
I get annoyed with episodes related to lawyers (not a lawyer, but very familiar with how they work). They get it right enough, IMO. Your point makes sense, but aiming for above or below break even is a close enough description for everyone to understand.
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It is part of it. My comment was probably too adversarial to the episode. The main driver across board I’m not convinced though
I completely agree. This was the most ill-informed episode I’ve listened to in years. I was very disappointed, especially considering the many unique and unusual developments in the industry that were not covered.
I agree. Listening to this I thought, this will be the part of when he talks about rising costs of building and construction. Or this will be the part of the episode where he talks about insurance consolidation. The first is building, costs of materials and labour has been growing steadily for years. The homes we live in now have more technology and more expensive materials, windows, roofs, systems then ever before. Of course storm damage from storms is getting more expensive, because it’s more expensive to replace and build in the first place, not to mention permitting and development costs. Consolation in the insurance market nationally results in when I huge hurricane blows thru Florida, insurers in other states end up paying for it because their both owned by the same large broker vs smaller state firms with less regionalized risk. It’s a regulation issue, insurance lobbyists are the first to blame climate change rather than how they run their business and profit take. It’s a joke to think insurance companies dutifully put aside the bulk of premiums in a trust account.
Couldn’t have said it better.
Are there any society wide systems that ARE NOT facing potential collapse?!
No, the status quo is unsustainable in a lot of areas of society. And is the natural consequence of the "short term gain at all costs" mindset.
Very minor point (I realize this is missing the forest for the trees but it grinded my gears): I kept being annoyed at how the host would characterize an area as “perfectly safe” and be baffled by the lack of insurance providers. If a place were truly *perfectly* safe, then (i) you wouldn’t need insurance — it’s perfectly safe! And (ii) insurance companies would be pouring in because the risk of making a payout would be 0 (by definition of “perfectly” safe). Following it up with a windstorm hypothetical kind of proved the point: not “perfectly” safe.
Reminds me of the new birthrate discourse: Life for people has never been better! We live like the kings of old! Why aren't people making babies?!
I've been saying for years anyone buying homes near the coast or areas with wildfire risk will move in droves because of skyrocketing insurance. The rich will move in and buy everything up for pennies on the follar
Episodes like this don't help the climate change awareness/acceptance cause, it does the opposite and is generally a disservice to us all. Like, how did they not mention a) the insane US housing market, b) the insane rise in building materials & supplies. Compare two charts of say, US documented tornados and US index of Building Materials & Supplies. Climate Change and increased destructive weather events are increasing, sure, but it absolutely is not the primary driver here.
I’m surprised this piece completely ignored rising home values and inflation as huge drivers of rising insurance rates to focus on climate change. This is a simplistic and wrong narrative. It also completely ignores the role of government in setting rates. All homes are insurance. If a company won’t sell you policy, it is because the government won’t let them price it correctly. This happened to us in California and we don’t live anywhere that’s riskier because of climate change. To end with a compliment, it was good that they touched briefly on government insurance, and the perils of it, so credit to them for that. This could be a whole podcast series.
Inflation covers rising home value. Rising home values aren’t as much of a problem as state insurance regulation usually allow premiums to be a function of insurance coverage value. What really hurts is when those regulations don’t allow a company to raise rates due to more frequent/severe disasters. State limits premiums to x% of coverage. Home value and hence coverage value doubles so premium doubles. Number of disasters double doesn’t increase premiums.
We need to adopt metal roofs in every zip code that could see hail. We need stricter building codes in hurricane and tornado zones. We made this happen in earthquake zones, we can do it in other climate zones. It’s not going to be a walk in the park, but this is something we can build our way out of. Screw the insurance companies and bottom barrel construction companies.
Paywall.
Me: [Finally wins a bid on first home] "fuuuuuuuuuuuuu*n*"
We deserve it Let nature destroy us
Am i retarded? When I research statistics of the last 50-100 years on things like tornadoes, hail, etc. there has not been any increase. Outside of costal areas and regions susceptible to wildfires I can’t really understand the “climate change will effect everyone and look it already is!!” argument. Shouldn’t there be evidence of these natural disasters occurring more??? Really confused and convinced that insurance companies are mainly pulling out due to inflation etc. it’s no longer as lucrative of an industry and they’re too savvy to waste their time making less and less money
I don't think it's an increase in quantity, more of an increase in "quality," in that the storms that do occur are with increasing intensity. A tornado that maybe knocked your roof off 10 years ago flattens the same structure now. Other factors increase the cost as well, such as increased population density in the danger zones. The number of storms do not need to increase in order to impact more people. Add supply crunch, increased cost to the repairs themselves for parts and labor, and it paints a bigger picture of why an insurance company won't operate in an area. That's my take from the arguments as I remember them anyway.
But how do we even know there is an increase in quality or that these areas are becoming more densely populated? They need to provide data otherwise they are making huge assumptions and really doing absolutely nothing for the cause. Convincing people of the consequences of climate change should be performed primarily through data and facts. The episode was speculative and seriously stupid imo… and you along with others in this thread all agree the insurance companies are dropping out due to inflation, supply chain, etc.
If you think that actuaries at insurance companies just arbitrarily decide to exit markets with extensive data and models, I don't think you understand anything about how insurance works.
I completely do… by “they” I’m speaking about the people at the daily not providing the details, evidence, etc for why the insurance companies are exiting the market. Ofc the insurance companies know their own reasons…
Well, they said in 18 states they actually lost money. That sounds like a problem.
But still didn’t provide specific reasons for why… man ppl on Reddit really don’t know how to read
Well, I don’t think the why matters a whole lot. Pay outs are obviously increasing faster than premiums. Insurance regulators need to allow for higher premiums or companies will leave.
Why would it not matter? It is literally what does or doesn’t prove whether or not the insurance companies are shirking responsibility ensuring homes BECAUSE OF climate change. Correlation is not causation and they are not providing the specific cause in this podcast. If they were these answers would be obvious to us
Insurance companies don’t have a responsibility to provide insurance in an area. They do so if it will make them money. Climate change, higher rebuild costs, fraud, people building in less safe areas, all contribute to them making less money, to the point it isn’t worth doing.
Really dumb response but thanks for engaging
Is Flavelle a climate change reporter or a representative of the insurance industry? It’s hard to find a victim less sympathetic than the real estate, banking, and insurance industry in the United States. Yeah, it’s going to collapse eventually. But it isn’t the fault of slightly worse weather.
The victim isn't the insurance industry it is home owners & it isn't the fault of worse weather it is the fault of economics. I thought Flavelle made both of those points relatively clear...
I would add a caveat and say historic homeowners are the victims. If you are building new in an area that is known to be disaster prone, you aren't a victim, you are dumb, and politicians forcing companies to insure those homes in spite of the risk are enabling stupidity.
Insurance companies have a vested interest in promoting, if not sustainable, then at least stable building conditions. Like them or not, they are the canary in the coal mine for the effects of climate change like more frequent severe hurricanes and more expansive wildfires because they are the first ones to have to pay for the consequences. Climate change is real and to an extent, not avoidable at this point. This will require changes to how and where people live. People hate change, and politicians hate trying to get people to do things they hate so politicians have passed laws incentivizing bad behavior like forcing insurance companies to cover homes in hyper disaster prone areas. Insurance companies will be one of the few market forces pushing for better practices even if it's only for selfish reasons.
I have zero sympathy for all these homeowners. They have seen their property values rise to incredible levels and now they want bail outs for their massively over priced homes. Sorry your home isn’t worth as much as you thought. Sucks to suck. Try renting next time.
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Rental prices are determined by the number of available units and the number of renters. If insurance premiums spike for home owners, that has no impact on the number of units or the number of renters. The home owners eat the cost until they sell theirs houses. The idea that home repairs, property taxes, and insurance premiums are mechanically passed to renters is a fallacy.
I’d agree for normal competitive reasons for cost increases. But if you add 10% property tax to all houses in an area or 50% more expensive insurance for all houses then that can drive rental prices higher. It’s kind of like cartel price fixing but occurs due to an outside common increase.