American, living in area prone to natural disasters: "Is the WHOLE WORLD becoming uninsurable?"
The answer is obviously "no" since there are other parts of the world that don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires.
It’s possible that solve the hurricane problems with proper building regulations and lower the risk of huge wildfires with controlled burning. But the US as always prefers to pretend that there’s nothing to be done when other parts of the world has figured it out.
We have cyclones here similar to the hurricanes in the US and usually it just blows over some trees maybe causes a power outage.
The absolute worst I have experienced was 3 days without power. I have never seen a house destroyed by a cyclone here.
As for wildfires, they do unfortunately claim a few houses most years.
Hurricanes are mostly just flood damage in the US, and some wind/debris damage exactly like the blown over trees you mention.
Houses generally aren't destroyed by hurricanes in the sense of "the storm literally ripped them up", they're made uninhabitable by storm surges (flood).
The scary ones are tornados.
And tornados do genuinely fuck shit up. Even in those "enlightened" parts of the world you think have proper building regulations. If you're interested, go look at the recaps of tornado damage where they hit Europe here: https://en.wikipedia.org/wiki/List_of_European_tornadoes_and...
Note the number of homes destroyed and people killed - plenty of both, even in those countries that prefer brick/concrete homes.
As the governments in the US get increasingly incompetent, insurance prices are going to have to rise. Government services are largely there to protect you during black swan events, so if those services get less and less effective, you're going to need more insurance for those events.
I recall reading somewhere that the Indians had done controlled burns before Europeans settled in the parts of the U.S. where fires are now a problem. European settlers who displaced them did not continue the controlled burns and then fires became a problem. Apparently, if you do regular controlled burns, the severity of fires is reduced and healthy trees survive it. When you do not, when fires do occur, all trees die and the fires spread out of control.
Theory: Damages in the USA have gone up because mold mitigation was incorporated as a serious consideration only fairly recently. If you increase your definition of what damage is and the work required to fix it then 'damage occurring' will appear to suddenly go up.
Wildfires are not the problem. They happen all the time without causing billion-dollar insurance claims. Insurance is always assets x risk. The issue is expensive flamable housing (assets) in a wildfire area (risk). We ask for trouble when we create million-dollar wooden houses surrounded by manicured gardens in desert enviroments. And build on a slope facing pervailing winds. The answer is concrete/brick houses with metal/ceramic rooves surrounded by sand/stone/concrete. Want a big green lawn? Move to the pacific northwest. Want to live near the beating heart of the movie industry, a town where it never rains? Get used to cactuses instead of rose gardens.
Wildfire structure losses can be mitigated with cutting firebreaks, building material selection and removing flammable trees and plants from properties. A lot of communities in western Canada have learned this the hard way.
It's so interesting to see the people in awe of that "fire hurricane" video in L.A....
We had a way more intense drought than they in my city last year (theirs are not that intense). We also had 50 km/h winds. We also had higher temperatures... And all of those to levels that we never saw before. Also, we have more trees in our cities. We had new "fire hurricane" videos every week (normally, every other year somebody films one).
And we had to evacuate dozens of homes, luckily no one was destroyed and people could return 2 months later.
Honest question. Why when people describe wood framed homes do they always phrase it like houses made from "firewood", "sticks", "twigs" etc? It at least for me always detracts from the argument at hand. You could just as easily build a wood framed home with an exterior shell that is fire resistant using modern materials or brick.
Well, we are commenting on an article specifically about the spread of fire in urban areas, as we've seen in LA this week.
Here in the seismically stable UK, we had problems with fire spreading in urban areas [1] in 1666. So we banned wood exteriors on buildings. It works pretty well if you don't need to worry about earthquakes or hurricanes; brick doesn't burn.
This lesson is taught in history classes to 10 year olds, and they don't tend to go into other countries' construction traditions, or reasons not to use bricks.
I don’t understand the sense of entitlement towards every nuclear family owning a building constructed with stone, steel, and concrete. None of these things are available in a level of abundance to grant them to every person alive. While concrete only construction is more common in developing countries I certainly question the quality. I lived in an apartment like this in South Asia and it had no weather insulating ability whatsoever, the plaster was constantly crumbling, and the doors would jam up. Not to mention the recurring nearby stories of an apartments roof collapsing on its occupant.
I am thankful to live in a county where land and building ownership are more available to the common man than most and many people can escape being perpetual renters. Wood construction enables that. Plus North Americans love to adjust and remodel their homes and have unique shapes with high ceilings etc etc etc which is really helped with our construction techniques. The only thing I hate is termite risk and that could probably be resolved by allowing framing with pressure treated wood
One huge problem with respect to fire resistance, in American home's, are the use of truss connector plates. While they have many advantages in cost and allow impressive cheap big houses, they fundamentally weaken the wood when it burns. Often houses just collapse on that joints, not because the overall beam failed, but this interface. In the end the use of "wood" is blamed, but that failed to address the rootcause.
Dimensional lumber is often called sticks, in the building industry, probably because it's quicker. For example, if a roof is built from individual pieces of dimensional lumber, instead of pre-built trusses, the building method isn't called dimensional-lumber-built but stick-built.
For me it's the result of pent-up anger from the popularity of drywall and particle board here in the US.
It's not a big leap to go from complaining about the furniture and the walls being made from what seems like highly compressed dust to also complaining that underneath it all is a bunch of sticks.
Brick, stucco, concrete siding are all fire resistant and commonly used in construction in the last 25 years.
Insulation plays into combustability as well, where mineral / rock wool has thermal mass, does not ignite, but us construction has recently favored fiberglass and cellulose for the the costs.
> You could just as easily build a wood framed home with an exterior shell that is fire resistant using modern materials or brick.
That is actually how pretty much all new houses in the UK are constructed. They are pre-fabbed timber frames with a brick facade. It's quite common for British people to be snobby about building materials. I wonder how many don't realise their house is timber framed.
Some of us live in reinforced concrete socialist-built apartment buildings, and our homes don't burn like american houses do. Same for single family houses made from brics and cement (most houses here)
Same for eg. gas explosions, this is one one looks like in us:
Same for eg floods, pump the basements and ground levels, repaint, move stuff back in. Someone from US I work with on a project had a pipe burst while on vacation, and insurance wrote off their whole house, because of a few days of water.
I mean, sure, you could that, but looking at the photos from fire-affected areas, nobody did that, it's all burnt to the ground.
>Honest question. Why when people describe wood framed homes do they always phrase it like houses made from "firewood", "sticks", "twigs" etc?
Europeans are jealous that they clearcut all their forests 1000 years ago and want to brag up their cinderblock homes that no one can actually afford to buy anymore. 40% down on their 50 year mortgages yadda yadda.
> What's the average monthly leccy bill in Phoenix during the summer? $400?
The average high temperature in Phoenix in July is 106.5F (41.4C). If you are cooling to 70.0F (21.1C), that's a difference of 36.5F (20.3C).
The average January low in Berlin is 28.0F (-2.2C). If you are heating to 65.0F (18.3C), that's a difference of 37.0F (20.5C).
I feel like many people living in climates that don't require air conditioning have this view that it's fantastically inefficient and wasteful. Depending on how you are heating (e.g. if you are using a gas boiler), cooling can be significantly more efficient per degree of difference. Especially if you don't have to dehumidify the air, as in Phoenix.
There's plenty of water for Californians in California + The Colorado River.
The problem is that our government has spent ~100 years ensuring that corporations have easier and cheaper access to it so that they can grow feed for farm animals to sell overseas, largely to places like UAE that have sufficiently depleted their own water table as to make it impossible to grow alfalfa, thus worsening the risk of droughts for the sole benefit of the shareholders of these corporations.
Every gov't agency in the US needs to start treating our natural resources as if they belong to all the citizens of the country and not a select few shareholders of whichever corporation can earn the most money by exploiting them.
> To be fair we are talking about an area of the country that is prone to seismic activity, it does limit the building materials.
Lisbon was destroyed by an earthquake/tsunami/firestorm combo in 1755 that killed tens of thousands.
When the city was rebuilt, they came up with the idea of using a wooden frame structure for earthquake resistance and masonry walls for fire resistance.
Nowadays, most new buildings seem to use reinforced concrete.
I wonder if American children are taught the story of the three little pigs.
What's the alternative? It's not particularly viable to just relocate an entire city.
Then there's the question of where to move them to. Between wildfires, hurricanes, and earthquakes you've eliminated most of the coasts. Much of the rest of the country defines its identity to a significant degree as being opposed to cosmopolitan cities. That doesn't leave a lot of places to move to even if we could just move the cities.
Japan has seismic activity, tsunamis, typhoons, landslides and flooding. Instead of building bunker houses they see homes as transient and utilitarian rather than as long-lasting investments. Perhaps homes in these high risks areas should be treated similarly.
Do we know why the insurance companies can't simply raise the insurance price to match the risks in those areas that are prone to natural disasters? I mean in general, not as in California where the government imposes strange policies. Speaking of the policy, why wouldn't California allow the insurance company raise the premium by region? Doesn't such policy benefit the rich at the cost of the poor as the rich love to live by the hills, lakes, or beaches, which is very much against the ideology of California?
Re: California, I don't understand the context for your question, or why you would think the California government is more strange than any other US state government. There's no universally-accepted "ideology of California." It's a big state with a huge, diverse population.
tl;dr, though: California does allow insurers to do that, but is using currently an antiquated set of rules that don't allow for modern risk management approaches. It's been rewriting those rules recently to fix this; I think the new rules are supposed to be in effect starting this year.
Japan is probably not a good comparison for home insurance because houses in Japan typically only have a 20 to 30 year lifespan. After that they are usually torn down and a new house is built.
Spain just had the worst flooding ever, Australia has massive wildfire issues, coastal areas all over the world are flooding, inland areas are dealing with drought. It's definitely not just the US.
One thing I haven't seen mentioned in here is the ornamental planting of non-native plants all over LA, like eucalyptus which is highly flammable, as opposed to the native coastal oak, which is not. All those iconic, non-native palm trees are fire hazards.
That's because that wasn't a material effect in this situation. It was hurricane force winds blowing over native shrubs and scrub land. It wasn't forests of eucalyptus that caused this. California has a decades long effort to restore native plants in areas. Eucalyptus groves are being torn out. The problem is that the native shrubs and grass are pretty flammable. They evolved to burn and regrow. They aren't resistant.
A key issue in the LA fires was bad management at all levels of government that could have prevented an order of magnitude of the damage (If procedures from the past were followed).
As for the hurricanes, stop allowing builders to build SFH in areas that are at or below sea level. They're going to flood. Period. That's not sustainable from an insurance perspective.
> nor build houses made from firewood in an area prone to wildfires.
The alternative is to build quadruple-the-price houses out of brick in an area prone to earthquakes.
It's much easier to repair/replace the former. And theoretically would be easier to avoid, if the fed would clean up the brush wood in their land (or give it back to the state, so they can manage it).
>don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires
Fireproof concrete bunkers would be worse for insurance because when the firestorm blows through and shatters the 7-centimeter windows slits your fireproof design calls for and ignites the interior you have to demolish steel reinforced concrete with machinery instead of knocking down wood with a sledgehammer and muscles.
A Caterpillar D9 is more expensive per day than a migrant laborer.
There are so many images of concrete buildings being burned out that if I search "california fires" the 9th image is of a steel-reinforced concrete building has ~10 meter fire jets blowing out one of its windows.
I'm always baffled at the fact that Americans don't build houses out of bricks.
I read those arguments of the advantages this method has, especially financial ones, but to me it's nonsense considering that it would prevent an endless number of problems that cause the total loss.
I still remember when New Orleans was hit with by Katrina, large parts of the suburbs where houses where made by wood and plastic where destroyed, yet downtown where buildings where made of bricks required maintenance, sometimes little of it, but none faced a total loss.
Unreinforced masonry is illegal in most of California and extremely dangerous- every brick becomes a projectile in an earthquake.
Despite the news coverage, fires are extremely rare but nearly every home in these areas is guaranteed to face multiple massive earthquakes that would bring down a brick building.
The entire west coast sits on top of a fault line. That’s why people don’t build with brick here. There’s plenty of brick buildings on the east coast (and on the west coast like in Oregon, but they have to be seismically retrofitted which is expensive).
If you built a home out of bricks in New Orleans it will sink. Same (and even worse) for Florida. You can mitigate that somewhat but it's extremely expensive and bad for the environment/water table/aquifer.
For reference, to make a non-sinking, heavy building in Florida you have to drill down into the limestone layer which is usually 100+ feet below the surface. Then you have to create very strong concrete caissons to hold the building up, standing on that limestone layer. It's very similar to if you were to build a structure out into the ocean (LOL).
There were houses that survived recent wildfires because they were built to be in a fire zone and survive fires. I’m sure there was damage but nowhere near total loss.
I’m sure when homes are rebuilt the majority will not be fire resistant.
It’s possible to build for hurricanes and floods too but few do it. They build houses that get blown away and then tap insurance.
Insurance rates for properties not built to withstand the stresses of their environment will go up.
we had a huge wildfire in my area in 2021 that burned through a few small towns. In one town, the only houses that survived where the ones that followed the guides out there for creating defensible space. They were also newer homes, which is obviously easier then retro-fitting an existing home, but the town got rebuilt essentially the same as it was, which is kind of sad to see.
I hope you don't get downvoted for stating the obvious. This tendency of equating the US to the world happens so frequently and it is 99% a non-US person pointing it out.
You also have to exclude areas that are now in flood planes (most cities), subject to freezing when the infrastructure can’t handle it (all of Texas), tornado prone (everywhere in the US(?)), and consider that the wildfire risk area for the US has expanded dramatically in the last few years.
For example, there was a red flag warning that ran from Colorado to Texas at the beginning of this month.
Parts of many cities have always been in floodplains, but after just looking it up, it does not seem that "most cities" are meaningfully in floodplains. This also does not automatically make even the parts within a floodplain uninsurable, depending on the circumstances.
Likewise, the level of infrastructure, tornado, and wildfire risk for the vast majority of the country is not sufficient for them to be uninsurable. "Occasionally a tornado comes through and gets 1 out of 10k houses" is not even a huge pressure on insurance prices.
Not uninsurable, but buildings are going to have to become tougher.
It's happened before. Chicago's reaction to the Great Fire was simple - no more building wooden houses. Chicago went all brick. Still is, mostly.
The trouble is, brick isn't earthquake resistant. Not without steel reinforcement.
I live in a house built of cinder block filled with concrete reinforced with steel. A commercial builder built this as his personal residence in 1950. The walls look like a commercial building. The outside is just painted cinder block. Works fine, survived the 1989 earthquake without damage, low maintenance. It's not what most people want today in the US.
In Yugoslavia, in 1969, one of the biggest earthquakes occurred, destroying several cities. After that, the country’s leaders decided to change building codes. Even today, although Yugoslavia no longer exists, the countries that adopted those codes have homes capable of withstanding earthquakes up to 7.5 on the Richter scale.
My main point is that if we face major natural disasters, we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
> As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
"Americans" is doing a lot of work in that sentence.
It would probably be more accurate to say "It seems to me that the history of American culture and economic systems have led to a system whose emergent behavior is to prioritize building cheap-but-easy-to-modify homes over constructing smaller-harder-to-modify-but-more-resilient ones."
Sure "we" need to take action, but the machine is very large and we are all very small gears in it. A twenty-something buying their first house doesn't have a magic wand to wave that will summon cinder block houses into being that don't physically exist. A builder who wants to build cinder block houses doesn't have a magic wand to rewrite city building codes that presume residential construction is mostly wood. A city council member who wants to modernize building codes doesn't have a magic wand to get enough constituents to prioritize this over housing costs, homelessness (but I repeat myself), jobs, etc.
Everyone's problems seem easy when you are very far away from them.
Why bother building a better home when it's cheaper to buy insurance and rebuild later?
This is why prices are important - sometimes it's sensible to build cheaper houses without these safeties if the risk isn't there, but if the risk does exist then it needs to be priced right to provide that incentive.
(Recently there was a major public building collapse in Serbia: the porch of the Novi Sad railway station collapsed, killing 15 people. This has really focused attention on corruption and caused massive protests.)
Reading up on this a bit, it seems it was the 1963 earthquake that precipitated the change in building regulations? The 1969 one seemed comparatively mild(?)
Yeah, I'm surprised that the damages of the LA fire occurred, because it was known beforehand that California had a fire problem (and also have an earthquake problem I think).
I'm here in Eastern Europe and our buildings can withstand a lot of things.
> we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
As an European, it baffles me as well.
If this doesn't happen to "cheap" homes here, why does it happen in California, to rich people's houses?
In 1666 London had a bit of a problem with fire, after that some building codes were introduced. Buildings made entirely from wood were not allowed and roofs had to have a parapet.
If you don't know what a parapet is, take a look up to the roofs on London's older buildings, the front wall rises up past the bottom of the roof. If there is a fire in the building then the parapet keeps the burning roof inside the footprint of the building rather than let it 'slide off' to set fire to the property on the other side of the street.
The parapet requirement did not extend to towns outside London, which makes me wonder why.
The answer to that is to see what goes on in the USA. After a natural disaster they just pick themselves up and keep going. Florida was obliterated in 2024 but nobody cared after a fortnight. Same with the current wild fires, nobody will care next week, it will be forgotten, even though having one's home destroyed might be considered deeply traumatic.
I think that the key to change is to not have too many natural disasters, ideally nobody has living memory of the last fire/flood/earthquake/pandemic/alien invasion/plague of locusts so that there is no point of reference or 'compassion fatigue'. Only then can there be a fair expectation of political will and the possibility of change.
If the market is allowed to price insurance correctly then we can motivate building designs to be more disaster resist. If the McMansion can't get insurance but disaster resistant, modest homes do, then people will adapt.
"Correctly" is doing a lot of work here. Some readers might miss that this is double edged. Insurance is a mandated product. You don't have a choice if you want a mortgage, or want to run a business. So while it is true that the sustainable price for insurance in many areas is higher than what current regulations allow, let's not forget what happens in an unregulated insurance market; price gouging.
Resistant homes will pay nearly the same prices as everyone else. So the cinder block home owner is subsidizing the sticks houses.
Same happens in autos. Monitored safe driving nets at most 10-20% discounts. Biggest factor is age, and even then, difference between 20yo and 35yo driver is 38%.
It was only a week or so ago that I learned that a major failure mode of most houses in Florida during Hurricane season used to be the roofs ripping off. The tie plates and straps that were invented to solve that problem created the McMansion as a side effect.[1]
Let's just consider Los Angeles for a second. For decades working class immigrants were pushed to the foothills in Altadena by redlining policies which placed them at risk for wildfires. Today their risk is exponentially greater due to the effects of unchecked climate change, and many cannot afford insurance even now.
How exactly do you expect these people to adapt? Many live in multigenerational households and could never afford to rebuild their house or move without uprooting their communities to another state.
Why are the victims made to adapt to the atrocious actions of the wealthy and powerful? Maybe our policy discussions should start from a place of compassion and work towards solutions from there.
Wood for earthquake resistance vs masonry for fire resistance seems like a false dichotomy.
Australia has a lot of experience with building fire resistant homes, and they didn’t do it with masonry, they did it with timber and steel framed homes, plus fireproof cladding and roofing materials, keeping a perimeter free of vegetation and protecting against ember ingress.
It is possible to have both earthquake and fire resistance in a stick framed home, without the expense of resorting to reinforced concrete.
California's building codes are the same. Three problems: overhaul takes generations, monster fire storms will still burn resistant materials, and brush upkeep is difficult
Australia is surprisingly urban, especially in terms of I would guess 90%+ of people live in relatively safe places fire wise (putting inhalation of particles aside).
People in built up areas almost don't think at all about wildfire safety, cladding an so on.
When I briefly lived in Oklahoma I found it frustrating that they use stick frame construction for homes and apartment buildings. Even when we know how to build much safer wind resistant houses.
What I thought was worse was once a tornado rips up a neighborhood builders are allowed to build replacement stick framed homes.
Oklahoma is full of lowest bidder builders. Living in OK I rarely see a house built in the last 10 years that looks like it was built to last. Yet another thing Americans don't seem to care about anymore.
And I’ll huff and I’ll puff and I’ll blow your house down.
Genuine question. Does this story get told to children in Oklahoma, and if so, don’t the children think to themselves “wtf parents, have you seen our house?”.
Most new houses built like that in a lot of places in Europe. Prefab reinforced concrete load-bearing walls + pourous concrete for the rest. It's either stucco or one layer of brick on the outside to give character to the building.
You're going to die if you're around to witness either (if you didn't already pass out from smoke/heat/lack of oxygen). It literally doesn't matter.
The advantage of suburbs in which houses are mostly built from non-flammable materials is that while maybe one or two rows of houses closest to forested areas will likely burn out, there won't be enough calorific potential for the fire to propagate further into the suburb.
Also for firefighting efforts the difference between a house burning out and a house burning down is huge. The former means that most of the fire is already contained in a non-flammable structure, reducing the risk of spreading and also making efforts to quench it with water more effective.
"Brick is much worse than wood for wind-stoked wildfires" is a strange take. If a wildfire is approaching, I'll take a town built from brick rather than plywood any day.
Relatedly, door locks sometimes seem to be "insurance rated", as in insurance companies give their opinion on what sort of lock one should use. If you couple that with the belief that no lock is 100% secure, it sort of suggests that a collaboration with insurance companies to decrease the odds they'll have to foot huge reconstruction bills (via stuff like you said, construction techniques, firefighting capacity, etc.) could alleviate this conflict somewhat.
You're correct that buildings must be more robust and literally capable of surviving an ongoing 4th of July event directly above the property.
However they must also be built such that there is less which is able to burn. Also so that that which does burn is less deadly when it burns.
There also need to be better firebreaks and less natural 'fuel load', which when there IS a good set of rain in the near future, needs to be burned in a rotating cycle to restore nature's fuel balance and discourage catastrophic uncontrolled correction events.
We live in an ICF house. People don’t realize it is “framed” with concrete instead of wood unless we tell them. Siding on the outside and drywall on the inside.
I don't think its necessarily the case what people don't want, but I assume that type of build doesn't come cheap and people find existing homes expensive enough.
Metal roof, passive house so embers don’t get sucked in. Concrete walls around the property and plants that don’t contribute to the fire.
The house might cost an additional $100k to build compared to conventional. But it would make all that back on energy, roofing, and insurance costs- probably at the point the conventional home would need a roof replacement.
Builders don’t build such houses unless a client or building code mandates it.
Other sources say the house wasn’t a passive house but did have fire rated walls.
It seems like a lot of fire resistance can be created just by focusing on defensible space and having a concrete or metal fence. Then protecting the roof ventilation from fire (there are special screening materials that can be bought). Then using class A rated materials on the roof and then the exterior. Then metal framed windows instead of vinyl. Actually doesn't cost that much more- they should require it in building codes in these areas. The issue then is retrofit- insurers should probably require a defensible space in these high risk areas.
> The trouble is, brick isn't earthquake resistant. Not without steel reinforcement.
It's just a matter of throwing a couple hundreds $ of metal and cement every few rows of bricks, like this: https://www.pointp.fr/asset/27/07/AST212707-XL.jpg when you see how much american spend on houses it's a drop in the ocean.
FYI a two storey 10x10m house will run you less than 10k euros in bricks for the external walls, and that's with 30cm wide honeycomb bricks which probably provide enough thermal insulation as is for LA. Add 10k of rockwool insulation and you're good to go for most places.
You use wood for simple reasons: it's widely available, that's the only thing your workers are trained on, it's cheaper so builders make more money, it's faster and allow crazier design (mcmansions). Same thing for asphalt shingles, nobody uses that, it needs constant replacement, but it's cheaper, easier/faster to install.
In europe we mostly build rectangles with simple two pitch roofs, ceramic tiles that last 50+ years, most of them are made of bricks, even in seismically active countries like Italy.
And skill, likely in low supply, and labor. I'm sure some in the Pacific Palisades could afford this no problem, but many in altadena inherited their homes and their homes were the majority of their net worth.
Admittedly not very knowledgeable about this stuff but I feel like a lot of these types of comments are greatly trivializing this problem
Tokyo has high earthquake and moderately high fire risk, people here tend to go with steel reinforced concrete but wooden buildings remain common as well.
I'm curious how the roof is constructed on your cinder block house. That kind of cinder block construction seems obviously superior to me, but I can't think of any roof that would be so obviously superior.
There are a LOT of fireproof roofing materials; the US is quite strange in covering most houses with these asphalt shingles. Clay/concrete tiles are pretty standard; slate or metal also options. There are presumably different ways of dealing with the gaps and ventilation to keep out embers.
This is an extreme that is not true. Bricks are harder to make earthquake resistant but it's perfectly possible to build houses that have SOME bricks in it that are also earthquake resistant.
There are permutations of materials that are both more fire resistant and more earthquake resistant to the required level at a certain height of the building.
In northern Italy, the rebuilding of mountain villages in brick and stone after devastating fires had destroyed many of them was ordered in the nineteenth century. It's absurd to claim you can't do anything against fires and the world has become uninsurable in the 21st century and in the world's richest country, while you keep building everything in the cheapest and lightest wood. The sight of the houses burned to the ground except for their fireplace and chimney in the middle is both sad and infuriating.
Like we see in California, when the government sets a price ceiling, insurance companies just leave. Same in Florida. If the free market truly was allowed run normally, the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there. Is that a bad thing? If someone was living in a house near where they tested missiles, we'd call them crazy. At what point can we say the same about people building and rebuilding over and over in these disaster areas.
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.
> 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.
> 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.
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), 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.
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.
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.
Or some forms of housing in high-risk areas, like sprawling single-family houses, might get too expensive, and the only way for people to live in those places would be a smaller number of denser, more easily defended structures. Also a good thing.
But if they don't set a price ceiling, then insurance companies price gouge.
You can't get a mortgage without insurance, so if insurers were allowed to freely control the price, they'd charge an arm and a leg since buyers are forced to buy. If insurance companies are allowed to freely raise their prices, then they would certainly love to do so because any homeowner with a mortgage would be absolutely stuck and have to pay whatever they demand or risk the bank taking their home back.
I think you have an idea that the free market would naturally lead to an efficient insurance price that let's them cover disasters. But markets aren't magic, and insurance markets are anything but efficient. I don't think anyone really knows what the "right" price for homeowner's insurance is in places like Florida and California.
The right price is the market price. There are multiple insurance providers and sufficient competition. And certainly the time to raise the limits is when companies are leaving the state?
Don't worry, the California government is responding to that by making it illegal to stop offering insurance in the state. That will definitely fix the problem.
Source? Many companies seem to be stopping offering insurance in the state just fine!
The most recent moves seem to be relaxing the pricing rules to allow major disaster pricing and recharging reinsurance rates in exchange for insurers offering more policies in high risk areas.
Its interesting because the last 5 years in the US have seen a dramatic appreciation in housing prices, and also a seeming rise of risk of catastrophic events, and insurance companies are grappling with these 2 things. Ultimately maybe different insurance products could be provided that effectively offload some or all of the risk to the home buyer(which obviously is a not a good scenario for banks giving mortgages).
How about profit caps? I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders.
To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.
The Florida situation is actually markedly different. The main problem was extreme litigation-friendliness. Florida saw 80% of the nation's insurance lawsuits but only ~8% of the insurance business. They've also since passed some reforms (HB 837, 2023; SB 2-A, 2022).
>Like we see in California, when the government sets a price ceiling, insurance companies just leave
Does not answer the question. With no price caps, no one will be able to buy insurance even if required by law. So that means if you own a house in a risky area, you will be unable to sell it and your values will fall. The price caps are to prevent that. But to me, there should be big incentives to prevent building and re-building in risky areas.
So yes, the world in some areas are uninsurable. And other areas are becoming uninsurable.
Tangential but I have read about propaganda and social engineering but seeing human caused fires to control migration patterns is a level of diabolical I never thought I would live to see but can't blame them if the cheap rent and house prices don't do the job gotta do what you gotta do
> With no price caps, no one will be able to buy insurance even if required by law
I very strongly doubt that say Elon Musk or Jeff Bezos wouldn't be able to afford market-rate insurance costs. They would just choose not to because its too expensive. Which is the point of letting the market set the rate
No one can truly afford to live there, if you price in the cost of insurance. The only reason people live there is because they haven't hit the 1/100 chance yet.
This logic makes absolutely zero sense. If a house is uninsurable, people will choose to live there without insurance. But if the house is insurable for a high cost people will not? They can still choose to not buy the expensive insurable and be in the same boat as inunsurable home owners.
I think apt comparison would be collision coverage. How much would you charge from someone that collides a car each year. Probably more than cost of those collisions on average.
Not just the rates are managed, but also deductibles. I'd gladly have a 5 figure deductble to keep my or miums lower, but regulators think this is unfair to some.
Given over half of all households in the country have less than $20k in savings I'd say concerns over equality of access may be well founded. Edit: No? The poors can go fuck themselves? Alright then I guess.
The governments know this and yet set the insurance premium price ceilings anyways.
At some point you have to consider that as indistinguishable from having a policy to drive people out: deny them insurance, wait for natural disaster, redevelop the now-very-cheap land however the government and its developer friends wants. Whether such a policy is adopted on purpose may not be possible to tell. You'll get called a conspiracist if you even hint that you wonder about it. But you know these people know -it's hard to believe that they don't- what happens when you set price ceilings.
There should be a way to build fire resistant buildings to reduce the cost of insuring them, likely this would be the solution in California without price caps.
You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof. These buildings would be realistically insurable in both California or Florida. They would cost more to build, not THAT much more though especially if land costs many millions, an extra 50k - 100k to build out of concrete is a very reasonable expense.
Since you mentioned FL, we have mostly solved hurricane level wind resistant building codes. Hurricane ties are cheap and they work. Anything built post hurricane Andrew has these. There's also materials like Hardi Plank siding, which does add a bit more cost, but effectively surrounds the house in a thin layer of concrete. Flooding is a mixed bag. My house is built substantially up and off the ground above the '100 year flood line'. Even if a flood didn't enter the dwelling proper, it would still be devastating.
The problem is storms are getting bigger and more frequent from climate change and hitting areas they normally don't.
I've been collecting a bunch of links on what things a homeowner can do. Probably the simplest thing is the clear a 5 foot ember resistant zone around the home. So remove greenery and replace wood chips with stone for example. Use fire resistant vents so ember does enter attic or crawlspace. Use Class A fire rated roof (which you can also get for asphalt shingles). If you have wood siding, replace with fiber cement siding...
> You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof
Just like exactly the rest of the world? We, the non-USA folks, are looking yearly at either fires or hurricanes destroying these wooden houses there and people keep rebuilding them. Insanity.
> the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there
I'm not so sure. The Pacific Palisades have astronomical real estate prices. (actually costly property in Florida isn't cheap either). I think the insurance costs would come out of the property prices.
I say this on the basis that the prices the real estate sells for is already what the market will tolerate, if there are other costs to owning it-- then the remaining part the market will tolerate will be less.
Perhaps a result of this is that it may only be realistic to construct lower costs 'disposable' cabins in areas with higher disaster risk... if so, that wouldn't sound like an unreasonable way to allocate resources.
Is it a bad thing that we should consider most of the planet unlivable because disasters happen that aren't eternally and increasingly profitable to insure?
Is it a bad thing that literally tens of millions of Americans would no longer have insurance? That you're asking double digit percents of the entire population to leave cities and just... what? Suddenly have new homes in a region with plentiful resources and access to water and food and an economy and no disaster potential?
Is it a bad thing to compare entire states to missile testing grounds?
Can’t you say that about any part of LA? Once a fire gets going, it grows and can destroy any neighborhood.
Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists). I would also make sure that the live video footage would be used only for that purpose. It would use AI at the edge to flag every fire immediately and alert nearest authorities, and otherwise delete footage. There may be other AI at the edge uses added later by the regulators but I’d work to put in place heavy bars to overcome (eg 70% in a public referendum) before they are added.
I would also invest heavily in mobile firefighting tools and materials. The firefighters using buckets is pitiful.
But then again, LA hasn’t invested in itself for decades. It’s like the opposite of NYC: rich people don’t want to live in Downtown LA, they live in the equivalent of our Brooklyn, say Manhattan Beach and Sheepshead Bay by the beach.
Because half of downtown looks increasingly more like skid row. Signage and streets are something out of the 70s literally. And there pretty much hasn’t been any new skyscrapers built since the 80s. The skyline is stuck in the Arnold Schwarzenegger movie era.
I stayed in Freehand hostel which is actually pretty nice, even though there’s abandoned buildings and homeless all around. I met a drunk Andy Dick there by the pool one evening LOL.
And you people from San Francisco — it ain’t much better over where you are. I visited Twitter HQ right when Elon took over. And let me tell you — there is a curious juxtaposition of City Hall, City Opera, The SF Philharmonic, and the fourth corner of that illustrious intersection is… a large abandoned alleyway with dumpsters. What? Imagine Lincoln Center in NYC having that.
On my show I did a lot of interviews — with regulators, technologists, sociopolitical commentators like Noam Chomsky. But one of my most down-to earth interviews was in SF of a homeless guy w his dog. See it for yourself what I’m talking about:
PS: to the silent downvoters… normally I don’t mind but this time you’re just doing it out of spite. Watch the video or say something. I bet you live there and don’t want to have these things pointed out. SF and LA were so great… so many movements started there. Lately people are fleeing and the homelessness is out of control.
> Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists).
This is a terrible way to deal with fire. The issue isn’t preventing fires from starting at all, because small fires are all over the place. A dropped cigarette can light a city block on fire if the wind is just right. The issue is preventing spread, and taking precautions when conditions (like wind) are conducive to rapid spread.
Let's not forget insurance company greed. They are traded on the stock market and must provide returns to their investors. Let's not pretend they are not also part of the problem. Same with health insurance, it should never be for-profit, IMHO.
But I do agree they should be able to set the premiums, otherwise they just go bankrupt. People should not live in idiotically constructed neighborhoods in danger zones if they can't afford it. But they shouldn't be gouged.
Insurance companies are for profit. They run the analysis of how much they need to charge to break even, and aim to charge above that. If they charge too high, customers will look at the alternatives and switch to a competitor.
You can replace "insurance" with any other business, the whole of capitalism is built upon this. Every stock on the stock market is trying to "provide returns to their investors" - each one is as guilty as the next - theres nothing special about insurance companies.
If the argument is that insurance should be a federally provided service, then we must have a different conversation. Look at the FAIR plan. They are government created, and will get wiped out because of these fires, possibly because they weren't charging enough to begin with (and taxpayers will now need to bail them out). The math doesn't change whether its state backed or privately backed. If a home, on average, gets burned down every X years, then the insurance premium needs to be adjusted to be able to cover that.
And here is the crux of the problem - if you take away the free market aspect of being able to adjust prices, and get forced to sell a product/service for less than what you need to, there will be a loss somewhere, in this order of operations:
1. loss at the insurance company --> insurance company goes broke or leaves the state
2. loss at the FAIR plan --> FAIR plan reserves get wiped out
3. loss at the state level --> taxpayers need to bail the situation out.
Id argue that letting the free market work (at layer 1 above) is the proper way about it. If a house burns down every 10 years, let insurance charge 10% of that cost, because that is the actual risk involved in the system. House prices will naturally come down to reflect that reality of risk.
Evidence? Has anyone collated predictions over time and compared them with outcomes to date?
I can remember a number of specific predictions (e.g. that snow would be unknown in most of the UK by the early 2000s) that were pessimistic. Of course, I recall those because they got a lot of media attention at the time and the media reporting is biased to the most extreme predictions so its not a fair sample.
if it did (which is not probable) happen it'd take until the end of the century
if we were to get there the entire world will be a different place; everything will have advanced so we won't be insuring our present world with our current knowledge and current tech but a future world with future knowledge and future tech
> if we were to get there the entire world will be a different place; everything will have advanced so we won't be insuring our present world with our current knowledge and current tech but a future world with future knowledge and future tech
That's a very convoluted way to spell "famine, wars and mass immigration". Techno-solutionism has become a religion, you don't even have to understand or look at the problem, just repeat "tech will save us all, in tech we trust".
Not everything advances. We still have houses built in the 1800s/1900s that are usable in predictable/similar climates/circumstances. A changing climate changes that.
Sure, we could bulldoze everything and build new stuff that can handle a +2C, +3C, +4C, etc... world, but that's expensive.
Sounds super optimistic. Despite some efforts to mitigate climate change. Industrialists are hell-bent on removing regulations and consuming more power than ever. Cooling things is expensive and the laws of thermodynamics don't care about how advanced a society is.
"All natural and technological processes proceed in such a way
That the availability of the remaining energy decreases
In all energy exchanges, if no energy enters or leaves an isolated system
The entropy of that system increases
Energy continuously flows from being concentrated
To becoming dispersed, spread out, wasted and useless
New energy cannot be created and high grade energy is being destroyed
An economy based on endless growth is
Unsustainable"
It seems everyone is on the same "We will find new solutions to a new problem".
I totally agree.
Here is a list of all new solutions we need:
1) not insure places at higher risk
2) mass desalinification
3) fix US hot climate grids sparkles and/or place them underground
4) Street corridors to isolate fires in neighborhood
5) Build with more fire-resistant materials
6) Install automated hydrant towers with cameras able to spray water on fire remotely (it's done in Spain on the edge of forests and urban areas)
7) Pass on the costs of maintaining of living in expensive risky areas to the people living there and/or give them benefits to move to unpopulated areas with no risk
1) Not all the world will suffer equally from climate change.
The parts that are at higher risk should not be insurable so that new housing will not be built there but somewhere else.
2) The idea there won't be water because it doesn't rain it's ridiculous.
We live on a planet literally made of water. We'll develop mass production de-salinification plants and have enough water.
We need to keep investing and improving that technology. I think having water artifically priced at a low price won't help the development of the desalinification industry. So water should cost more NOW that we can afford it to reflect the R&D cost of it that we must make to have water later.
5) Hot countries don't tend to have plenty of wood to build with. Forests grow with more rain. Building with wood in Spain and Italy is very rare. LA got his wood shipped from somewhere further out. Let's build with other materials in arid fire-prone zones. Yes it's perfectly possible to have houses that are both more-fire-resistant and more-earthquake resistant.
Two step forwards one step back. Doesn't mean the step back made the two step forward not good.
I was not familiar with the concept of brine.
I thought we would extract the salt from the water and store it. Maybe use it for construction material like with the CO2 extracted from the atmosphere.
I'm not an expert and I might have the Dunning-Kruger effect on this. It might be a lot harder than I can imagine/know at this moment but it might still be worth it and necessary.
Fire risk isn't that new. London famously largely burnt down in the great fire of 1666 and the solution was to build stuff that doesn't burn as easily. It's not really a new science.
You’re mostly talking about wildfires. The top 5 most destructive events in US are all hurricanes. They are the size of multiple states and bring more water in a period of a day than rest of annual non-hurricane rainfall.
It’s desalinated water falling from a massive sprinkler in the sky.
Wildfires can be avoided by not building wood structures in places that historically have had frequent wildfires. A good way to incentivise this is very high insurance costs, which lenders will require before granting a mortgage. Governments can also enact fire codes.
Buildings can be built out of less fire prone materials, and surrounding non native vegetation avoided which feeds fires. This does mean someone can’t live in LA as if they are in a New England country town.
I'm not so familiar with huge wind but a lot of water I got some (naive) ideas.
Build much bigger sewer pipes and river beds. Build houses higher. As usual each region has his own problems. We can all agree either we move out of there or we invent ways to mitigate the problems. For the long term of course, as we all agree, reducing CO2 emissions, stop climate warming and trying to get back some CO2. I believe and hope we can both do that and not having to live like austerity monks.
You are right. I live in Europe and I'm not very familiar with hurricanes. I'm more familiar with fires and earthquakes.
It seems some parts of Florida have been hit by catastrophes every 2-5 years. Maybe we should treat the whole space as natural reserves and building less there.
I saw a lot of houses constructured right on the beach in Florida that they seemed just looking for trouble.
> 1) Not all the world will suffer equally from climate change. The parts that are at higher risk should not be insurable so that new housing will not be built there but somewhere else.
So what about the people who already live there...? Like I'm fine telling millionaires their coastal cottages are fucked, but there's a lot more folks out there who've lived in these areas for generations both because they're attached to them emotionally, and also because they can't afford to go anywhere else.
I know, is sad :( Tough choices must be made. Like many of our ancestors, we will have to migrate to better places and/or adapt. We'll do all we can to make it work. As personal advice, I will be buying my second home (when I'll be able to afford it) somewhere in a different country/region with different climate (and political) connotations. Avoid having all the eggs in the same basket. I think we should all have 2nd/3rd homes and also Airbnb them to be more efficient. If all would rent their 2nd/3rd homes the supply would exceed demand and the price would drop. I think we really need to use smart-locks remotely openable in a bigger scale. We could have a future of prosperity and abbundance with enough redundancy to accomodate for all the distasers we were not able to mitigate enough.
I live in North Texas, and I see a similar pattern in home and car insurance as well. Our main local threat is hail. Well, and the tornadoes, but while very destructive, tornadoes create fairly geographically limited damage. Hail can cover whole cities at a time.
Car insurance became quite expensive. My premium is about $2,200 / 6mo (no accidents, no speeding, no claims in about 10 years) for two cars and two drivers. For some reason, 80% of people choose to park outside while they have a 2-car garage available. Usually packed with crap. They find it easier to have their cars totaled every 4-6 years.
For home insurance, my policy is almost $4,800/yr now! While making some coverage adjustments, I noticed that my insurance company no longer offers a choice of lower deductibles for hail/wind. It’s a fixed percentage relative to my property value, currently showing as nearly $15k as the cheapest option. That’s more than 50% of the replacement cost! (I know that because I had my roof replaced twice in the last 10 years.)
I live in a similar climate where hail and tornados are both a risk, though hail is a little less likely here than where you are.
Admittedly we have cheap cars, but our car insurance for two drivers is closer to $850 for the year (full coverage with a reasonable deductible).
Insurance costs have seemed to adjust to a combination of more severe weather conditions, but they also have to fix much more complicated and expensive cars today too. A simple fender bender can be thousands to fix, heck I recently heard about a $5,500 bill when a newer Ford got water in the headlight and fried pretty much the entire electrical system.
Every era has it's Malthusian alarmists and without fail, each has been proven wrong by exactly the same thing the author decries and says won't work this time: technological change and adaption. There's no reason to think this time will be any different. Will some places become uninsurable? Sure, plenty of places over time have become uninsurable. Will the whole world became uninsurable? Absolutely not, because we are quite good at adaptation in the face of adversity.
The issue in California is not the price of insurance, it's availability because of extremely myopic ballot initiatives that are entirely political in nature. Should insurance be fairly priced, then the market can force people out of uninsurable areas and into areas with far less chance to burn.
Thinking technology will always save us is no different from divine or magical thinking.
Lots of societies and civilizations have collapsed. Some were straight up wiped off the earth and we don't even know what happened to them. Western civilization has had a good 500 years, and America has had a good 250 years, but that doesn't mean things can never go bad in the future.
Plenty of places have had catastrophic droughts, famines, and plagues. Nearly half of Europe died a few times from plagues. Most natives in America were absolutely wiped out from disease and other issues. Tens of millions died of famine in China last century. Tsunamis washed away and killed hundreds of thousands in Indonesia and Japan this current century.
In the past, the Krakatoa eruption messed with the climate around the world and made the sky dark. The Bronze Age Collapse is something we still don't understand but nearly wiped out everything in the western world. With population density higher than ever, disasters that match major historical ones would be far more destructive. It's really just been an unusually peaceful few decades in first world countries and people have gotten too comfortable.
>Plenty of places have had catastrophic droughts, famines, and plagues. Nearly half of Europe died a few times from plagues. Most natives in America were absolutely wiped out from disease and other issues. Tens of millions died of famine in China last century. Tsunamis washed away and killed hundreds of thousands in Indonesia and Japan this current century.
Conveniently you selected pre-technology examples. How curious.
Meanwhile the impending global famine(s) - (plural) of the 20th century never came to be because captitalism kept pumping out agriscience improvements to improve crop yields to 10 times what they were in 1900.
> "we are quite good at adaptation in the face of adversity."
Historically, much of this "adaptation" was achieved via migration. If your vision for the future includes mass migration away from the equator into the cooler north, then okay, we are on the same page as to one of the plausible outcomes.
But there are currently only 8 billion people, and already a lot of articles about how people in Europe and South Korea and Japan and America aren't having children. How are we ever going to get to 1 trillion like this?
But important, useful things will still be burning and flooding, at huge cost to the economy. Which is less nice.
At this point I think we've tipped into a world of complete delusion, where imaginary "markets" are more important than keeping the planet comfortable, stable, and inhabitable.
Also. this, from that most volatile, irrational, and least sensible of all professions - the actuaries:
This is the same logic that almost destroyed the financial system in 2008. "House prices always go up, and there is no reason to think this time will be different". Fine logic that works until it doesn't.
At best your logic works because people get concerned, and work to solve the problem. Once there is a critical mass of people unconcerned, like yourself, that think we will magically adapt and solve the problem, we're screwed.
? Have you opened a history book? The whole pre-WW2 situation was a malthusian trap. The colonial empires starved out whole continents on the periphery of their empires. Thats how japan and germany turned to hyper-imperialism in the first place.
And the solution of turning gas into fertilizer requires a free trade system to be reliable.
You can't live in places where your home is going to get destroyed every couple of decades by wildfires, floods, or hurricanes. There are more of these places now because of climate change and a lot of people are going to have to migrate over the next century, like huge global migrations. Insurance can't/won't allow a bunch of people to deny this reality any more (or at least much longer). LA is going to be pretty uninsurable unless the local governments do a lot to mitigate the fire risk.
As the 173 million strong population of Bangladesh can attest, they can and do live in such places.
"Each year, on average, 31,000 square kilometres (12,000 sq mi) (around 21% of the country) is flooded. During severe floods the affected area may exceed two-thirds of the country, as was seen in 1998."
Most of the world does not want to aspire to be Bangladesh, but humans have been living in extremely disaster-prone areas for millennia because the short-term benefits (rich soil etc) outweigh the occasional catastrophic losses.
Yes and before they migrate due to climate change, they'll sell their charred lots to some fascist with the willpower to clear the brush, fill the reservoirs, and deploy fire fighting drones. Then everything will go back to normal. God protects only the strong.
It's always amazing and disappointing to see how many people actually believe that prices can be lowered by legislative fiat, or that "price gouging" is an actual thing that happens. I guess they would prefer to have shortages instead of paying market rates, and then complain about "greedy big business" or (my favorite) "late stage capitalism".
Judging from my experience (house built in non hazard suburb and maintained every few years), Yes.
The thing is that with the additional cost of climate change, a lot of these houses do not have the capacity to go through a once-in-100-years event, as they start to occur more frequently.
We just had a water backflow from the city main pipeline last August. Pretty much everyone was impacted, and insurance cost went up for those that were not impacted anyway.
So to make the house insurable, it requires: 1) massive city infrastructure rebuilding, and 2) everyone pays a lot more to install additional "modules" in their houses. For example I already have a backflow valve but if things get worse and water starts to accumulate close to the bottom of the house I'll need a very expensive French drain, something like 60k CAD. It's not going to break me, but it's 3-4 years of saving.
I can't imagine what happens if we get another once-in-100-years storm this summer. I'll probably leave the basement bare without floor and won't bother to claim it.
This seems like more of a commentary on a general lack of understanding of basic economics.
If things aren't priced correctly, mayhem ensues. Frustratingly the political solutions to high prices often just put off the problem. Government mandated price fixing, of insurance, rentals, etc never fixes the core problem, only allows it to fester.
Sometimes it's taxpayers losing money, sometimes it's the few unlucky ones being forced by the government - and arguably the latter is worse for everyone as private investment and services dry up because of regulatory risks.
In my NYC neighborhood, we seem to be going through a whole slew of businesses closing shop within the last year and change.
One obvious reason is rent hikes.
But as one of my favorite local bars was closing, one of the staff mentioned that insurance was really starting to kill them.
We don't live in a flood-prone part of NYC, so I'm curious: is insurance for retail space really going up dramatically across the board in NYC, or was this a single, subjective understanding of a situation?
when i hear stories like that i think it's a ripple of effect of paying out for others but then i also recall seeing how much the industry started paying out to political interests after citizens united, too
Yes, retail insurance is up. This is due to crime and theft. In some cases, it's the we don't want your business/headache rate hike. NYC has about 835,000 unauthorized immigrants. That is up from about 400,000 in 2022.
Insurance is America’s best method of pricing externalities. If America is becoming uninsurable, maybe they should look into other methods of addressing or minimizing those externalities.
Like requiring buildings be built to a standard where they can survive normal weather events, not building in disaster prone areas, not building in sprawling huge developments that eat up a ton of natural space and create a huge urban woodland interface, and trying to slow the pace of climate change by not dumping so much co2 into the atmosphere.
Really interesting reading - looks like there's a lot of comments here along the lines of things that could be done to build more fire/flood/huricane resistant housing.
I don't want to detract away from those points, but it's definitely worth saying that, at present, we're polluting CO2 into the atmosphere at a very large and to some extent avoidable rate. Climate change is already happening, but the extent to which it happens is still down to us - we can and need to do lots to improve flood resistance in, say, Florida, but we can also stop parts of Florida ending up below sea level too.
Every year, humanity grows richer, more resilient to natural disasters, and more capable of predicting natural disasters and their negative outcomes. The point of insurance is to spread the expected burden of calamities that will affect a minority of a population to the entire population, so that those affected will have a financial safety net. This principle works regardless of how disastrous or prone to calamity a population is. If there will be more fires, more hurricanes, etc, the market will favor homes built in different locations, different architectural styles, etc in response to changing premiums and probabilities of disaster. We don't live in a world like in 1905 where an earthquake would lead to a fire that burns down an entire city. Prosperity simply requires changing to circumstances where valid.
>We don't live in a world like in 1905 where an earthquake would lead to a fire that burns down an entire city
I'm not convinced that that's true, and even if it is a huge chunk of population (world, US, pick your area, it applies broadly) keep fighting to regress us to these periods.
People complaining about rules they don't understand is in some sense as old as the existence of rules, but the internet has dramatically increased the number of people who consider themselves experts on politics, healthcare, construction, electrical code, and every other topic on the sun, and who are proud of ignoring the science and the rules and who go out of their way to avoid permits, inspections, etc.
At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.
So you have a huge mix of things which are old and degrading, things which were never built right, and things which people are actively modifying in dangerous ways. People have a false sense of confidence build during the years where we were enforcing these rules; I do not believe that confidence is still warranted.
Plenty of things were built just fine or better and hold up with regular maintenance or modifications, and many are proving to have only been practical to build during a time that had a lower floor for better or worse depending on the thing.
Would some places have become what they are today had they not built their subway system when it was opportune or hilariously less expensive than it is now? The good things we can iterate on or refactor now would have way more overhead to build from scratch at todays standards, not all of which are inherently useful or justified. Sometimes a whole city burns down or all the labor was forced, which sucks and we don't want, but sometimes you're having to get shadow studies done to build anything higher than a bungalow
> At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.
This isn't helped by actual bad rules and regulations on the books. Some minor examples are the prop 95 warnings on every damn thing or the way CAFE standards work to encourage the sale of more pickup trucks. I don't blame some people for wanting to scrap the whole regulatory system after encountering enough of these.
I agree with your analysis of how insurance works. But, wouldn’t the burden of calamities only spread amongst the insurance holders? I am not sure what the factors are, but if a lot more people go without insurance (because they are independently wealthy or live in an uninsurable location), doesn’t change the calculation?
People who go without insurance because they live in an uninsurable location would leave those who remain insured better off, because the insurance company would be less likely to need to make an exorbitant payout to the victims in the disaster-prone area. This is of course true as long as insurers don't manipulate the market to keep premiums high despite their total expected claim outlay lowering.
As an insurance buyer, in a hypothetically ideal market situation, you would want all those who also purchase from the same insurer to have the lowest risk of needing an expensive claim paid. The lower the expected payout * risk of disaster means lower premiums for the insurer to still make an expected profit.
I think what will happen is simply: Houses are built in places which are more insurable, existing danger-prone houses will exist until they are destroyed, until then they will increasingly be status objects for the elite who can afford the loss and have inaccurate risk appraisal. The fact that so many valuable objects are kept in Malibu/Palisades homes despite fires happening there a lot (as recent as 2018) indicates homeowners in disaster-prone areas aren't acting perfectly rationally.
If insurance and property taxes are proportional to property price, and property prices grow faster than incomes, then cost of ownership will eventually become unaffordable to existing residents.
A similar argument works if insurance is just based on reconstruction cost, but construction costs inflate faster than incomes.
If properties become unaffordable, then to restore equilibrium, property prices must fall, incomes must rise, or lower-income residents will sell to higher-income purchasers. If there are few higher-income purchasers, property prices will fall.
Property taxes could be cut, or decoupled from property values (e.g. poll tax), but that never happens.
If the risk really is high, there is no practical insurance available, and all purchasers are rational, then the price may go to zero.
An example of an irrational purchaser would be one who assigned high status to a beach house, even in the face of threats from coastal erosion, hurricane floods or tsunamis.
Possibly one of the most inane phrases ever uttered about modern governments is Oliver Wendell Holmes’s oft-quoted phrase stating that “taxes are what we pay for civilized society.” This reflected the naïve view, often pushed in the eighteenth and nineteenth century, of the so-called “social contract.”
According to this idea, we pay taxes, and in return the state provides order, protection, and all the blessings of civilization.
Presumably included among all those taxpayer-funded civilizational “services” provided by governments one can find “fire suppression.”
But, you wouldn’t know it from watching tens of thousands of residents flee their homes in southern California and Los Angeles County as fires rage. As of Wednesday at midday, five different fires in southern California are still zero-percent contained. Nor is this some hard-to-reach rural area with few roads and little infrastructure. These fires are right in the middle of suburban cities and towns. Yet, it is all apparently too much for lavishly-funded government agencies to handle.
Indeed, government authorities in Los Angeles County and California had neglected infrastructure to the point that it became useless in many areas in terms of battling the blazes.
> Property taxes could be cut, or decoupled from property values (e.g. poll tax), but that never happens.
Couldn't the total property tax take be set to be proportional to incomes, shared between households in proportion to property price?
> If the risk really is high, there is no practical insurance available, and all purchasers are rational, then the price may go to zero.
Rational purchasers might reason that:
1) they need a home
2) unless they own a home they'll have to rent
3) even an uninsurable home could be expected to be habitable for a while
4) if rent for the duration of expected habitability exceeds transaction costs and property taxes for some uninsurable home, it could be worth a nonzero amount
my sadly hot (no pun intended) take is that insurance needs to be let free. price controls on insurance are doubly counterproductive - not only does it result in the companies leaving, it results in those who need the insurance losing their stuff when catastrophe inevitably hits.
it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.
rather than price controls a slightly better solution would be just to nationalize insurance and force everyone to use it, but even that is not really a solution since highly correlated events are the antithesis of insurance.
One thing I am mostly against is nationalized property/casualty insurance. California seems to have taken every opportunity to not properly price risk.
My worry is that while extreme, their logic and priorities do not feel unique for government decision making. The last thing I'd want to do is expand it.
When you distort risk pricing, you distort the market, and if you do it hard enough for long enough, you are basically pulling back the slingshot.
While this also applies to mutual insurers, my philosophy is being serious about solvency is the best way to know if you are properly underwriting and pricing.
I feel like the government operates too much knowing that they can backstop it either themselves or by imposing an assessment on the market.
You are right that the really big disasters are very correlated events. While not a silver bullet, reinsurance and other risk transfer stuff can help smooth those kind of events out. The good-ish thing with those risks is that while they are uncertain, they are sort of identifiable, known unknowns in Rumsfeld parlance.
I agree with that sentiment, the thing that always seems crazy to me is that California's housing pricing in the face of all these things, but perhaps it's sort of pick your poison. Like I don't want to harp on it, but the only implicit or explicit thing everyone appears to agree on given the decisions that have been made is protecting housing prices above all else. But don't expose people to the ramifications of the housing appreciation (Looking at you, Prop 13).
This is not an insurance problem, or a market problem, or an MBA econ problem.
It's a "Do we want cultural extinction or a relatively comfortable and habitable planet?" problem, which is not quite the same thing.
No amount of faith-based "We will adapt!" is going to make an impression until evidence appears that we are actually adapting in real, tangible ways.
Clearly, objectively, and empirically we are not. We are doing the opposite - pretending to ourselves the problem is going to be solved by continuing with the same mistakes which caused it.
i unironically believe the insurance is a great signal for pricing externalities. if you want, imo, a comfortable planet, you should want everyone to have to pay, out of pocket, for the risk they’re taking.
the result would be people not living in areas that a risky, engaging in behaviors or risking, or partaking in things the contribute to the world becoming more volatile.
Agreed. The government should ensure fair prices by ensuring healthy competition. Maybe have a (non-subsidized) public option. The government should also compensate for the power disparity by requiring policies to have reasonable coverage and making sure insurance companies actually honor them when the times comes. But directly dictating a maximum price isn’t going to go well.
> it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.
Long term, sure. In the short term, the rapid rise of housing prices combined with the increased rates and severity of disasters means the extra monthly cost would be enough to price a number of people out of homes they purchased when rates were much lower. While it's easy to say, "They should just move," that has huge transaction costs. Aside from the obvious things, which are already substantial, consider the cost of paying off a mortgage taken out a few years ago and acquiring a new mortgage at current interest rates. That can cost you hundreds of thousands of dollars (which shows up as now only being able to afford a much worse house, probably in a much worse location, if you can continue to afford to own at all), and you are basically gifting that money to the bank by paying off your loan early.
You can understand why such people would be willing to take a chance on not having insurance rather than incur a definite loss, and why it might be tempting to try to come up with some other solution than just unleashing the unrelenting might of the free market on them.
Totally agree, though there should still be insurance commisions and controls to ensure that any company selling policies in a given area is solvent enough to pay out. Otherwise you'll have fly-by-night insurance companies selling sham policies for cheap then folding up shop during the next natural disaster saying "oopsies guess it's the state's responsibility now".
The problem is that in American home-buying, insurance is often compulsory for a purchase with a mortgage. This makes sense from the bank's perspective--they want to insure their collateral. However, the system doesn't really have an answer for "what happens when their collateral becomes uninsurable?" Even though lenders have force-placed insurance, even those insurers can deny coverage in certain circumstances (e.g. flood plain). This puts insurers in a position to de-facto foreclose on not just one person's house, but swaths of houses in regions they (as an industry) deem risky.
I'm not sure what the answer is here other than forcing insurers to insure (which would raise premiums for everyone), or creating meta-insurance of some kind (insurance against becoming uninsured).
There's always some price at which an insurer would willingly insure. The only case where it is "impossible" is when there's a government price cap. The other issue that you implicitly refer to, though, is that the price of insurance can be altered annually, while the mortgage term is much longer. This mismatch creates "what happens when their collateral becomes [so expensive to insure that the homeowner would never have agreed to this mortgage deal on these terms upfront]?"
What I see happening in the future is builders will stop building homes in highly disaster prone areas because those places cant secure insurance and thus potential owners won't be able to secure a mortgage, and the only folks living there will be the very wealthy that can afford to self-insure.
There are some areas like CA where natural disaster risk can be mitigated through forest management and I think those places will continue to grow, but for places where we can't do anything to impact a natural disaster (ie hurricane's in florida), those places will start to have "off limit" zones for any type of insurable construction. These places will still be accessable, we will just build parks, beaches and other things there for the public, just not homes or commercial structures.
I think a big part of why natural disasters have gotten so bad is one climate change but also the fact that we're building places we shouldn't and in the future most will learn the lesson to no build in a certain area unless they are made of money and are aware of the risks of building their.
If a property is uninsurable, it can be bought for cash. The actual land value can still be mortgaged, too.
Would you want to hold collateral that has a high risk of becoming worthless? You would effectively be self insuring it and would have to price that into a loan you offered.
> Would you want to hold collateral that has a high risk of becoming worthless?
Of course not, the problem is that all parties were a-okay with the purchase in the first place, and the banks are trying to change the terms when they realize their hand is a losing one after many turns of the game. Sometimes that’s life, and the corporations should be forced to lose instead of changing the rules so the homeowner loses instead.
Insurer of last resort == taxpayers bailing out people who can no longer afford to live in their multi-million dollar properties but refuse to sell and move.
TBF the best example of a program like this that currently exists is the National Flood Insurance Program which covers many sub-multi-million dollar homes and is billions of dollars in the hole.
Probably more that we spent decades since mass adoption of AC moving 10s of millions of people into previously lightly inhabited areas, then repeatedly bailed them out with government money to rebuild when disaster struck.
Add to that the general rich mans disease of building anything in America being slow & expensive, so each rebuild is more expensive than the last, well beyond just inflation.
Define uninsurable. In present world that means that someone will bet a lot of money nothing bad will happen to you, and you will pay them for long to keep that bet on. And that will work for that someone because the kind of bad things they give money for should be extremely rare, its like a reverse lotto. But if things become not so rare, or the unexpected rare events affect at once too much people, then becomes not so profitable for them.
But that doesn't mean that the concept may still be valid for the end user in a way or another, just that in the other end you may have a different kind of actor or mitigation of risk. That those events become far more common is not random or an act of some god, i.e. taxes for fossil carbon usage or other economic action towards those actors meant to have a fund for those cases. Or having a personal saving plan instead of giving that money to someone else, that in average may work better for most. Or force insurance companies to keep playing even when the odds are not so extremely favourable for them.
> The other way the world is becoming uninsurable is much of what we take for granted--abundant, affordable resources, products, food and fuel, for example--is not guaranteed, and cannot be insured by political or technological means.
Fuel is not guaranteed, but renewables, batteries, heat pumps, EVs and possible nuclear does increasingly give us a technological option for ensuring power.
It's fair to ask if economics will drive us to adopt these technologies on a wide enough scale before we run out.
I’m not sure how heat pumps and batteries “ensure power”. Building far more nuclear would create green jobs, high paying jobs, and ensure widespread power, but the current trend is to close nuclear power plants and burn natural gas instead.
This is silly, and overcomplicating the issue. The world is very insurable, at a price. The property and casualty business is competitive as hell in almost all parts.
When the cost of premium surpasses what people are able to pay, companies will just leave. That's the point of the article, you can only ignore material reality for so long.
The companies are leaving because of mandated price caps from the government. In every other market when cost > price and they can't control cost, companies increase price.
You can only ignore the reality of government interference in the insurance market for so long.
Can't think for yourself? This is econ 101. People will try to drive down the cost by:
1) Buying/building smaller houses that cost less to insure.
2) Building using different materials which are less prone to burn.
3) Moving to areas less prone to fires/hurricanes etc
4) Voting for representatives who take this more seriously and install better infrastructure to fight fires/floods.
These are all good ideas which haven't been put in place already because the government has distorted the insurance market so badly people aren't getting the right price signals.
> Like virtually all problems, it's been approached as a problem with a political solution: the state or federal government can force insurers to continue offering policies that put them on the hook for additional catastrophic losses, and / or become "insurers of last resort."
When you put a minimum on the price of wages the true minimum is zero. When you put a maximum on the price of insurance the true maximum is 1/0.
It's a financial problem, ultimately. Living in Antarctica is difficult and expensive because of the conditions, but with enough money it's manageable.
California is not very hospitable on its own but with human intervention it was made liveable. But that is now running out, because e.g. the water supply is no longer adequate for what is used.
But this is the difficult situation we find ourselves in; due to climate change, hospitable areas are no longer hospitable, and while you can throw money at the problem, it becomes exponentially more expensive to continue to live there. If this continues, it will trigger a (mass) migration. This can be applied everywhere, and the phrase "climate change will trigger mass migrations" has been uttered many times already. It however feels like people only considered this to be a problem in e.g. the global south, affecting poor people because they don't have the financial means to shape the earth and their living conditions by throwing money at the problem.
I live in the Netherlands that for hundreds of years has thrown money and resources at the problem that it's below sea level and prone to flooding. We're still managing, but still get flooding in some places due to e.g. heavy rains deeper in Europe. But if the sea level goes up enough, either we'll have to spend billions in building higher sea walls... or abandon regions entirely. The worst case predictions mention a 2.5 meter sea level rise by 2100, that'll definitely test our infrastructure to put it mildly.
(this comment was a reply first but moved it to a top level one because I added my main article comment as well).
> Risks and losses cannot be extinguished, they can only be transferred to others.
At least for risks like wildfires, we can reduce future risk by rebuilding homes using wildfire resistant techniques and materials.
The problem in LA (exacerbated by the climate-change driven conditions) was that most of the burned neighborhoods were built adjacent to fire prone wildlands during an era when homes were built like matchboxes, almost designed to burn. Add the hurricane strength wind, and each building became a blowtorch.
Fiber cement siding, minimal eaves, and metal roofs are straightforward ways to reduce wildfire contagion risk of buildings. There have been numerous experiments done to demonstrate how effective this approach is at significantly reducing combustibility of buildings.
Cutting back trees near houses to create defensible space is also pretty straightforward.
I also know almost nothing about insurance other than what I've observed as a policyholder. Two things I would note though:
1) Maybe there needs to be some adjustments to how risk pooling is done. I live in Florida, so my homeowner's insurance is ridiculously expensive, but my property isn't really at risk from hurricanes etc, being very far inland. Realistically my property isn't any more at risk of anything than any property anywhere else in the country.
2) There doesn't seem to be enough flexibility in the offers. Most people seem to think insurance should cover any losses, but really people only need insurance to cover losses that they cannot recover from. I'd take a $100K deductible on my homeowner's insurance if it was offered and lowered my premiums significantly, but it's my understanding the law won't allow that.
What are we betting that the Americans rebuild in wood again? It seems like they never learn. We had a single city fire like this 500 years ago and since then we haven’t… because we built the city back in brick instead of wood.
Americans used to build cities with brick and masonry. They were repeatedly destroyed by strong earthquakes, as would happen to your city if subject to similarly severe earthquakes. Americans paid for that lesson in blood.
European houses are not designed to withstand American disasters. A brick house that can survive a M8.5 earthquake, which is the safety standard where I live, will be almost purely steel structurally and very expensive to build. The brick would be decorative, which can be (and is) done on a wood frame.
Concrete + rebar and then a steel roof secured with hurricane-proof metal straps, or just tile roofing if the area isn’t hurricane prone. Concrete can also be used for things like insulated concrete forms (ICF) that save energy and improve insulation for both hot and cold.
I definitely understand what you are saying here, and it makes sense. But concrete is quite common in Europe these days, which I suspect would also be a good option for earthquake zones.
Why don't insurance companies mandate significant fire abatement in new builds to be insurable? While it may not be possible to save every house, I wonder how many houses could have been saved with a thought behind "how can we minimize damage in a wildfire scenario"
This is happening already, it has happened to my neighbors. As resident of CA in a neighborhood which previously was not, but now probably is, 'fire prone' I fully expect to hear from my insurance company to provide evidence of defendable space and other modifications to minimize the likelihood of structure fire.
I've read that once more than about 5-10 house were on fire, there was really no hope of containment, due to the orientation of the streets relative to the wind, the proximity of houses, and the intensity of the wind. Thus the key is prevention -- not letting the wild land fire get to the first 5-10 houses.
The term "uninsurable" is not linked to "too expensive" or (equivalently) "too high risk". It's linked to "unpredictable".
The business insurances are in is a business of statistics. As long as you can model things giving you an expected value and a standard deviation, you can offer an insurance policy which gives you X amount of profit with Y amount of risk, and the insurance premiums are adjusted such that the insurance's risk for negative profit is negligible, according to the model.
What does it mean for climate change? Current insurance models apparently don't work well, so they don't dare to offer policies in certain areas. But just like city planners need to adjust (build further away from shore, higher up, build in flooding protections) and home owners do (AC, think twice if you want a basement) and farmers (choice of crops, irrigation systems), so do insurances by finding better models that allow them to have better statistics.
My expectation in the long run is that insurances will be offered again, but with so high premiums for certain areas (of high risk) that it will just be too expensive to live there. Which is fine. Nobody lives on the moon either. And the public shouldn't be paying for somebody's privilege to have a nice waterfront property in a hurricane area.
TL;DR: The current public discourse about this topic conflates predictability with cost when talking about "insurability". They are very different things.
> What does it mean for climate change? ...think twice if you want a basement
Why is climate change a problem for basements? Is it to do with flooding? If floods are likely to affect basements, doesn't that suggest an opportunity for sacrificial basements?[0]
[0] "The construction of concrete ground structures or sacrificial basements is a recognised solution for construction in areas of high flood risk. The habitable spaces are raised a minimum of 600mm above the level of design flood risk, while the basement area can provide additional nonhabitable storage space." https://www.basements.org.uk/TBIC/Building-Legislation/Plann...
The problem is the materials used. Greedy developers building junk homes and making bank. People in those areas are able to afford fire resistant housing but most of them are being swindled into buying stick homes. The few properly designed homes fared far better. Code needs to be updated and consumers need to be educated.
A number of those homes were old enough to qualify for social security. I doubt it's reasonable to believe developers could anticipate the environmental conditions that would befall a home some half-century since breaking ground.
I think the problem is less the materials used, and more that urban sprawl has pushed cities to build out into areas they shouldn't be building.
Destroying the wetlands to build houses closer to the ocean has eliminated the natural hurricane protection (from storm surge, at least) that many low lying areas had.
Building into fire-prone hills outside of cities in Southern California was never going to end well.
I often hear people bring up the point that wood buildings are a risk for wildfires and brick/concrete would be safer. When I did some research on this topic years ago I concluded that brick/concrete is much less stable in an Earthquake, which is also a concern for LA. Is it possible to build earthquake resistant concrete structures?
Yes, you can build reinforced concrete structures rated to not collapse during a M8-9 earthquake. However, the quantity of steel and reinforcement required for the concrete structure to have sufficient strength makes it expensive and labor intensive to build.
The US has been pioneering other construction techniques using welded steel plates instead of reinforced concrete. They have excellent seismic resistance and are much cheaper to build because you don't need to place rebar.
People keep wanting to live in huge space that they barely use, then buy a fuckton of appliances they use once or twice a month at the maximum and hoard stuff like there is no tomorrow. Then they cry when they lose everything or that nobody want to insure their pile of crap. Just insure the minimum to live comfortably. It is much lower than what you can think of.
Since I have been moving every 4 to 5 years I have been focusing on never hoarding too much stuff. My appartment can burn, I will be fine and as long as I can find a small roof[1] for me and my family (1 partner 2 teenagers) and we could buy back what we need to live comfortably with less than 10k€ and then rebuild gradually to live in a normally sized[2] appartment/house.
[1] by my standards, which I rate at 20 to 25sq/m per person living in the household.
[2] a bungalow, yurt, caravan or large camper would be enough for a disaster recovery.
Yes but OTOH between drugs/addiction, homelessness, traffic, healthcare, consequences of global warming, loneliness epidemy, crime, it is hard to have empathy when you see a whole country complaining of self induced misery.
The graph is potentially misleading in a few ways. Population has increased, more houses to get destroyed. House prices outpace CPI. Costs went up, but so did revenue for the above reasons. Obviously those factors are independent of hurricane and fire size and frequency.
It’s hard to view insurance as a viable business when overpaying executives has become the norm. Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023. The industry is rife with waste and high barriers to entry.
> Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023.
Honestly, no one would care about CEO pay if the insurance companies would just pay out and make customers whole. Instead, there are mechanisms and processes in place to keep premiums coming in and to reduce or refuse claim payouts.
They bank it as any insurance company should do. Invest it cautiously. Hire sound decent people to run it with solid levels of accountability (including from a board of directors that is mostly made up of a rotating number of clients). Do it from the beginning of the company. Grow your staff slowly. Build enough of a cushion that can last the company years. Right? Right?
I'd run that company well for $250k/annually + benefits (an enormous amount of money).
> If the state or federal government offers an open checkbook--we'll pay any and all losses, no questions asked--then those ultimately paying these astronomical bills--the taxpayers--will reasonably ask: why are we subsidizing people to rebuild in places that are clearly no longer habitable due to the probabilities of another fire, flood or hurricane?
There's two options:
1: Pay people to leave, perhaps 80% of the fair market value as of a certain date.
2: Pay people for their loss, but do not allow them to rebuild. (Unless the house is built to stricter standards, and meeting those standards might not be covered by the loss.)
I'm no insurance expert, but I know that insurance usually doesn't cover what's called force majeure — ie. "great forces" such as natural disasters. That's because insurance doesn't work if all insurees (or a large proportion) need to be compensated at the same time.
So my question is: is it even possible to insure against these events — e.g. hurricanes, forest fires, earthquakes — given that all insurance takers may need to collect compensation at once (in which case the price of a house insurance would need to be at least the same as the price of a new house).
The answer is, of course, no. (Betteridge's law and all that)
Are there going to be massive changes in building codes? Yes.
Will that make owning a building more expensive? Yes.
Will the pundits tell you it is the fault of the what ever political party is in power? of course they will.
What is true is that 'pre-global warming' designed infrastructure is going to become uninsurable because it will be regularly destroyed. Once a track record is established for 'global warming aware' infrastructure, the cost to insure it will become more clear.
If you were wondering "How will global climate change effect me personally?", this is it. Your city's costs are going up as it has to rebuild itself to a new
standard, if you own a home your insurance costs are going up until you tear it down (or it gets destroyed) and rebuild it to the new standard.
Good. Building houses in tsunami-prone areas, areas downstream of large dams, and in known forest fire areas is stupid and insurance companies get to be the little boy who says "the emperor has no clothes" first.
I'm not sure I follow this: "why are we subsidizing people to rebuild in places that are clearly no longer habitable"
Does/Why would the insurance assume the subsidy is for people rebuilding in the same place? Money is fungible and so it doesn't need to be in the same place, at all. What I'd expect is that insurance for those hard-to-insure places would skyrocket and thus a new balance would be achieved.
You would expect that in a rational market. But go down a reading hole about flood insurance. tl;dr: in many places in the US, the only company that offers flood insurance is the US government because everyone else has pulled out. And people do tend to use the money to rebuild in the same location -- reasons as varied as "I like my beachhouse" to "my entire community was born and lived in this parish and I aint leaving".
Now that the physics of insolvency are starting to overcome political pressure of keeping Daddy Bailout-Bucks around, and people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.
>people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.
I know politics is famous for elites abusing it for their own benefit, but sometimes the population is truly not ready for something that the elites understand is utterly necessary and that's not a bad thing. The risks and benefits of an elite class, I guess.
Fire insurers could begin ploughing some of their take back into educating clients, helping them harden their homes, and making sure clients are up-to-date on fire codes. As the world changes, businesses should expect to have to remodel their product.
When you become uninsurable yourself, all you're doing is crossing an imaginary line that has always been there, and kept in imaginary condition precisely to insure that your mental health is stable enough to keep on paying more than anything else :\
You're not supposed to notice this.
Whether or not you crossed that line due to any fault of your own, or from the line moving past you with a whimper or a whoosh, you're also not supposed to be able to tell the difference until it's too late.
Working with the big ships that are often covered by some of the most well-established insurers in the world, it turns out that when you really need them to pay a claim, the stronger your insurance company, the more likely their lawyers will outmaneuver yours, and the claim will not be paid.
Otherwise it could be paying the claim but denying further coverage which the limited number of alternative underwriters can also deny. That's a hell of a negotiating position.
The really issue is that most people don't understand insurance.
People reduce or stop caring when they know insurance will cover things. In my opinion this leads to higher losses and higher costs. Especially when people choose more expensive things.
> That neither is a solution to the actual problem is glossed over, because as a society, we've become accustomed to the idea that there is a political solution to all problems.
THIS. I have started thinking a lot about this recently, and this isn't a lot less obvious that it sounds at first. We tend to think that, if we find _some_ consensus to fix a problem, this will be fixed. But many problems emerge now that no consensus, no matter how global, will not fix.
And even that very idea that we are a reasonable species and we will converge to some consensus-based solution isn't actually true.
So let me try to put the author's argument in order:
(1) The author tried to get homeowner's insurance, but was denied because their home was a significant hurricane risk
(2) The author (maybe?) got insurance through a state-run FAIR program, but then cites news reports that these programs are close to insolvency (As are a significant amount of non-state-run homeowner insurance programs).
(3) The author is like, "well, if it's so hard to insure my house, maybe I should think about living somewhere else." And then generalizes to "a lot of places should be uninsurable and uninhabited - apocalypse here we come"
The question this article seems to ask is "is the world becoming insurable while maintaining a profit margin?", not "is the world becoming uninsurable?" These are different questions, with different answers.
Insurance profit margins are razor thin. Many insurers pay out more in claims than they collect in premiums, and the difference is made up with interest and other returns on investments from the insurer’s massive reserves.
Insurers are strictly regulated at the state level. They have to keep enough reserves to pay a surge in claims. And they have to collect enough premiums to pay out an average claim volume, or else the state requires them to shut down.
As long as so many things are not accounted for properly (negative externalities), what good is it to talk about the world being insurable or not? It's like putting a bunch of monkeys in the cockpit of a rocket and then asking if you can insure it.
Fantastic article. So what if one set of matket participants goes full blown denial and tries to force a economically unsound activity upon the state who forces it upon external unwilling participants aka a classic extractive empire going to war for extended reality denial? Economic idealisms or nostalgia with outsourced externalities what a concept..
It seems like "severe storms" have increased quite a bit, the other categories not so much. What does "severe storm" mean here? Doesn't seem to mean hurricanes or winter storms. So what gives? Is this just political patronage handed out under the cover of claiming a big storm knocked some trees down?
The main problem is (a) the cost of roofers has gone up significantly, (b) as a country we switched from more durable forms of roofing like slate to cheap forms that are harder to repair and easier to damage, like asphalt shingles, and (c) the roofing industry is now full of bad actors committing near-insurance fraud.
Roof damage fraud ... my understanding is the insured has roof damage, takes a payment from the insurance company but does not repair roof, next storm comes along: roof damage again!
> This is the intrinsic limit of political fixes: we take the risks and losses and transfer them to others lacking the political power to contest the transfer.
This hits hard and close to home. While my heart goes out to everyone that’s shouldering misfortunes, I’m wary of the “private profits, public risks” phenomenon getting even more out of control.
Obviously we can’t afford to disappoint all the people that were forced to jump into an outrageous housing market all at once, they need affordable insurance, and also still expect to 10x their property investment, particularly in coastal areas. If we don’t do this, it will be another huge blow to the shrinking middle class.
Meanwhile, the flyover states with fewer hurricanes and wildfires will subsidize coastal insurance basically due to strength of Californias market clout, and yet flyover states won’t ever see a windfall from their own rising property values. Since remote employees in flyover states often get less salary for the same work, they are already subsidizing rent for higher density areas. Regardless of where you live, everyone should recognize that this is unsustainable and divisive.
I assume the foundations are concrete, and the rest is wood, cardboard and any combination of the two, so I could see that the foundation would survive a fire
Ouch - so this explains why my home insurance almost tripled in a year - and I don't live in an at-risk area. Everyone I know had huge premium increases.
As with any market, there will be a price that the market cannot bear; and if your 'floor', your minimum policy price offering, is too high for your market, then insurance (as an asset class) no longer has product-market fit.
> That the private-sector can trigger crises that have no political or technological fix is on very few pundits' radar.
Interestingly, there seems to a number of cultural solutions to this problem. Like, imagine if the people of LA adopted a fondness for living in dense urban environments, and a reluctance to "live near nature," the problem of wildfires becomes much more tractable. Or for example, a culture of maintenance (forests, power infrastructure, infrastructure fireproofing, risk preparedness, etc.), like outlined in the book "The Innovation Delusion," could very well reduce risk a considerable amount. Unfortunately our civilization is too much stuck in its traditional ways to consider such solutions.
Insurance is such a crutch for some people, but it shouldn't be.
If something is worth doing, it's worth doing whether you have insurance or not.
In my opinion, the amount of resources spent on buying insurance would, in almost every case, be better spent on prevention rather than after the fact mitigation.
It's that "in almost every case" that's the problem. The whole point of insurance is to cover that case where it does happen, irrespective of how unlikely it is.
Case in point, my partner was diagnosed with a very, very, very rare terminal cancer at 32. Insurance turned out to be a great investment for us.
Something neat about the insurance industry is that it seems to be immune to irrationality. Whether or not someone believes in climate change, premiums are a function of actual measured risk. If risk goes up, premiums go up.
And because being accurate at assessing risk is directly connected to company performance, they’re likely one of the best places to go to get your finger on the pulse of what’s actually happening.
The one time this falls apart is when the government puts their finger on the scale and creates insurance that runs at a loss so that people can keep rebuilding in practically uninsurable locales.
I guess another nice thing about this is that the insurance company and you both have aligned incentives. Neither of you want to see claims being made. So they really care that you’re doing whatever you can to reduce risk.
I bet some of this is wrong, based on an incomplete read of the system, so please educate me. :)
My only hope for climate change is that insurance companies start lobbying to have a more predictable environment since risk models works better when things aren't chaotic, and that gives a monetary incentice for companies to do better
This is a great opportunity for developers to rebuild with greater density.
It's not clear how extraordinary the losses are - by how much home insurance losses actually outpace home-price inflation (not CPI).
For the moment let's set aside legitimate concerns of climate change or land-use policy inducing unanticipated risk.
Insurance is systemic in the sense of pervasive, but the question is whether the crisis is a controllable excursion from stability, or itself amplifies the problem.
The key factor in the 2008 crisis was how foreclosures reduced prices causing more foreclosures and higher borrowing costs - a vicious cycle.
With insurance, homes are already affected. What other specific markets? Does insurance company diversification spread the impact from real estate costs to other industries?
The destabilizing mechanism is insurer exit after over-exposure. Over-exposure comes not from extra assets, but from mis-pricing.
US Insurance is a private market facility, so pricing is competitive. If a competitor prices insurance below your risk-assessed value, your incentive is to meet their price and try to make it up in other markets or through better investments. This tendency would get worse in times of strong investment growth.
Thus the investment-dependent insurance industry loses when investments fail, and also tends to lose after investments have been winning. Insurance profitability in the last two decades may reflect a sweet spot of stock market performance more than improvements in risk-assessment.
Assuming over-exposure, then what? Both low prices and availability depend on diverse and competitive suppliers. After an insurer has suffered major losses in a market, particularly to the point of viability, they lose the confidence of both investors and customers -- and insurance depends entirely on that belief of reliability. So their best response is to simply leave that market, to maintain their reputation in other markets. Then as more insurers leave a market, prices go up, consuming all available price elasticity - which is very, very significant for homes as fixed assets that are key to other value streams like jobs, schools, etc.
Still, that seems limited to housing unless it takes down cross-subsidizing insurance companies.
But it does end housing in these markets. Individuals won't be able to buy homes because of the cost of mortgages and insurance. But if insurance is unavailable large companies could own apartments (or even subdivisions where they lease homes) and self-insure or enjoy more tailored insurance.
With entire neighborhoods destroyed by fire, developers could rebuild newer, denser housing. And insurers could stay in business by settling with policy holders using money combined with a stake in the new neighborhood corporation.
That's the ideal solution, but it won't happen at neighborhood scale because it would involve too many coordination costs. The state (California) would have to effectively take all the property to avoid hold-outs, and then arrange with various insurance companies and developers.
So the economic solution is for developers to buy up plots of burned-down neighborhoods. A single small developer could use California's SB-9 to build 4 units where there was one. And larger developers could buy a 4 adjacent plots and build a 30-unit apartment. Both could self-insure, or be well-served by insurance company that focuses on protectable, high-density housing.
Doing that at middling scale - lots of complex transactions - would make a good business, albeit not the typical YC. You'd combine a small tech firm with a boutique law firm, add a government relations team. You'd have to be up and running quickly to use the crisis to get the policies you need and start coordinating developers who are sure to be in demand.
The California (and Florida) situation is easily explainable [1]. As this video points out you have these forces in play:
1. The state who sets insurance price caps for political expediency, basically to increase house prices (because they'd go down if insurance prices could float freely). BTW we have examples of areas that are uninsurable like the Florida Keys;
2. The homeowners who want their house prices to go up and want to pay as little as possible for home insurance; and
3. Insurance companies who can't write too many policies so they remain solvent. Price caps ultimately lead to insurers leaving the market.
LA in particular has competing problems: wildfires and earthquakes. If you want to avoid total loss due to wildfires, first you wouldn't build in Pacific Palisades at all. It's a vegetation rich area between hills with potentially high winds. If you want to avoid fire loss, you would build out of concrete not timber-framed buildings.
But the problem is that earthquakes have the opposite building priorities. Lumber is actually quite good in earthquake zones because you tend to get less loss of life from the collapse of timber houses.
Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.
Ultimately all of this comes down to a malaise brought on by high house prices. Voters consistently vote for policies that increase their house prices with absolutely no concern for the externalities.
If it now costs $1 million to build an "average" house, then you're going to be spending $20,000+ a year on insurance. If your house only cost $100,000, you wouldn't have that problem.
It's even worse in California because a lot of property taxes are capped so the state government can't even recoupe taxes from a lot of high-priced property but they suffer the costs of it (eg by being the insurer of last resort).
a lot of this here is really what the problem is. for whatever reason, california wants to try to micromanage this particular microeconomy (insurance), but it will fail.
> Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.
It's expensive here, but is it expensive in Japan? Here its' expensive because it requires extensive steelwork which takes you entirely out of the domain of rubberstamp building approval and into needing PE-stamped bespoke engineering and also gets overbuilt to a greater degree.
Get rid of the federal guarantee for homes that are deemed too risky for private insurance. Stop privatizing gains with publicly backed safety nets and people will engage in less risky behavior. But get ready to be labelled as heartless if you back or even suggest such.
From my personal experience in the UK, a few annec-data points:
A friend owns a Land Rover with such a notoriously bad engine that insurers refuse to insure it. Land Rover had to make their own car insurance [1].
Another friend owns an electric car that is becoming increasingly uninsurable. I'm told that due to the battery, any significant collision defaults to a complete destruction of the vehicle and not a repair. The second-hand market for electric cars is also terrible, almost no car dealer will touch them in the UK.
Another friend had a car that was insured for £5k, but it was actually worth more. An accident occurred that completely destroyed the car in a fire, and they offered £1.5k. They approached the insurer and said if £1.5k is adequate to replace the vehicle, then they could simply drop a vehicle off instead. Eventually they increased the amount to £2.5k, half of their own estimate, and far less than the vehicles actual worth.
Another friend got into an accident and was permanently injured. They got an initial offer from the other insurance company, which their insurance said to decline as they believed they should expect more. Several years of slow progress, with the original insurer shutting down and passing their work to several other insurers, they were told too much time had elapsed and they should have gone for the original amount. They offered a £50 "good will gesture" and then closed the case. In the UK we have the Financial Ombudsman for insurance disputes [2], which after review decided that £50 was perfectly adequate.
Another friend had their vehicle temporarily ceased by the police (the police were wrong to do so in this case, but you have zero right to appeal). They lost one of the sets of keys for the vehicle and scratched the car. The police told the person there was nothing they could do, and to claim on the insurance. They instead paid for the damage themselves, because the insurance premiums on such a claim would not be worth it. Just tonight I saw something similar where somebody's mirror was damaged in a hit & run, choosing to fix it themselves to avoid insurance premiums increase.
I used to send out parcels and insure them, but several parcels arrived damaged (admitted by the couriers) and they said they needed proof of packaging the items correctly. From therein I would video the packaging of all items and something occurred again, but they made it impossible to actually use their insurance.
My point is this: Getting insurance is becoming increasingly difficult, but also getting the insurer to honour their agreement is becoming increasingly difficult. In the UK you are legally required to have car insurance, but they are clearly robbing people with no recourse to justice. The system is already broken and not fit for purpose.
Again, insane that the president elect does not believe in climate change and chose to blame supposed DEI practices in California's firefighters while the fire was burning.
Nothing will change, houses will be rebuilt the same way in the same place.
This seems like such a gloomy article. There are plenty of other solutions. If you can't insure a home, that home's price should come down. If there is a 5% chance my home is destroyed every year I would expect a steep discount. I could see myself gambling on such a home for 50% off. Alternatively if you don't wanna gamble, just move to a place that's less risky. If moving is too much for you, renting may still be an option. Yes the increased risk will push prices higher, but it will also crash property prices, so who knows what will happen. Yes land owners in these areas will be screwed, but you don't have a right to returns on your investment.
Real solution: assess risks and mandate building houses that can withstand those risks. Hurricanes? Find out what is the maximum possible hurricane and mandate construction standards that a house will withstand it with minimum damage (24" reinforced concrete walls etc). Same for fire.
Some years ago I contracted for a mega-big-global insurance company.
They would spread leaflets/internal publications on "Risk Profile for the Year 20##" every year. And they would issue updates every Q or H.
Insurance companies monitor every-little-thing. If it hasn't rained for X days in Z country, they KNOW IT, monitor it, and accordingly change policies, premiums, etc.
I always tell people that the most lucrative job (imho) is "Actuary" (https://en.wikipedia.org/wiki/Actuary) so for anyone who is young enough to make a career change or have kids on the verge of picking directions/professions, "Actuary" for-the-win!!
If history shows one thing- that is that a ton of political problems are just technological problems solvable with surplus bribery - and the fact that we have a ton of political problems indicates we have a misallocation of technological problem solving ability, away from what are the foundations of society, towards "luxury" perverted incentivized problems created by a wealth bubble.
A million thinkers working and thinking about block chains instead of energy or fertilizers or carbon capture. This bubble and its misallocation shadow has to die, for the system to reboot.
The Third world has never been insurable. Insurance, supermarkets with self-checkout, home order delivery, all these things are only possible in high trust developed societies.
Home delivery works perfectly well in less developed society. As wages are so much lower it is very much cheaper to deliver to door and possibly even get documentation for signature. Big issue in the end is cost of living. Which affects everyone and most of things in live.
The problem with home delivery in a “low trust” area is that your delivered items will get stolen, unless you can manage to stay at home all day to receive deliveries.
“Losses rise with inflation, of course, but the losses are rising far above background inflation.”
Losses are very much in line with asset price inflation. If a house rises in value for no good reason other than loose monetary policy, so does the compensation. At the same time, insurers struggle to find safe yields to match these cost increases when that same monetary policy keeps interest rates low.
Looking at the chart pictured, one would expect that extreme weather events have increased dramatically after 2000, but that is not the case:
Article seems a bit black and white. After fire insurance dumped my mother's insurance, the "Fair" Plan started out with some similar black and white with insights like "zipcode bad for fire" == "you get worst price". Recently their direction has gotten better, better clearance == better pricing, better building == better pricing, etc. This seems like a better direction. Monthly inspections maybe even == better pricing. Repairs == better pricing. Community changes == better pricing. I think there is a lot of gradual room for improvement here. Ie. More spacing between homes, yard clearance, hydrant locations, accessible fire water sources, quarterly inspections by qualified inspectors, etc. Maybe highly exposed communities would have 10,000 gallon water tanks every square block just for fire.
I think it is easy for people to "dump" on some of these higher priced real estate incidents seen recently but this is also affecting people on social security. What are we going to do just let their house burn down and then just have a bunch of homeless senior citizens in the mix. Why even have government? Seems like a terrible country to live in if a 30 year old needs to plan their house situation out into their 80s.
Also seems a bit ironic to me that you get insurance to cover unexpected future expenses but when insurance takes losses then they can just drop you because .. the losses were unexpected. They've known for 20++ years and I'm sure some... money was made... Did they put some away for this situation? Also if you personally experience a loss they also drop you almost immediately.
This idea that we'd just let insurance companies do whatever is *nuts*. Has that ever worked? Honestly pure capitalism seems like the real behind the scenes American dream or fantasy. This same climate change most likely was created by companies making buckets of money with no plan to deal with the side-effects we experience now. Just let the market take care of it....
These companies aren't about making "some profit" they want to make as much profit as possible. Is some 75 year widow living in her and her dead husband's house in Eureka, CA going to convince them to keep insuring her house at a reasonable price? Even if she paid the same insurance company for 30 years?
I think the solution is going to require some government intervention because insurance companies just don't care and it will be hard for new players to innovate quickly enough to tackle such a large crisis. Ie. legislating the inspections, legislating the fire-resistant building guidelines + insurance scale, subsidizing certain low income locations, working with communities to improve fire safety and resources. Some work has happened but clearly it is not happening fast enough.
People have lost their homes and everything they own to a natural disaster that was not under their control. I don't care where you live in the world, this could happen to you. The lack of empathy and victim blaming in these comments is absolutely revolting. I am done with this site. It has been taken over by heartless people with zero intellectual curiosity. Good riddance.
It's always been filled with smug self-important techbro shitlibertarians (edit: with egos more fragile than literal snowflakes). Luckily, what's they've sent around is starting to come back and they reeeeally don't like consequences.
When nerds like me were freaking out about climate change in 2003, what did people think we we’re talking about?!?
This is the exact scenario every single scientist I studied under openly discussed: probably not an extinction level event, but very, very expensive… Expensive to the point of it being cheaper in the long run to switch to renewables asap and hope for the best.
It’s like a 150M conservatives are all at once are saying “Wait a minute! We should do something about this!”
So what? Living without insurance is nothing crazy.
Many dogs (pitbulls, akitas..) are uninsurable, yet we see them everywhere. People just accept damages, and pay it out of their own pocket (or run away and do not pay).
An hour in and nobody in these comments is addressing climate change? The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change. Should people be forced to abandon their homes because the fossil fuel companies lied and misled the public and bought out our governments for the last 50 years?
IMHO we should be seizing the fossil fuel companies' assets and using them for disaster relief around the world due to the catastrophe they have deliberately caused.
The talk about insurance rates is a deliberate distraction.
We need a high per-ton carbon tax, with all revenue dividended out per-capita to offset the inflation. This would eliminate the green premium on a great number of clean alternatives and avoid the problems of the government picking where to invest, letting the market handle that instead.
And if those companies don't find other things to do (they'd be quite good at geothermal, or durable carbon sequestration, with all their drilling and fracking expertise), then they'll go bankrupt without needing to do anything so extreme as nationalizing/seizing/whatever.
If you ask Americans to vote to make gas more expensive to stop climate change (eg. the Washington carbon tax referenda), they say no. America burns lots of fossil fuels because it's what the voters want. If every private fossil fuel company shut down tomorrow, there would be riots in the streets, and then oil and gas would be imported from abroad.
Did you miss the part where I said the public has been lied to for the past 50 years?
I didn't say we shut off all the gas pumps tomorrow. It will obviously take time to transition off. I said we seize their assets and use the proceeds for climate relief. We can keep the revenue coming and using the profits for disaster relief while we transition off fossil fuels. It's not that hard to understand.
Don't agree. Well partially. I also think the privatise the profits socialise the losses story is strong, and the coal and oil interests should pony up more remediation costs.
But insurance is one of the best signals we have to true risk/consequence/likelihood, which commercial interests pay attention to
The best long term outcome here would be rebuilding safer but the downside will be "which excludes the poor" -that's where I think state and federal policy should apply the lever: require socialised housing outcomes.
Price controls on insurance forces socialised losses. Better is some middle ground: mandate insurance, demand adequate mitigations and defences. But losing the price signal is bad.
The losses were already socialized without the controls. Look at how the insurance companies always behave in these situations. They always find a way to stick the public with the bill. Don't listen to the corporate talking points. The price controls may have been stupid but they are a distraction.
What evidence do you have that these fires have anything to do with climate change? They appear to be adequately explained by the known behavior of the region, and to the extent that they're not the radical increases in habitation and the systematic suppression of small fires is enough to cover any gap.
Ironically there is a great case that varrious environmental groups that vigorously opposed controlled burns are among the greatest proximal human causes of the current situation. If careful analysis concluded so, would you support seizing their assets for use as disaster relief?
The frequency and intensity of droughts in the area has increased due to climate change. The increased winds is due to climate change. It is obvious. It is not explained by "radical population increase".
Stop trying to distract with fossil fuel propaganda trying to distract with everthing else they can. Yes controlled burns still happen but it is also understandable that people would be jumpy about them with the problems fire has been causing in that area in recent years.
> The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change
I saw an article on npr [1] which basically agrees with the chart on the blogpost. I 1980, there were 3 disasters a year that cost $1B, inflation adjusted. In 2024, 24. The second chart in the npr article is pretty terrifying.
Without accounting for population growth in high risk areas this is meaningless. If the population and housing units in a floodplain doubles, a $500M 1980s disaster becomes a $1B 2024 disaster. That's not to mention the above-inflation increase in the cost of housing which probably bumps these numbers up as well.
a practical problem is that the financial instruments insurance companies create (insurance linked securities or ILS, catastrophe bonds, and other structured products) are not available to retail investors, who would likely buy a lot of higher risk investments if they were allowed to, and this would provide a lot more collateral for writing new policies. if you want more of it, deregulate it. it's that simple.
Sure, but state governments (in the US) also set what prices are allowed (disclaimer: I don't work in the industry but have friends that do so I might misunderstand). And that means that if the state says "you can only charge X for insurance", and it's still unprofitable, those customers are effectively uninsurable.
I see that as a regulatory issue, but of course, the end result is the same. I'm familiar with services being effectively unavailable as a result of regulation from living in Canada. (Health insurance / not being allowed to buy healthcare).
Insurance needs to be not-for-profit or a government enterprise. Physical projects and infrastructure should not be started until risk is assessed. Speculators and go-go finance has ought to be constrained. As for myself, I am choosing alternative ways to plan, finance, build, and manage infrastructure project. The current systems is a non-starter for most people under 50.
> Insurance needs to be not-for-profit or a government enterprise.
There are many examples of this in the insurer of last resort, which are non-profit or government insurance when the private insurance can no longer cover.
Insurers of last resort have the same issues with denying claims and not paying out like the private insurers. If you read the OP article, the only people asking for not-for-profit or government insurance are basically asking for infinite money, which is both a non-starter and impossible.
What really should be done is private insurers raising premiums to match risk. This may mean some consumers will be priced out of insurance policies.
To me this sort of thing just seems like a weird financialization brain disease of sorts.
At the end of the day if your house burns down you can go and get some wood / stone / whatever and build one somewhere else and this will basically always be possible to do to some degree.
The question is just about what the chance of having to do that per year is and what that represents in dollar value. It can’t not be possible.
American, living in area prone to natural disasters: "Is the WHOLE WORLD becoming uninsurable?"
The answer is obviously "no" since there are other parts of the world that don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires.
It’s possible that solve the hurricane problems with proper building regulations and lower the risk of huge wildfires with controlled burning. But the US as always prefers to pretend that there’s nothing to be done when other parts of the world has figured it out.
We have cyclones here similar to the hurricanes in the US and usually it just blows over some trees maybe causes a power outage. The absolute worst I have experienced was 3 days without power. I have never seen a house destroyed by a cyclone here.
As for wildfires, they do unfortunately claim a few houses most years.
Hurricanes are mostly just flood damage in the US, and some wind/debris damage exactly like the blown over trees you mention.
Houses generally aren't destroyed by hurricanes in the sense of "the storm literally ripped them up", they're made uninhabitable by storm surges (flood).
The scary ones are tornados.
And tornados do genuinely fuck shit up. Even in those "enlightened" parts of the world you think have proper building regulations. If you're interested, go look at the recaps of tornado damage where they hit Europe here: https://en.wikipedia.org/wiki/List_of_European_tornadoes_and...
Note the number of homes destroyed and people killed - plenty of both, even in those countries that prefer brick/concrete homes.
Hurricanes throw branches. Tornados throw cars.
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As the governments in the US get increasingly incompetent, insurance prices are going to have to rise. Government services are largely there to protect you during black swan events, so if those services get less and less effective, you're going to need more insurance for those events.
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I recall reading somewhere that the Indians had done controlled burns before Europeans settled in the parts of the U.S. where fires are now a problem. European settlers who displaced them did not continue the controlled burns and then fires became a problem. Apparently, if you do regular controlled burns, the severity of fires is reduced and healthy trees survive it. When you do not, when fires do occur, all trees die and the fires spread out of control.
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Theory: Damages in the USA have gone up because mold mitigation was incorporated as a serious consideration only fairly recently. If you increase your definition of what damage is and the work required to fix it then 'damage occurring' will appear to suddenly go up.
Wildfires are not the problem. They happen all the time without causing billion-dollar insurance claims. Insurance is always assets x risk. The issue is expensive flamable housing (assets) in a wildfire area (risk). We ask for trouble when we create million-dollar wooden houses surrounded by manicured gardens in desert enviroments. And build on a slope facing pervailing winds. The answer is concrete/brick houses with metal/ceramic rooves surrounded by sand/stone/concrete. Want a big green lawn? Move to the pacific northwest. Want to live near the beating heart of the movie industry, a town where it never rains? Get used to cactuses instead of rose gardens.
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Wildfire structure losses can be mitigated with cutting firebreaks, building material selection and removing flammable trees and plants from properties. A lot of communities in western Canada have learned this the hard way.
Where is “here”? Are you sure you aren’t confusing hurricanes and tornados? Hurricanes rarely destroy houses in the US, either.
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It's so interesting to see the people in awe of that "fire hurricane" video in L.A....
We had a way more intense drought than they in my city last year (theirs are not that intense). We also had 50 km/h winds. We also had higher temperatures... And all of those to levels that we never saw before. Also, we have more trees in our cities. We had new "fire hurricane" videos every week (normally, every other year somebody films one).
And we had to evacuate dozens of homes, luckily no one was destroyed and people could return 2 months later.
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Honest question. Why when people describe wood framed homes do they always phrase it like houses made from "firewood", "sticks", "twigs" etc? It at least for me always detracts from the argument at hand. You could just as easily build a wood framed home with an exterior shell that is fire resistant using modern materials or brick.
Well, we are commenting on an article specifically about the spread of fire in urban areas, as we've seen in LA this week.
Here in the seismically stable UK, we had problems with fire spreading in urban areas [1] in 1666. So we banned wood exteriors on buildings. It works pretty well if you don't need to worry about earthquakes or hurricanes; brick doesn't burn.
This lesson is taught in history classes to 10 year olds, and they don't tend to go into other countries' construction traditions, or reasons not to use bricks.
[1] https://en.wikipedia.org/wiki/Great_Fire_of_London
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I don’t understand the sense of entitlement towards every nuclear family owning a building constructed with stone, steel, and concrete. None of these things are available in a level of abundance to grant them to every person alive. While concrete only construction is more common in developing countries I certainly question the quality. I lived in an apartment like this in South Asia and it had no weather insulating ability whatsoever, the plaster was constantly crumbling, and the doors would jam up. Not to mention the recurring nearby stories of an apartments roof collapsing on its occupant.
I am thankful to live in a county where land and building ownership are more available to the common man than most and many people can escape being perpetual renters. Wood construction enables that. Plus North Americans love to adjust and remodel their homes and have unique shapes with high ceilings etc etc etc which is really helped with our construction techniques. The only thing I hate is termite risk and that could probably be resolved by allowing framing with pressure treated wood
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One huge problem with respect to fire resistance, in American home's, are the use of truss connector plates. While they have many advantages in cost and allow impressive cheap big houses, they fundamentally weaken the wood when it burns. Often houses just collapse on that joints, not because the overall beam failed, but this interface. In the end the use of "wood" is blamed, but that failed to address the rootcause.
Dimensional lumber is often called sticks, in the building industry, probably because it's quicker. For example, if a roof is built from individual pieces of dimensional lumber, instead of pre-built trusses, the building method isn't called dimensional-lumber-built but stick-built.
For me it's the result of pent-up anger from the popularity of drywall and particle board here in the US.
It's not a big leap to go from complaining about the furniture and the walls being made from what seems like highly compressed dust to also complaining that underneath it all is a bunch of sticks.
It so often feels like a house of cards.
Brick, stucco, concrete siding are all fire resistant and commonly used in construction in the last 25 years.
Insulation plays into combustability as well, where mineral / rock wool has thermal mass, does not ignite, but us construction has recently favored fiberglass and cellulose for the the costs.
Look at houses in California. Most have fire resistant stucco exteriors. It's the style out here.
It’s not just the exterior material. You also need to screen or eliminate openings that embers can penetrate.
Especially when even in wood framed houses your walls are still stone specifically for the fire resistant properties.
If you wanted to make fun of building practices it would probably be the trend of plastic siding.
> You could just as easily build a wood framed home with an exterior shell that is fire resistant using modern materials or brick.
That is actually how pretty much all new houses in the UK are constructed. They are pre-fabbed timber frames with a brick facade. It's quite common for British people to be snobby about building materials. I wonder how many don't realise their house is timber framed.
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A 2x4 is just a big stick. It's smaller in shape than some logs you throw on the fire, and it's nice and dry.
Some of us live in reinforced concrete socialist-built apartment buildings, and our homes don't burn like american houses do. Same for single family houses made from brics and cement (most houses here)
Same for eg. gas explosions, this is one one looks like in us:
https://media.cnn.com/api/v1/images/stellar/prod/23081219122...
And this is one over here:
https://www.prlekija-on.net/uploaded/2018_11/eksplozija-plin...
Same for eg floods, pump the basements and ground levels, repaint, move stuff back in. Someone from US I work with on a project had a pipe burst while on vacation, and insurance wrote off their whole house, because of a few days of water.
I mean, sure, you could that, but looking at the photos from fire-affected areas, nobody did that, it's all burnt to the ground.
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>Honest question. Why when people describe wood framed homes do they always phrase it like houses made from "firewood", "sticks", "twigs" etc?
Europeans are jealous that they clearcut all their forests 1000 years ago and want to brag up their cinderblock homes that no one can actually afford to buy anymore. 40% down on their 50 year mortgages yadda yadda.
To be fair we are talking about an area of the country that is prone to seismic activity, it does limit the building materials.
Perhaps what should be more commonly accepted is that the US is a land of great natural beauty! And large tracts of it should be left to nature.
What's the average monthly leccy bill in Phoenix during the summer? $400?
Where does LA get most of its water? Local sources? I don't think that's the case.
New Orleans is a future Atlantis.
San Francisco is a city built by Monty Python. Don't build it there it'll fall down, but I built it anyway, and it fell down, so I built it again...
> What's the average monthly leccy bill in Phoenix during the summer? $400?
The average high temperature in Phoenix in July is 106.5F (41.4C). If you are cooling to 70.0F (21.1C), that's a difference of 36.5F (20.3C).
The average January low in Berlin is 28.0F (-2.2C). If you are heating to 65.0F (18.3C), that's a difference of 37.0F (20.5C).
I feel like many people living in climates that don't require air conditioning have this view that it's fantastically inefficient and wasteful. Depending on how you are heating (e.g. if you are using a gas boiler), cooling can be significantly more efficient per degree of difference. Especially if you don't have to dehumidify the air, as in Phoenix.
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There's plenty of water for Californians in California + The Colorado River.
The problem is that our government has spent ~100 years ensuring that corporations have easier and cheaper access to it so that they can grow feed for farm animals to sell overseas, largely to places like UAE that have sufficiently depleted their own water table as to make it impossible to grow alfalfa, thus worsening the risk of droughts for the sole benefit of the shareholders of these corporations.
Every gov't agency in the US needs to start treating our natural resources as if they belong to all the citizens of the country and not a select few shareholders of whichever corporation can earn the most money by exploiting them.
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> To be fair we are talking about an area of the country that is prone to seismic activity, it does limit the building materials.
Japan comes to mind as a country that's solved this.
> Where does LA get most of its water? Local sources? I don't think that's the case.
Relevant: https://www.latimes.com/california/story/2025-01-10/as-flame...
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> To be fair we are talking about an area of the country that is prone to seismic activity, it does limit the building materials.
Lisbon was destroyed by an earthquake/tsunami/firestorm combo in 1755 that killed tens of thousands.
When the city was rebuilt, they came up with the idea of using a wooden frame structure for earthquake resistance and masonry walls for fire resistance.
Nowadays, most new buildings seem to use reinforced concrete.
I wonder if American children are taught the story of the three little pigs.
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What's the alternative? It's not particularly viable to just relocate an entire city.
Then there's the question of where to move them to. Between wildfires, hurricanes, and earthquakes you've eliminated most of the coasts. Much of the rest of the country defines its identity to a significant degree as being opposed to cosmopolitan cities. That doesn't leave a lot of places to move to even if we could just move the cities.
Japan has seismic activity, tsunamis, typhoons, landslides and flooding. Instead of building bunker houses they see homes as transient and utilitarian rather than as long-lasting investments. Perhaps homes in these high risks areas should be treated similarly.
Do we know why the insurance companies can't simply raise the insurance price to match the risks in those areas that are prone to natural disasters? I mean in general, not as in California where the government imposes strange policies. Speaking of the policy, why wouldn't California allow the insurance company raise the premium by region? Doesn't such policy benefit the rich at the cost of the poor as the rich love to live by the hills, lakes, or beaches, which is very much against the ideology of California?
If your house burning down was a near certainty within a few decades, the real cost of insurance would be buying a new house + profit margin.
Insurance only really works when most people don’t suffer a catastrophic event and can cover the few who do.
It's more complicated than that, as always. Here's some (incomplete) background on Florida:
https://www.civilbeat.org/2024/03/how-floridas-home-insuranc...
Re: California, I don't understand the context for your question, or why you would think the California government is more strange than any other US state government. There's no universally-accepted "ideology of California." It's a big state with a huge, diverse population.
tl;dr, though: California does allow insurers to do that, but is using currently an antiquated set of rules that don't allow for modern risk management approaches. It's been rewriting those rules recently to fix this; I think the new rules are supposed to be in effect starting this year.
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I would assume that earthquake insurance in japan is a reasonable model for "world insurance".
It looks like it's a reinsurance program:
https://www.mof.go.jp/english/policy/financial_system/earthq...
So, I think the answer is "no".
Japan is probably not a good comparison for home insurance because houses in Japan typically only have a 20 to 30 year lifespan. After that they are usually torn down and a new house is built.
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America isn't the only place having an uptick in extreme weather events, though.
Spain just had the worst flooding ever, Australia has massive wildfire issues, coastal areas all over the world are flooding, inland areas are dealing with drought. It's definitely not just the US.
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"Pakistan floods: One third of country is under water - minister"
https://www.bbc.com/news/world-europe-62712301
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One thing I haven't seen mentioned in here is the ornamental planting of non-native plants all over LA, like eucalyptus which is highly flammable, as opposed to the native coastal oak, which is not. All those iconic, non-native palm trees are fire hazards.
That's because that wasn't a material effect in this situation. It was hurricane force winds blowing over native shrubs and scrub land. It wasn't forests of eucalyptus that caused this. California has a decades long effort to restore native plants in areas. Eucalyptus groves are being torn out. The problem is that the native shrubs and grass are pretty flammable. They evolved to burn and regrow. They aren't resistant.
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A key issue in the LA fires was bad management at all levels of government that could have prevented an order of magnitude of the damage (If procedures from the past were followed).
You’re a fire management expert? What did LA do wrong?
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As for the hurricanes, stop allowing builders to build SFH in areas that are at or below sea level. They're going to flood. Period. That's not sustainable from an insurance perspective.
> nor build houses made from firewood in an area prone to wildfires.
The alternative is to build quadruple-the-price houses out of brick in an area prone to earthquakes.
It's much easier to repair/replace the former. And theoretically would be easier to avoid, if the fed would clean up the brush wood in their land (or give it back to the state, so they can manage it).
pretty much any area can get flooded though by freak rainfall
>don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires
Fireproof concrete bunkers would be worse for insurance because when the firestorm blows through and shatters the 7-centimeter windows slits your fireproof design calls for and ignites the interior you have to demolish steel reinforced concrete with machinery instead of knocking down wood with a sledgehammer and muscles.
A Caterpillar D9 is more expensive per day than a migrant laborer.
There are so many images of concrete buildings being burned out that if I search "california fires" the 9th image is of a steel-reinforced concrete building has ~10 meter fire jets blowing out one of its windows.
We're bad at so very many things while thinking we're the best at everything.
don't worry, pretty soon you're gonna be great...
Meh, couple this with articles about drone inspection of roofs and properties, and the trend of insurance getting harder to come by emerges.
I'm always baffled at the fact that Americans don't build houses out of bricks.
I read those arguments of the advantages this method has, especially financial ones, but to me it's nonsense considering that it would prevent an endless number of problems that cause the total loss.
I still remember when New Orleans was hit with by Katrina, large parts of the suburbs where houses where made by wood and plastic where destroyed, yet downtown where buildings where made of bricks required maintenance, sometimes little of it, but none faced a total loss.
Unreinforced masonry is illegal in most of California and extremely dangerous- every brick becomes a projectile in an earthquake.
Despite the news coverage, fires are extremely rare but nearly every home in these areas is guaranteed to face multiple massive earthquakes that would bring down a brick building.
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The entire west coast sits on top of a fault line. That’s why people don’t build with brick here. There’s plenty of brick buildings on the east coast (and on the west coast like in Oregon, but they have to be seismically retrofitted which is expensive).
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Building out of wood is cheap and perfectly strong for most areas.
Engineering is always a set of trade-offs.
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If you built a home out of bricks in New Orleans it will sink. Same (and even worse) for Florida. You can mitigate that somewhat but it's extremely expensive and bad for the environment/water table/aquifer.
For reference, to make a non-sinking, heavy building in Florida you have to drill down into the limestone layer which is usually 100+ feet below the surface. Then you have to create very strong concrete caissons to hold the building up, standing on that limestone layer. It's very similar to if you were to build a structure out into the ocean (LOL).
If I’m choosing building materials to try and resist disaster, I’d just go straight to making a monolithic dome.
Wood is way cheaper and more available at large scale here than in Europe.
There were houses that survived recent wildfires because they were built to be in a fire zone and survive fires. I’m sure there was damage but nowhere near total loss.
I’m sure when homes are rebuilt the majority will not be fire resistant.
It’s possible to build for hurricanes and floods too but few do it. They build houses that get blown away and then tap insurance.
Insurance rates for properties not built to withstand the stresses of their environment will go up.
we had a huge wildfire in my area in 2021 that burned through a few small towns. In one town, the only houses that survived where the ones that followed the guides out there for creating defensible space. They were also newer homes, which is obviously easier then retro-fitting an existing home, but the town got rebuilt essentially the same as it was, which is kind of sad to see.
https://www.fema.gov/sites/default/files/documents/fema_mars...
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> I’m sure when homes are rebuilt the majority will not be fire resistant
They are required to be: https://heatmap.news/climate/california-wildfire-building-co...
The problem is that in many desirable places to live in California, many houses are very old and are not compliant with the latest building codes.
Climate change enters the chat...
Even pessimistic scenarios don't predict threats to buildings (other than war, which to my knowledge never was insurable) in most areas of the world.
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How did climate change cause vast neighborhoods of single-family wooden mcmansions to be constructed with ~3 meters of separation?
Still waiting for the water to flood New York...
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Pole drift.
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was that understanding formed by Fox News, perhaps?
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I hope you don't get downvoted for stating the obvious. This tendency of equating the US to the world happens so frequently and it is 99% a non-US person pointing it out.
You also have to exclude areas that are now in flood planes (most cities), subject to freezing when the infrastructure can’t handle it (all of Texas), tornado prone (everywhere in the US(?)), and consider that the wildfire risk area for the US has expanded dramatically in the last few years.
For example, there was a red flag warning that ran from Colorado to Texas at the beginning of this month.
Parts of many cities have always been in floodplains, but after just looking it up, it does not seem that "most cities" are meaningfully in floodplains. This also does not automatically make even the parts within a floodplain uninsurable, depending on the circumstances.
Likewise, the level of infrastructure, tornado, and wildfire risk for the vast majority of the country is not sufficient for them to be uninsurable. "Occasionally a tornado comes through and gets 1 out of 10k houses" is not even a huge pressure on insurance prices.
An
Not uninsurable, but buildings are going to have to become tougher.
It's happened before. Chicago's reaction to the Great Fire was simple - no more building wooden houses. Chicago went all brick. Still is, mostly.
The trouble is, brick isn't earthquake resistant. Not without steel reinforcement.
I live in a house built of cinder block filled with concrete reinforced with steel. A commercial builder built this as his personal residence in 1950. The walls look like a commercial building. The outside is just painted cinder block. Works fine, survived the 1989 earthquake without damage, low maintenance. It's not what most people want today in the US.
In Yugoslavia, in 1969, one of the biggest earthquakes occurred, destroying several cities. After that, the country’s leaders decided to change building codes. Even today, although Yugoslavia no longer exists, the countries that adopted those codes have homes capable of withstanding earthquakes up to 7.5 on the Richter scale.
My main point is that if we face major natural disasters, we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
> As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
"Americans" is doing a lot of work in that sentence.
It would probably be more accurate to say "It seems to me that the history of American culture and economic systems have led to a system whose emergent behavior is to prioritize building cheap-but-easy-to-modify homes over constructing smaller-harder-to-modify-but-more-resilient ones."
Sure "we" need to take action, but the machine is very large and we are all very small gears in it. A twenty-something buying their first house doesn't have a magic wand to wave that will summon cinder block houses into being that don't physically exist. A builder who wants to build cinder block houses doesn't have a magic wand to rewrite city building codes that presume residential construction is mostly wood. A city council member who wants to modernize building codes doesn't have a magic wand to get enough constituents to prioritize this over housing costs, homelessness (but I repeat myself), jobs, etc.
Everyone's problems seem easy when you are very far away from them.
Why bother building a better home when it's cheaper to buy insurance and rebuild later?
This is why prices are important - sometimes it's sensible to build cheaper houses without these safeties if the risk isn't there, but if the risk does exist then it needs to be priced right to provide that incentive.
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(Recently there was a major public building collapse in Serbia: the porch of the Novi Sad railway station collapsed, killing 15 people. This has really focused attention on corruption and caused massive protests.)
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Reading up on this a bit, it seems it was the 1963 earthquake that precipitated the change in building regulations? The 1969 one seemed comparatively mild(?)
> Americans prioritize building cheap homes over constructing better and more resilient ones.
It's all considered disposable, much like strip malls.
The problem always becomes, who is going to pay for that action.
Yeah, I'm surprised that the damages of the LA fire occurred, because it was known beforehand that California had a fire problem (and also have an earthquake problem I think).
I'm here in Eastern Europe and our buildings can withstand a lot of things.
> we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
As an European, it baffles me as well.
If this doesn't happen to "cheap" homes here, why does it happen in California, to rich people's houses?
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In 1666 London had a bit of a problem with fire, after that some building codes were introduced. Buildings made entirely from wood were not allowed and roofs had to have a parapet.
If you don't know what a parapet is, take a look up to the roofs on London's older buildings, the front wall rises up past the bottom of the roof. If there is a fire in the building then the parapet keeps the burning roof inside the footprint of the building rather than let it 'slide off' to set fire to the property on the other side of the street.
The parapet requirement did not extend to towns outside London, which makes me wonder why.
The answer to that is to see what goes on in the USA. After a natural disaster they just pick themselves up and keep going. Florida was obliterated in 2024 but nobody cared after a fortnight. Same with the current wild fires, nobody will care next week, it will be forgotten, even though having one's home destroyed might be considered deeply traumatic.
I think that the key to change is to not have too many natural disasters, ideally nobody has living memory of the last fire/flood/earthquake/pandemic/alien invasion/plague of locusts so that there is no point of reference or 'compassion fatigue'. Only then can there be a fair expectation of political will and the possibility of change.
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If the market is allowed to price insurance correctly then we can motivate building designs to be more disaster resist. If the McMansion can't get insurance but disaster resistant, modest homes do, then people will adapt.
"Correctly" is doing a lot of work here. Some readers might miss that this is double edged. Insurance is a mandated product. You don't have a choice if you want a mortgage, or want to run a business. So while it is true that the sustainable price for insurance in many areas is higher than what current regulations allow, let's not forget what happens in an unregulated insurance market; price gouging.
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Resistant homes will pay nearly the same prices as everyone else. So the cinder block home owner is subsidizing the sticks houses.
Same happens in autos. Monitored safe driving nets at most 10-20% discounts. Biggest factor is age, and even then, difference between 20yo and 35yo driver is 38%.
There are no tricks or deals to insurance.
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It was only a week or so ago that I learned that a major failure mode of most houses in Florida during Hurricane season used to be the roofs ripping off. The tie plates and straps that were invented to solve that problem created the McMansion as a side effect.[1]
[1] https://www.youtube.com/watch?v=3oIeLGkSCMA
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Let's just consider Los Angeles for a second. For decades working class immigrants were pushed to the foothills in Altadena by redlining policies which placed them at risk for wildfires. Today their risk is exponentially greater due to the effects of unchecked climate change, and many cannot afford insurance even now.
How exactly do you expect these people to adapt? Many live in multigenerational households and could never afford to rebuild their house or move without uprooting their communities to another state.
Why are the victims made to adapt to the atrocious actions of the wealthy and powerful? Maybe our policy discussions should start from a place of compassion and work towards solutions from there.
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Wood for earthquake resistance vs masonry for fire resistance seems like a false dichotomy.
Australia has a lot of experience with building fire resistant homes, and they didn’t do it with masonry, they did it with timber and steel framed homes, plus fireproof cladding and roofing materials, keeping a perimeter free of vegetation and protecting against ember ingress.
It is possible to have both earthquake and fire resistance in a stick framed home, without the expense of resorting to reinforced concrete.
California's building codes are the same. Three problems: overhaul takes generations, monster fire storms will still burn resistant materials, and brush upkeep is difficult
Australia is surprisingly urban, especially in terms of I would guess 90%+ of people live in relatively safe places fire wise (putting inhalation of particles aside).
People in built up areas almost don't think at all about wildfire safety, cladding an so on.
When I briefly lived in Oklahoma I found it frustrating that they use stick frame construction for homes and apartment buildings. Even when we know how to build much safer wind resistant houses.
What I thought was worse was once a tornado rips up a neighborhood builders are allowed to build replacement stick framed homes.
Oklahoma is full of lowest bidder builders. Living in OK I rarely see a house built in the last 10 years that looks like it was built to last. Yet another thing Americans don't seem to care about anymore.
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And I’ll huff and I’ll puff and I’ll blow your house down.
Genuine question. Does this story get told to children in Oklahoma, and if so, don’t the children think to themselves “wtf parents, have you seen our house?”.
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Most new houses built like that in a lot of places in Europe. Prefab reinforced concrete load-bearing walls + pourous concrete for the rest. It's either stucco or one layer of brick on the outside to give character to the building.
Note that brick is much worse than wood for wind-stoked wildfires; think ‘explosive fiery-hot shrapnel’ rather than just catching on fire like wood.
(This is not a contradiction of your point, just a useful related factoid for the modern era.)
You're going to die if you're around to witness either (if you didn't already pass out from smoke/heat/lack of oxygen). It literally doesn't matter.
The advantage of suburbs in which houses are mostly built from non-flammable materials is that while maybe one or two rows of houses closest to forested areas will likely burn out, there won't be enough calorific potential for the fire to propagate further into the suburb.
Also for firefighting efforts the difference between a house burning out and a house burning down is huge. The former means that most of the fire is already contained in a non-flammable structure, reducing the risk of spreading and also making efforts to quench it with water more effective.
"Brick is much worse than wood for wind-stoked wildfires" is a strange take. If a wildfire is approaching, I'll take a town built from brick rather than plywood any day.
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Think about what you’ve just written… you’re saying that a stone building is less safe than a wood building in a fire.
Have we seen any stone cities burn down lately? Because I haven’t seen London burn down since they replaced all the wooden houses with brick in 1666.
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Wind-stoked wildfires are not cat4 or something tornadoes.
Relatedly, door locks sometimes seem to be "insurance rated", as in insurance companies give their opinion on what sort of lock one should use. If you couple that with the belief that no lock is 100% secure, it sort of suggests that a collaboration with insurance companies to decrease the odds they'll have to foot huge reconstruction bills (via stuff like you said, construction techniques, firefighting capacity, etc.) could alleviate this conflict somewhat.
More than just buildings.
ZONING and Building Code need to change.
You're correct that buildings must be more robust and literally capable of surviving an ongoing 4th of July event directly above the property.
However they must also be built such that there is less which is able to burn. Also so that that which does burn is less deadly when it burns.
There also need to be better firebreaks and less natural 'fuel load', which when there IS a good set of rain in the near future, needs to be burned in a rotating cycle to restore nature's fuel balance and discourage catastrophic uncontrolled correction events.
We live in an ICF house. People don’t realize it is “framed” with concrete instead of wood unless we tell them. Siding on the outside and drywall on the inside.
I don't think its necessarily the case what people don't want, but I assume that type of build doesn't come cheap and people find existing homes expensive enough.
It seems some houses that focused on fire safety survived the fire with minimal damage.
https://nypost.com/2025/01/15/real-estate/passive-house-surv...
Metal roof, passive house so embers don’t get sucked in. Concrete walls around the property and plants that don’t contribute to the fire.
The house might cost an additional $100k to build compared to conventional. But it would make all that back on energy, roofing, and insurance costs- probably at the point the conventional home would need a roof replacement.
Builders don’t build such houses unless a client or building code mandates it.
Other sources say the house wasn’t a passive house but did have fire rated walls.
It seems like a lot of fire resistance can be created just by focusing on defensible space and having a concrete or metal fence. Then protecting the roof ventilation from fire (there are special screening materials that can be bought). Then using class A rated materials on the roof and then the exterior. Then metal framed windows instead of vinyl. Actually doesn't cost that much more- they should require it in building codes in these areas. The issue then is retrofit- insurers should probably require a defensible space in these high risk areas.
https://youtu.be/yZe-TlYxm9g?si=Uuqy6rhrhUb8l-_c
> The trouble is, brick isn't earthquake resistant. Not without steel reinforcement.
It's just a matter of throwing a couple hundreds $ of metal and cement every few rows of bricks, like this: https://www.pointp.fr/asset/27/07/AST212707-XL.jpg when you see how much american spend on houses it's a drop in the ocean.
FYI a two storey 10x10m house will run you less than 10k euros in bricks for the external walls, and that's with 30cm wide honeycomb bricks which probably provide enough thermal insulation as is for LA. Add 10k of rockwool insulation and you're good to go for most places.
You use wood for simple reasons: it's widely available, that's the only thing your workers are trained on, it's cheaper so builders make more money, it's faster and allow crazier design (mcmansions). Same thing for asphalt shingles, nobody uses that, it needs constant replacement, but it's cheaper, easier/faster to install.
In europe we mostly build rectangles with simple two pitch roofs, ceramic tiles that last 50+ years, most of them are made of bricks, even in seismically active countries like Italy.
Europe: https://www.philomag.com/sites/default/files/styles/article_...
US: https://www.reviewjournal.com/wp-content/uploads/2017/10/950...
And skill, likely in low supply, and labor. I'm sure some in the Pacific Palisades could afford this no problem, but many in altadena inherited their homes and their homes were the majority of their net worth.
Admittedly not very knowledgeable about this stuff but I feel like a lot of these types of comments are greatly trivializing this problem
Tokyo has high earthquake and moderately high fire risk, people here tend to go with steel reinforced concrete but wooden buildings remain common as well.
I'm curious how the roof is constructed on your cinder block house. That kind of cinder block construction seems obviously superior to me, but I can't think of any roof that would be so obviously superior.
There are a LOT of fireproof roofing materials; the US is quite strange in covering most houses with these asphalt shingles. Clay/concrete tiles are pretty standard; slate or metal also options. There are presumably different ways of dealing with the gaps and ventilation to keep out embers.
> brick isn't earthquake resistant
This is an extreme that is not true. Bricks are harder to make earthquake resistant but it's perfectly possible to build houses that have SOME bricks in it that are also earthquake resistant. There are permutations of materials that are both more fire resistant and more earthquake resistant to the required level at a certain height of the building.
They clearly qualified it with "Not without steel reinforcement."
Anyways the difference in labor costs between wood and reinforced brick would be massive in LA county not to mention the additional cost of materials.
Much more practical solution is more aggressive defensible spaces, cracking down on gardens, and proper management of fire reservoirs
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In northern Italy, the rebuilding of mountain villages in brick and stone after devastating fires had destroyed many of them was ordered in the nineteenth century. It's absurd to claim you can't do anything against fires and the world has become uninsurable in the 21st century and in the world's richest country, while you keep building everything in the cheapest and lightest wood. The sight of the houses burned to the ground except for their fireplace and chimney in the middle is both sad and infuriating.
Like we see in California, when the government sets a price ceiling, insurance companies just leave. Same in Florida. If the free market truly was allowed run normally, the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there. Is that a bad thing? If someone was living in a house near where they tested missiles, we'd call them crazy. At what point can we say the same about people building and rebuilding over and over in these disaster areas.
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.
> 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.
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> 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.
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), 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.
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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.
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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.
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Or some forms of housing in high-risk areas, like sprawling single-family houses, might get too expensive, and the only way for people to live in those places would be a smaller number of denser, more easily defended structures. Also a good thing.
But if they don't set a price ceiling, then insurance companies price gouge.
You can't get a mortgage without insurance, so if insurers were allowed to freely control the price, they'd charge an arm and a leg since buyers are forced to buy. If insurance companies are allowed to freely raise their prices, then they would certainly love to do so because any homeowner with a mortgage would be absolutely stuck and have to pay whatever they demand or risk the bank taking their home back.
I think you have an idea that the free market would naturally lead to an efficient insurance price that let's them cover disasters. But markets aren't magic, and insurance markets are anything but efficient. I don't think anyone really knows what the "right" price for homeowner's insurance is in places like Florida and California.
The right price is the market price. There are multiple insurance providers and sufficient competition. And certainly the time to raise the limits is when companies are leaving the state?
Don't worry, the California government is responding to that by making it illegal to stop offering insurance in the state. That will definitely fix the problem.
Source? Many companies seem to be stopping offering insurance in the state just fine!
The most recent moves seem to be relaxing the pricing rules to allow major disaster pricing and recharging reinsurance rates in exchange for insurers offering more policies in high risk areas.
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Gotta catch up to Florida
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> when the government sets a price ceiling, insurance companies just leave…
> the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there…
Seems like the result is the same — people will live there but without insurance.
worse, you’ll be paying to bail them out in the name of solidarity.
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Its interesting because the last 5 years in the US have seen a dramatic appreciation in housing prices, and also a seeming rise of risk of catastrophic events, and insurance companies are grappling with these 2 things. Ultimately maybe different insurance products could be provided that effectively offload some or all of the risk to the home buyer(which obviously is a not a good scenario for banks giving mortgages).
Price caps always seem like such a transparent political move.
How about profit caps? I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders.
To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.
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> Same in Florida.
The Florida situation is actually markedly different. The main problem was extreme litigation-friendliness. Florida saw 80% of the nation's insurance lawsuits but only ~8% of the insurance business. They've also since passed some reforms (HB 837, 2023; SB 2-A, 2022).
>Like we see in California, when the government sets a price ceiling, insurance companies just leave
Does not answer the question. With no price caps, no one will be able to buy insurance even if required by law. So that means if you own a house in a risky area, you will be unable to sell it and your values will fall. The price caps are to prevent that. But to me, there should be big incentives to prevent building and re-building in risky areas.
So yes, the world in some areas are uninsurable. And other areas are becoming uninsurable.
Why is the burden on insurance companies to make up for individual poor decisions?
In some cases it makes sense to socialise the losses, but I'm not convinced this is one of them.
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Tangential but I have read about propaganda and social engineering but seeing human caused fires to control migration patterns is a level of diabolical I never thought I would live to see but can't blame them if the cheap rent and house prices don't do the job gotta do what you gotta do
"With no price caps, no one will be able to buy insurance even if required by law."
Burden of proof?
> With no price caps, no one will be able to buy insurance even if required by law
I very strongly doubt that say Elon Musk or Jeff Bezos wouldn't be able to afford market-rate insurance costs. They would just choose not to because its too expensive. Which is the point of letting the market set the rate
Clearly it’s not true that “no one” could afford to live there. And if demand was low then the housing would become more affordable
No one can truly afford to live there, if you price in the cost of insurance. The only reason people live there is because they haven't hit the 1/100 chance yet.
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This logic makes absolutely zero sense. If a house is uninsurable, people will choose to live there without insurance. But if the house is insurable for a high cost people will not? They can still choose to not buy the expensive insurable and be in the same boat as inunsurable home owners.
Will banks give out loans for houses without insurance?
I think apt comparison would be collision coverage. How much would you charge from someone that collides a car each year. Probably more than cost of those collisions on average.
Not just the rates are managed, but also deductibles. I'd gladly have a 5 figure deductble to keep my or miums lower, but regulators think this is unfair to some.
Given over half of all households in the country have less than $20k in savings I'd say concerns over equality of access may be well founded. Edit: No? The poors can go fuck themselves? Alright then I guess.
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The governments know this and yet set the insurance premium price ceilings anyways.
At some point you have to consider that as indistinguishable from having a policy to drive people out: deny them insurance, wait for natural disaster, redevelop the now-very-cheap land however the government and its developer friends wants. Whether such a policy is adopted on purpose may not be possible to tell. You'll get called a conspiracist if you even hint that you wonder about it. But you know these people know -it's hard to believe that they don't- what happens when you set price ceilings.
There should be a way to build fire resistant buildings to reduce the cost of insuring them, likely this would be the solution in California without price caps.
You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof. These buildings would be realistically insurable in both California or Florida. They would cost more to build, not THAT much more though especially if land costs many millions, an extra 50k - 100k to build out of concrete is a very reasonable expense.
Steel frame, flame retardant insulation and cladding, rammed earth, .. these are all options.
Flammable trees well away from a leaf free clean guttered (or no gutter) house are also no compromise requirements.
See: https://research.csiro.au/bushfire/ and https://www.csiro.au/en/work-with-us/services/testing-and-ce...
for the rabbit hole of Australian Bushfire housing certification and testing.
Burning Down the House: Trial by Fire CSIRO- https://www.youtube.com/watch?v=KBtawn7IAnI
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Since you mentioned FL, we have mostly solved hurricane level wind resistant building codes. Hurricane ties are cheap and they work. Anything built post hurricane Andrew has these. There's also materials like Hardi Plank siding, which does add a bit more cost, but effectively surrounds the house in a thin layer of concrete. Flooding is a mixed bag. My house is built substantially up and off the ground above the '100 year flood line'. Even if a flood didn't enter the dwelling proper, it would still be devastating.
The problem is storms are getting bigger and more frequent from climate change and hitting areas they normally don't.
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I've been collecting a bunch of links on what things a homeowner can do. Probably the simplest thing is the clear a 5 foot ember resistant zone around the home. So remove greenery and replace wood chips with stone for example. Use fire resistant vents so ember does enter attic or crawlspace. Use Class A fire rated roof (which you can also get for asphalt shingles). If you have wood siding, replace with fiber cement siding...
https://www.insurance.ca.gov/01-consumers/200-wrr/Safer-from...
https://readyforwildfire.org/wp-content/uploads/2024/05/Low-...
https://osfm.fire.ca.gov/what-we-do/fire-engineering-and-inv...
> You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof
Just like exactly the rest of the world? We, the non-USA folks, are looking yearly at either fires or hurricanes destroying these wooden houses there and people keep rebuilding them. Insanity.
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> There should be a way to build fire resistant buildings to reduce the cost of insuring them
There is:
* https://www.youtube.com/watch?v=yZe-TlYxm9g
But when a lot of your housing stock is multiple decades old that was built before modern building codes, there's a lot of kindling out there.
why not have a 100 feet buffer clear of vegetation around housing? seems like an easy fix.
> the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there
I'm not so sure. The Pacific Palisades have astronomical real estate prices. (actually costly property in Florida isn't cheap either). I think the insurance costs would come out of the property prices.
I say this on the basis that the prices the real estate sells for is already what the market will tolerate, if there are other costs to owning it-- then the remaining part the market will tolerate will be less.
Perhaps a result of this is that it may only be realistic to construct lower costs 'disposable' cabins in areas with higher disaster risk... if so, that wouldn't sound like an unreasonable way to allocate resources.
> Is that a bad thing?
Is it a bad thing that we should consider most of the planet unlivable because disasters happen that aren't eternally and increasingly profitable to insure?
Is it a bad thing that literally tens of millions of Americans would no longer have insurance? That you're asking double digit percents of the entire population to leave cities and just... what? Suddenly have new homes in a region with plentiful resources and access to water and food and an economy and no disaster potential?
Is it a bad thing to compare entire states to missile testing grounds?
Is this satire?
Most of the populated areas are perfectly safe from fire.
https://wildfiretaskforce.org/updated-fire-hazard-severity-z...
Can’t you say that about any part of LA? Once a fire gets going, it grows and can destroy any neighborhood.
Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists). I would also make sure that the live video footage would be used only for that purpose. It would use AI at the edge to flag every fire immediately and alert nearest authorities, and otherwise delete footage. There may be other AI at the edge uses added later by the regulators but I’d work to put in place heavy bars to overcome (eg 70% in a public referendum) before they are added.
I would also invest heavily in mobile firefighting tools and materials. The firefighters using buckets is pitiful.
But then again, LA hasn’t invested in itself for decades. It’s like the opposite of NYC: rich people don’t want to live in Downtown LA, they live in the equivalent of our Brooklyn, say Manhattan Beach and Sheepshead Bay by the beach.
Because half of downtown looks increasingly more like skid row. Signage and streets are something out of the 70s literally. And there pretty much hasn’t been any new skyscrapers built since the 80s. The skyline is stuck in the Arnold Schwarzenegger movie era.
I stayed in Freehand hostel which is actually pretty nice, even though there’s abandoned buildings and homeless all around. I met a drunk Andy Dick there by the pool one evening LOL.
And you people from San Francisco — it ain’t much better over where you are. I visited Twitter HQ right when Elon took over. And let me tell you — there is a curious juxtaposition of City Hall, City Opera, The SF Philharmonic, and the fourth corner of that illustrious intersection is… a large abandoned alleyway with dumpsters. What? Imagine Lincoln Center in NYC having that.
On my show I did a lot of interviews — with regulators, technologists, sociopolitical commentators like Noam Chomsky. But one of my most down-to earth interviews was in SF of a homeless guy w his dog. See it for yourself what I’m talking about:
https://www.youtube.com/watch?v=rqjFeaDLuYQ
PS: to the silent downvoters… normally I don’t mind but this time you’re just doing it out of spite. Watch the video or say something. I bet you live there and don’t want to have these things pointed out. SF and LA were so great… so many movements started there. Lately people are fleeing and the homelessness is out of control.
> Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists).
This is a terrible way to deal with fire. The issue isn’t preventing fires from starting at all, because small fires are all over the place. A dropped cigarette can light a city block on fire if the wind is just right. The issue is preventing spread, and taking precautions when conditions (like wind) are conducive to rapid spread.
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Alleyways are good. They help prevent trash and smell from being on the streets people use.
NYC doesn’t have them and the city smells terrible from all of the garbage
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Let's not forget insurance company greed. They are traded on the stock market and must provide returns to their investors. Let's not pretend they are not also part of the problem. Same with health insurance, it should never be for-profit, IMHO.
But I do agree they should be able to set the premiums, otherwise they just go bankrupt. People should not live in idiotically constructed neighborhoods in danger zones if they can't afford it. But they shouldn't be gouged.
Insurance companies are for profit. They run the analysis of how much they need to charge to break even, and aim to charge above that. If they charge too high, customers will look at the alternatives and switch to a competitor.
You can replace "insurance" with any other business, the whole of capitalism is built upon this. Every stock on the stock market is trying to "provide returns to their investors" - each one is as guilty as the next - theres nothing special about insurance companies.
If the argument is that insurance should be a federally provided service, then we must have a different conversation. Look at the FAIR plan. They are government created, and will get wiped out because of these fires, possibly because they weren't charging enough to begin with (and taxpayers will now need to bail them out). The math doesn't change whether its state backed or privately backed. If a home, on average, gets burned down every X years, then the insurance premium needs to be adjusted to be able to cover that.
And here is the crux of the problem - if you take away the free market aspect of being able to adjust prices, and get forced to sell a product/service for less than what you need to, there will be a loss somewhere, in this order of operations:
1. loss at the insurance company --> insurance company goes broke or leaves the state
2. loss at the FAIR plan --> FAIR plan reserves get wiped out
3. loss at the state level --> taxpayers need to bail the situation out.
Id argue that letting the free market work (at layer 1 above) is the proper way about it. If a house burns down every 10 years, let insurance charge 10% of that cost, because that is the actual risk involved in the system. House prices will naturally come down to reflect that reality of risk.
Former CEO of AXA, a major French insurer, famously announced that a world at +4°C would be "uninsurrable" [1].
That was 10 years ago.
It's true that most predictions about climate are wrong - most of the time, they're optimistic. (Not always, fortunately [2])
[1] https://www.leparisien.fr/economie/business/special-cop21-un...
[2] https://www.theclimatebrink.com/p/emissions-are-no-longer-fo...
> most of the time, they're optimistic.
Evidence? Has anyone collated predictions over time and compared them with outcomes to date?
I can remember a number of specific predictions (e.g. that snow would be unknown in most of the UK by the early 2000s) that were pessimistic. Of course, I recall those because they got a lot of media attention at the time and the media reporting is biased to the most extreme predictions so its not a fair sample.
HN just had a "Whoops we undercounted plant C02 absorption by 40% for the last 40 years" post so I would say the errors mostly go in one direction.
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+4°C is to the upper end of projections
if it did (which is not probable) happen it'd take until the end of the century
if we were to get there the entire world will be a different place; everything will have advanced so we won't be insuring our present world with our current knowledge and current tech but a future world with future knowledge and future tech
It's just a matter of time at that point
> if we were to get there the entire world will be a different place; everything will have advanced so we won't be insuring our present world with our current knowledge and current tech but a future world with future knowledge and future tech
That's a very convoluted way to spell "famine, wars and mass immigration". Techno-solutionism has become a religion, you don't even have to understand or look at the problem, just repeat "tech will save us all, in tech we trust".
Not everything advances. We still have houses built in the 1800s/1900s that are usable in predictable/similar climates/circumstances. A changing climate changes that.
Sure, we could bulldoze everything and build new stuff that can handle a +2C, +3C, +4C, etc... world, but that's expensive.
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Sounds super optimistic. Despite some efforts to mitigate climate change. Industrialists are hell-bent on removing regulations and consuming more power than ever. Cooling things is expensive and the laws of thermodynamics don't care about how advanced a society is.
"All natural and technological processes proceed in such a way That the availability of the remaining energy decreases In all energy exchanges, if no energy enters or leaves an isolated system The entropy of that system increases Energy continuously flows from being concentrated To becoming dispersed, spread out, wasted and useless New energy cannot be created and high grade energy is being destroyed An economy based on endless growth is Unsustainable"
We're up +1.5C already and it's a polynomial growth. This current figure was also on the "upper end" of projections from 25 years ago.
It seems everyone is on the same "We will find new solutions to a new problem". I totally agree.
Here is a list of all new solutions we need: 1) not insure places at higher risk 2) mass desalinification 3) fix US hot climate grids sparkles and/or place them underground 4) Street corridors to isolate fires in neighborhood 5) Build with more fire-resistant materials 6) Install automated hydrant towers with cameras able to spray water on fire remotely (it's done in Spain on the edge of forests and urban areas) 7) Pass on the costs of maintaining of living in expensive risky areas to the people living there and/or give them benefits to move to unpopulated areas with no risk
1) Not all the world will suffer equally from climate change. The parts that are at higher risk should not be insurable so that new housing will not be built there but somewhere else.
2) The idea there won't be water because it doesn't rain it's ridiculous. We live on a planet literally made of water. We'll develop mass production de-salinification plants and have enough water. We need to keep investing and improving that technology. I think having water artifically priced at a low price won't help the development of the desalinification industry. So water should cost more NOW that we can afford it to reflect the R&D cost of it that we must make to have water later.
5) Hot countries don't tend to have plenty of wood to build with. Forests grow with more rain. Building with wood in Spain and Italy is very rare. LA got his wood shipped from somewhere further out. Let's build with other materials in arid fire-prone zones. Yes it's perfectly possible to have houses that are both more-fire-resistant and more-earthquake resistant.
> We'll develop mass production de-salinification plants and have enough water.
And then you'll have the brine problem.
Can you explain this problem for those unfamiliar?
I'm asking naively and honestly: is there a solution to brine? Believe it's pumped directly back into ocean at the moment.
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brine can be used for mineral extraction.
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Two step forwards one step back. Doesn't mean the step back made the two step forward not good. I was not familiar with the concept of brine. I thought we would extract the salt from the water and store it. Maybe use it for construction material like with the CO2 extracted from the atmosphere. I'm not an expert and I might have the Dunning-Kruger effect on this. It might be a lot harder than I can imagine/know at this moment but it might still be worth it and necessary.
>"We will find new solutions to a new problem"
Fire risk isn't that new. London famously largely burnt down in the great fire of 1666 and the solution was to build stuff that doesn't burn as easily. It's not really a new science.
You’re mostly talking about wildfires. The top 5 most destructive events in US are all hurricanes. They are the size of multiple states and bring more water in a period of a day than rest of annual non-hurricane rainfall.
It’s desalinated water falling from a massive sprinkler in the sky.
Wildfires can be avoided by not building wood structures in places that historically have had frequent wildfires. A good way to incentivise this is very high insurance costs, which lenders will require before granting a mortgage. Governments can also enact fire codes.
Buildings can be built out of less fire prone materials, and surrounding non native vegetation avoided which feeds fires. This does mean someone can’t live in LA as if they are in a New England country town.
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I'm not so familiar with huge wind but a lot of water I got some (naive) ideas. Build much bigger sewer pipes and river beds. Build houses higher. As usual each region has his own problems. We can all agree either we move out of there or we invent ways to mitigate the problems. For the long term of course, as we all agree, reducing CO2 emissions, stop climate warming and trying to get back some CO2. I believe and hope we can both do that and not having to live like austerity monks.
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You are right. I live in Europe and I'm not very familiar with hurricanes. I'm more familiar with fires and earthquakes. It seems some parts of Florida have been hit by catastrophes every 2-5 years. Maybe we should treat the whole space as natural reserves and building less there. I saw a lot of houses constructured right on the beach in Florida that they seemed just looking for trouble.
> 1) Not all the world will suffer equally from climate change. The parts that are at higher risk should not be insurable so that new housing will not be built there but somewhere else.
So what about the people who already live there...? Like I'm fine telling millionaires their coastal cottages are fucked, but there's a lot more folks out there who've lived in these areas for generations both because they're attached to them emotionally, and also because they can't afford to go anywhere else.
I know, is sad :( Tough choices must be made. Like many of our ancestors, we will have to migrate to better places and/or adapt. We'll do all we can to make it work. As personal advice, I will be buying my second home (when I'll be able to afford it) somewhere in a different country/region with different climate (and political) connotations. Avoid having all the eggs in the same basket. I think we should all have 2nd/3rd homes and also Airbnb them to be more efficient. If all would rent their 2nd/3rd homes the supply would exceed demand and the price would drop. I think we really need to use smart-locks remotely openable in a bigger scale. We could have a future of prosperity and abbundance with enough redundancy to accomodate for all the distasers we were not able to mitigate enough.
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I live in North Texas, and I see a similar pattern in home and car insurance as well. Our main local threat is hail. Well, and the tornadoes, but while very destructive, tornadoes create fairly geographically limited damage. Hail can cover whole cities at a time.
Car insurance became quite expensive. My premium is about $2,200 / 6mo (no accidents, no speeding, no claims in about 10 years) for two cars and two drivers. For some reason, 80% of people choose to park outside while they have a 2-car garage available. Usually packed with crap. They find it easier to have their cars totaled every 4-6 years.
For home insurance, my policy is almost $4,800/yr now! While making some coverage adjustments, I noticed that my insurance company no longer offers a choice of lower deductibles for hail/wind. It’s a fixed percentage relative to my property value, currently showing as nearly $15k as the cheapest option. That’s more than 50% of the replacement cost! (I know that because I had my roof replaced twice in the last 10 years.)
Do you own higher end vehicles or possibly an EV? Or you're seeing those sorts of rates with something like a Honda Accord?
1yo and 3yo “technically” luxury brands. But the car values combined is under $100k
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What's the rough value for your two cars?
I live in a similar climate where hail and tornados are both a risk, though hail is a little less likely here than where you are.
Admittedly we have cheap cars, but our car insurance for two drivers is closer to $850 for the year (full coverage with a reasonable deductible).
Insurance costs have seemed to adjust to a combination of more severe weather conditions, but they also have to fix much more complicated and expensive cars today too. A simple fender bender can be thousands to fix, heck I recently heard about a $5,500 bill when a newer Ford got water in the headlight and fried pretty much the entire electrical system.
Every era has it's Malthusian alarmists and without fail, each has been proven wrong by exactly the same thing the author decries and says won't work this time: technological change and adaption. There's no reason to think this time will be any different. Will some places become uninsurable? Sure, plenty of places over time have become uninsurable. Will the whole world became uninsurable? Absolutely not, because we are quite good at adaptation in the face of adversity.
The issue in California is not the price of insurance, it's availability because of extremely myopic ballot initiatives that are entirely political in nature. Should insurance be fairly priced, then the market can force people out of uninsurable areas and into areas with far less chance to burn.
Thinking technology will always save us is no different from divine or magical thinking.
Lots of societies and civilizations have collapsed. Some were straight up wiped off the earth and we don't even know what happened to them. Western civilization has had a good 500 years, and America has had a good 250 years, but that doesn't mean things can never go bad in the future.
Plenty of places have had catastrophic droughts, famines, and plagues. Nearly half of Europe died a few times from plagues. Most natives in America were absolutely wiped out from disease and other issues. Tens of millions died of famine in China last century. Tsunamis washed away and killed hundreds of thousands in Indonesia and Japan this current century.
In the past, the Krakatoa eruption messed with the climate around the world and made the sky dark. The Bronze Age Collapse is something we still don't understand but nearly wiped out everything in the western world. With population density higher than ever, disasters that match major historical ones would be far more destructive. It's really just been an unusually peaceful few decades in first world countries and people have gotten too comfortable.
>Plenty of places have had catastrophic droughts, famines, and plagues. Nearly half of Europe died a few times from plagues. Most natives in America were absolutely wiped out from disease and other issues. Tens of millions died of famine in China last century. Tsunamis washed away and killed hundreds of thousands in Indonesia and Japan this current century.
Conveniently you selected pre-technology examples. How curious.
Meanwhile the impending global famine(s) - (plural) of the 20th century never came to be because captitalism kept pumping out agriscience improvements to improve crop yields to 10 times what they were in 1900.
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Historically, much of this "adaptation" was achieved via migration. If your vision for the future includes mass migration away from the equator into the cooler north, then okay, we are on the same page as to one of the plausible outcomes.
I think what I worry about is large-scale migrations of people to 'better' areas and the problems that's going to cause.
Let alone migrations for other reasons, e.g. moving to states with better human rights or work availability.
So we can have 1 trillion people, 2 trillion, there's no upper limit?
But there are currently only 8 billion people, and already a lot of articles about how people in Europe and South Korea and Japan and America aren't having children. How are we ever going to get to 1 trillion like this?
Which is nice.
But important, useful things will still be burning and flooding, at huge cost to the economy. Which is less nice.
At this point I think we've tipped into a world of complete delusion, where imaginary "markets" are more important than keeping the planet comfortable, stable, and inhabitable.
Also. this, from that most volatile, irrational, and least sensible of all professions - the actuaries:
https://www.theguardian.com/environment/2025/jan/16/economic...
This is the same logic that almost destroyed the financial system in 2008. "House prices always go up, and there is no reason to think this time will be different". Fine logic that works until it doesn't.
At best your logic works because people get concerned, and work to solve the problem. Once there is a critical mass of people unconcerned, like yourself, that think we will magically adapt and solve the problem, we're screwed.
? Have you opened a history book? The whole pre-WW2 situation was a malthusian trap. The colonial empires starved out whole continents on the periphery of their empires. Thats how japan and germany turned to hyper-imperialism in the first place.
And the solution of turning gas into fertilizer requires a free trade system to be reliable.
You can't live in places where your home is going to get destroyed every couple of decades by wildfires, floods, or hurricanes. There are more of these places now because of climate change and a lot of people are going to have to migrate over the next century, like huge global migrations. Insurance can't/won't allow a bunch of people to deny this reality any more (or at least much longer). LA is going to be pretty uninsurable unless the local governments do a lot to mitigate the fire risk.
As the 173 million strong population of Bangladesh can attest, they can and do live in such places.
"Each year, on average, 31,000 square kilometres (12,000 sq mi) (around 21% of the country) is flooded. During severe floods the affected area may exceed two-thirds of the country, as was seen in 1998."
https://en.wikipedia.org/wiki/Floods_in_Bangladesh
Most of the world does not want to aspire to be Bangladesh, but humans have been living in extremely disaster-prone areas for millennia because the short-term benefits (rich soil etc) outweigh the occasional catastrophic losses.
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Yes and before they migrate due to climate change, they'll sell their charred lots to some fascist with the willpower to clear the brush, fill the reservoirs, and deploy fire fighting drones. Then everything will go back to normal. God protects only the strong.
You can; it's just expensive.
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It's always amazing and disappointing to see how many people actually believe that prices can be lowered by legislative fiat, or that "price gouging" is an actual thing that happens. I guess they would prefer to have shortages instead of paying market rates, and then complain about "greedy big business" or (my favorite) "late stage capitalism".
People who buy health care in the US already get de facto shortages (from denied coverage) and inflated market rates.
Other kinds of insurance are no different.
Judging from my experience (house built in non hazard suburb and maintained every few years), Yes.
The thing is that with the additional cost of climate change, a lot of these houses do not have the capacity to go through a once-in-100-years event, as they start to occur more frequently.
We just had a water backflow from the city main pipeline last August. Pretty much everyone was impacted, and insurance cost went up for those that were not impacted anyway.
So to make the house insurable, it requires: 1) massive city infrastructure rebuilding, and 2) everyone pays a lot more to install additional "modules" in their houses. For example I already have a backflow valve but if things get worse and water starts to accumulate close to the bottom of the house I'll need a very expensive French drain, something like 60k CAD. It's not going to break me, but it's 3-4 years of saving.
I can't imagine what happens if we get another once-in-100-years storm this summer. I'll probably leave the basement bare without floor and won't bother to claim it.
This seems like more of a commentary on a general lack of understanding of basic economics.
If things aren't priced correctly, mayhem ensues. Frustratingly the political solutions to high prices often just put off the problem. Government mandated price fixing, of insurance, rentals, etc never fixes the core problem, only allows it to fester.
Sometimes it's taxpayers losing money, sometimes it's the few unlucky ones being forced by the government - and arguably the latter is worse for everyone as private investment and services dry up because of regulatory risks.
In my NYC neighborhood, we seem to be going through a whole slew of businesses closing shop within the last year and change.
One obvious reason is rent hikes.
But as one of my favorite local bars was closing, one of the staff mentioned that insurance was really starting to kill them.
We don't live in a flood-prone part of NYC, so I'm curious: is insurance for retail space really going up dramatically across the board in NYC, or was this a single, subjective understanding of a situation?
It's possible insurance prices were rising specifically for them - because they had a lot of claims, for example - and not necessarily for everybody.
when i hear stories like that i think it's a ripple of effect of paying out for others but then i also recall seeing how much the industry started paying out to political interests after citizens united, too
Yes, retail insurance is up. This is due to crime and theft. In some cases, it's the we don't want your business/headache rate hike. NYC has about 835,000 unauthorized immigrants. That is up from about 400,000 in 2022.
https://capitaloneshopping.com/research/shoplifting-statisti...
https://www.thecity.nyc/2024/02/21/shoplifting-surge-nyc-sma...
https://nypost.com/2024/05/20/opinion/nyc-crime-wave-continu...
Insurance is America’s best method of pricing externalities. If America is becoming uninsurable, maybe they should look into other methods of addressing or minimizing those externalities.
Like requiring buildings be built to a standard where they can survive normal weather events, not building in disaster prone areas, not building in sprawling huge developments that eat up a ton of natural space and create a huge urban woodland interface, and trying to slow the pace of climate change by not dumping so much co2 into the atmosphere.
Really interesting reading - looks like there's a lot of comments here along the lines of things that could be done to build more fire/flood/huricane resistant housing.
I don't want to detract away from those points, but it's definitely worth saying that, at present, we're polluting CO2 into the atmosphere at a very large and to some extent avoidable rate. Climate change is already happening, but the extent to which it happens is still down to us - we can and need to do lots to improve flood resistance in, say, Florida, but we can also stop parts of Florida ending up below sea level too.
Every year, humanity grows richer, more resilient to natural disasters, and more capable of predicting natural disasters and their negative outcomes. The point of insurance is to spread the expected burden of calamities that will affect a minority of a population to the entire population, so that those affected will have a financial safety net. This principle works regardless of how disastrous or prone to calamity a population is. If there will be more fires, more hurricanes, etc, the market will favor homes built in different locations, different architectural styles, etc in response to changing premiums and probabilities of disaster. We don't live in a world like in 1905 where an earthquake would lead to a fire that burns down an entire city. Prosperity simply requires changing to circumstances where valid.
>We don't live in a world like in 1905 where an earthquake would lead to a fire that burns down an entire city
I'm not convinced that that's true, and even if it is a huge chunk of population (world, US, pick your area, it applies broadly) keep fighting to regress us to these periods.
People complaining about rules they don't understand is in some sense as old as the existence of rules, but the internet has dramatically increased the number of people who consider themselves experts on politics, healthcare, construction, electrical code, and every other topic on the sun, and who are proud of ignoring the science and the rules and who go out of their way to avoid permits, inspections, etc.
At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.
So you have a huge mix of things which are old and degrading, things which were never built right, and things which people are actively modifying in dangerous ways. People have a false sense of confidence build during the years where we were enforcing these rules; I do not believe that confidence is still warranted.
Plenty of things were built just fine or better and hold up with regular maintenance or modifications, and many are proving to have only been practical to build during a time that had a lower floor for better or worse depending on the thing.
Would some places have become what they are today had they not built their subway system when it was opportune or hilariously less expensive than it is now? The good things we can iterate on or refactor now would have way more overhead to build from scratch at todays standards, not all of which are inherently useful or justified. Sometimes a whole city burns down or all the labor was forced, which sucks and we don't want, but sometimes you're having to get shadow studies done to build anything higher than a bungalow
> At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.
This isn't helped by actual bad rules and regulations on the books. Some minor examples are the prop 95 warnings on every damn thing or the way CAFE standards work to encourage the sale of more pickup trucks. I don't blame some people for wanting to scrap the whole regulatory system after encountering enough of these.
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I agree with your analysis of how insurance works. But, wouldn’t the burden of calamities only spread amongst the insurance holders? I am not sure what the factors are, but if a lot more people go without insurance (because they are independently wealthy or live in an uninsurable location), doesn’t change the calculation?
People who go without insurance because they live in an uninsurable location would leave those who remain insured better off, because the insurance company would be less likely to need to make an exorbitant payout to the victims in the disaster-prone area. This is of course true as long as insurers don't manipulate the market to keep premiums high despite their total expected claim outlay lowering.
As an insurance buyer, in a hypothetically ideal market situation, you would want all those who also purchase from the same insurer to have the lowest risk of needing an expensive claim paid. The lower the expected payout * risk of disaster means lower premiums for the insurer to still make an expected profit.
I think what will happen is simply: Houses are built in places which are more insurable, existing danger-prone houses will exist until they are destroyed, until then they will increasingly be status objects for the elite who can afford the loss and have inaccurate risk appraisal. The fact that so many valuable objects are kept in Malibu/Palisades homes despite fires happening there a lot (as recent as 2018) indicates homeowners in disaster-prone areas aren't acting perfectly rationally.
If insurance and property taxes are proportional to property price, and property prices grow faster than incomes, then cost of ownership will eventually become unaffordable to existing residents.
A similar argument works if insurance is just based on reconstruction cost, but construction costs inflate faster than incomes.
If properties become unaffordable, then to restore equilibrium, property prices must fall, incomes must rise, or lower-income residents will sell to higher-income purchasers. If there are few higher-income purchasers, property prices will fall.
Property taxes could be cut, or decoupled from property values (e.g. poll tax), but that never happens.
If the risk really is high, there is no practical insurance available, and all purchasers are rational, then the price may go to zero.
An example of an irrational purchaser would be one who assigned high status to a beach house, even in the face of threats from coastal erosion, hurricane floods or tsunamis.
Possibly one of the most inane phrases ever uttered about modern governments is Oliver Wendell Holmes’s oft-quoted phrase stating that “taxes are what we pay for civilized society.” This reflected the naïve view, often pushed in the eighteenth and nineteenth century, of the so-called “social contract.”
According to this idea, we pay taxes, and in return the state provides order, protection, and all the blessings of civilization.
Presumably included among all those taxpayer-funded civilizational “services” provided by governments one can find “fire suppression.”
But, you wouldn’t know it from watching tens of thousands of residents flee their homes in southern California and Los Angeles County as fires rage. As of Wednesday at midday, five different fires in southern California are still zero-percent contained. Nor is this some hard-to-reach rural area with few roads and little infrastructure. These fires are right in the middle of suburban cities and towns. Yet, it is all apparently too much for lavishly-funded government agencies to handle.
Indeed, government authorities in Los Angeles County and California had neglected infrastructure to the point that it became useless in many areas in terms of battling the blazes.
I don't disagree, but...
> Property taxes could be cut, or decoupled from property values (e.g. poll tax), but that never happens.
Couldn't the total property tax take be set to be proportional to incomes, shared between households in proportion to property price?
> If the risk really is high, there is no practical insurance available, and all purchasers are rational, then the price may go to zero.
Rational purchasers might reason that:
1) they need a home
2) unless they own a home they'll have to rent
3) even an uninsurable home could be expected to be habitable for a while
4) if rent for the duration of expected habitability exceeds transaction costs and property taxes for some uninsurable home, it could be worth a nonzero amount
my sadly hot (no pun intended) take is that insurance needs to be let free. price controls on insurance are doubly counterproductive - not only does it result in the companies leaving, it results in those who need the insurance losing their stuff when catastrophe inevitably hits.
it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.
rather than price controls a slightly better solution would be just to nationalize insurance and force everyone to use it, but even that is not really a solution since highly correlated events are the antithesis of insurance.
One thing I am mostly against is nationalized property/casualty insurance. California seems to have taken every opportunity to not properly price risk. My worry is that while extreme, their logic and priorities do not feel unique for government decision making. The last thing I'd want to do is expand it.
When you distort risk pricing, you distort the market, and if you do it hard enough for long enough, you are basically pulling back the slingshot.
While this also applies to mutual insurers, my philosophy is being serious about solvency is the best way to know if you are properly underwriting and pricing. I feel like the government operates too much knowing that they can backstop it either themselves or by imposing an assessment on the market.
You are right that the really big disasters are very correlated events. While not a silver bullet, reinsurance and other risk transfer stuff can help smooth those kind of events out. The good-ish thing with those risks is that while they are uncertain, they are sort of identifiable, known unknowns in Rumsfeld parlance.
I agree with that sentiment, the thing that always seems crazy to me is that California's housing pricing in the face of all these things, but perhaps it's sort of pick your poison. Like I don't want to harp on it, but the only implicit or explicit thing everyone appears to agree on given the decisions that have been made is protecting housing prices above all else. But don't expose people to the ramifications of the housing appreciation (Looking at you, Prop 13).
This is not an insurance problem, or a market problem, or an MBA econ problem.
It's a "Do we want cultural extinction or a relatively comfortable and habitable planet?" problem, which is not quite the same thing.
No amount of faith-based "We will adapt!" is going to make an impression until evidence appears that we are actually adapting in real, tangible ways.
Clearly, objectively, and empirically we are not. We are doing the opposite - pretending to ourselves the problem is going to be solved by continuing with the same mistakes which caused it.
i unironically believe the insurance is a great signal for pricing externalities. if you want, imo, a comfortable planet, you should want everyone to have to pay, out of pocket, for the risk they’re taking.
the result would be people not living in areas that a risky, engaging in behaviors or risking, or partaking in things the contribute to the world becoming more volatile.
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Agreed. The government should ensure fair prices by ensuring healthy competition. Maybe have a (non-subsidized) public option. The government should also compensate for the power disparity by requiring policies to have reasonable coverage and making sure insurance companies actually honor them when the times comes. But directly dictating a maximum price isn’t going to go well.
> it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.
Long term, sure. In the short term, the rapid rise of housing prices combined with the increased rates and severity of disasters means the extra monthly cost would be enough to price a number of people out of homes they purchased when rates were much lower. While it's easy to say, "They should just move," that has huge transaction costs. Aside from the obvious things, which are already substantial, consider the cost of paying off a mortgage taken out a few years ago and acquiring a new mortgage at current interest rates. That can cost you hundreds of thousands of dollars (which shows up as now only being able to afford a much worse house, probably in a much worse location, if you can continue to afford to own at all), and you are basically gifting that money to the bank by paying off your loan early.
You can understand why such people would be willing to take a chance on not having insurance rather than incur a definite loss, and why it might be tempting to try to come up with some other solution than just unleashing the unrelenting might of the free market on them.
Totally agree, though there should still be insurance commisions and controls to ensure that any company selling policies in a given area is solvent enough to pay out. Otherwise you'll have fly-by-night insurance companies selling sham policies for cheap then folding up shop during the next natural disaster saying "oopsies guess it's the state's responsibility now".
I think this is a pretty common and au courant take right now.
The problem is that in American home-buying, insurance is often compulsory for a purchase with a mortgage. This makes sense from the bank's perspective--they want to insure their collateral. However, the system doesn't really have an answer for "what happens when their collateral becomes uninsurable?" Even though lenders have force-placed insurance, even those insurers can deny coverage in certain circumstances (e.g. flood plain). This puts insurers in a position to de-facto foreclose on not just one person's house, but swaths of houses in regions they (as an industry) deem risky.
I'm not sure what the answer is here other than forcing insurers to insure (which would raise premiums for everyone), or creating meta-insurance of some kind (insurance against becoming uninsured).
There's always some price at which an insurer would willingly insure. The only case where it is "impossible" is when there's a government price cap. The other issue that you implicitly refer to, though, is that the price of insurance can be altered annually, while the mortgage term is much longer. This mismatch creates "what happens when their collateral becomes [so expensive to insure that the homeowner would never have agreed to this mortgage deal on these terms upfront]?"
What I see happening in the future is builders will stop building homes in highly disaster prone areas because those places cant secure insurance and thus potential owners won't be able to secure a mortgage, and the only folks living there will be the very wealthy that can afford to self-insure.
There are some areas like CA where natural disaster risk can be mitigated through forest management and I think those places will continue to grow, but for places where we can't do anything to impact a natural disaster (ie hurricane's in florida), those places will start to have "off limit" zones for any type of insurable construction. These places will still be accessable, we will just build parks, beaches and other things there for the public, just not homes or commercial structures.
I think a big part of why natural disasters have gotten so bad is one climate change but also the fact that we're building places we shouldn't and in the future most will learn the lesson to no build in a certain area unless they are made of money and are aware of the risks of building their.
If a property is uninsurable, it can be bought for cash. The actual land value can still be mortgaged, too.
Would you want to hold collateral that has a high risk of becoming worthless? You would effectively be self insuring it and would have to price that into a loan you offered.
> Would you want to hold collateral that has a high risk of becoming worthless?
Of course not, the problem is that all parties were a-okay with the purchase in the first place, and the banks are trying to change the terms when they realize their hand is a losing one after many turns of the game. Sometimes that’s life, and the corporations should be forced to lose instead of changing the rules so the homeowner loses instead.
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> the entire idea of being an "insurer of last resort" is based on an unlimited supply of money to fund losses that no longer make financial sense
Key insight here. Insurer of last resort == bag-holder for negative EV proposition.
Insurer of last resort == taxpayers bailing out people who can no longer afford to live in their multi-million dollar properties but refuse to sell and move.
TBF the best example of a program like this that currently exists is the National Flood Insurance Program which covers many sub-multi-million dollar homes and is billions of dollars in the hole.
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Probably more that we spent decades since mass adoption of AC moving 10s of millions of people into previously lightly inhabited areas, then repeatedly bailed them out with government money to rebuild when disaster struck.
Add to that the general rich mans disease of building anything in America being slow & expensive, so each rebuild is more expensive than the last, well beyond just inflation.
Define uninsurable. In present world that means that someone will bet a lot of money nothing bad will happen to you, and you will pay them for long to keep that bet on. And that will work for that someone because the kind of bad things they give money for should be extremely rare, its like a reverse lotto. But if things become not so rare, or the unexpected rare events affect at once too much people, then becomes not so profitable for them.
But that doesn't mean that the concept may still be valid for the end user in a way or another, just that in the other end you may have a different kind of actor or mitigation of risk. That those events become far more common is not random or an act of some god, i.e. taxes for fossil carbon usage or other economic action towards those actors meant to have a fund for those cases. Or having a personal saving plan instead of giving that money to someone else, that in average may work better for most. Or force insurance companies to keep playing even when the odds are not so extremely favourable for them.
> The other way the world is becoming uninsurable is much of what we take for granted--abundant, affordable resources, products, food and fuel, for example--is not guaranteed, and cannot be insured by political or technological means.
Fuel is not guaranteed, but renewables, batteries, heat pumps, EVs and possible nuclear does increasingly give us a technological option for ensuring power.
It's fair to ask if economics will drive us to adopt these technologies on a wide enough scale before we run out.
I’m not sure how heat pumps and batteries “ensure power”. Building far more nuclear would create green jobs, high paying jobs, and ensure widespread power, but the current trend is to close nuclear power plants and burn natural gas instead.
This is silly, and overcomplicating the issue. The world is very insurable, at a price. The property and casualty business is competitive as hell in almost all parts.
The government needs to just stay out of it.
When the cost of premium surpasses what people are able to pay, companies will just leave. That's the point of the article, you can only ignore material reality for so long.
The companies are leaving because of mandated price caps from the government. In every other market when cost > price and they can't control cost, companies increase price.
You can only ignore the reality of government interference in the insurance market for so long.
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Ok, just play the next move. Insurance is expensive. Now what happens.
Can't think for yourself? This is econ 101. People will try to drive down the cost by:
1) Buying/building smaller houses that cost less to insure. 2) Building using different materials which are less prone to burn. 3) Moving to areas less prone to fires/hurricanes etc 4) Voting for representatives who take this more seriously and install better infrastructure to fight fires/floods.
These are all good ideas which haven't been put in place already because the government has distorted the insurance market so badly people aren't getting the right price signals.
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People don't build wood houses in an area that gets wild fires
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> Like virtually all problems, it's been approached as a problem with a political solution: the state or federal government can force insurers to continue offering policies that put them on the hook for additional catastrophic losses, and / or become "insurers of last resort."
When you put a minimum on the price of wages the true minimum is zero. When you put a maximum on the price of insurance the true maximum is 1/0.
It's a financial problem, ultimately. Living in Antarctica is difficult and expensive because of the conditions, but with enough money it's manageable.
California is not very hospitable on its own but with human intervention it was made liveable. But that is now running out, because e.g. the water supply is no longer adequate for what is used.
But this is the difficult situation we find ourselves in; due to climate change, hospitable areas are no longer hospitable, and while you can throw money at the problem, it becomes exponentially more expensive to continue to live there. If this continues, it will trigger a (mass) migration. This can be applied everywhere, and the phrase "climate change will trigger mass migrations" has been uttered many times already. It however feels like people only considered this to be a problem in e.g. the global south, affecting poor people because they don't have the financial means to shape the earth and their living conditions by throwing money at the problem.
I live in the Netherlands that for hundreds of years has thrown money and resources at the problem that it's below sea level and prone to flooding. We're still managing, but still get flooding in some places due to e.g. heavy rains deeper in Europe. But if the sea level goes up enough, either we'll have to spend billions in building higher sea walls... or abandon regions entirely. The worst case predictions mention a 2.5 meter sea level rise by 2100, that'll definitely test our infrastructure to put it mildly.
(this comment was a reply first but moved it to a top level one because I added my main article comment as well).
> Risks and losses cannot be extinguished, they can only be transferred to others.
At least for risks like wildfires, we can reduce future risk by rebuilding homes using wildfire resistant techniques and materials.
The problem in LA (exacerbated by the climate-change driven conditions) was that most of the burned neighborhoods were built adjacent to fire prone wildlands during an era when homes were built like matchboxes, almost designed to burn. Add the hurricane strength wind, and each building became a blowtorch.
Fiber cement siding, minimal eaves, and metal roofs are straightforward ways to reduce wildfire contagion risk of buildings. There have been numerous experiments done to demonstrate how effective this approach is at significantly reducing combustibility of buildings.
Cutting back trees near houses to create defensible space is also pretty straightforward.
I also know almost nothing about insurance other than what I've observed as a policyholder. Two things I would note though:
1) Maybe there needs to be some adjustments to how risk pooling is done. I live in Florida, so my homeowner's insurance is ridiculously expensive, but my property isn't really at risk from hurricanes etc, being very far inland. Realistically my property isn't any more at risk of anything than any property anywhere else in the country.
2) There doesn't seem to be enough flexibility in the offers. Most people seem to think insurance should cover any losses, but really people only need insurance to cover losses that they cannot recover from. I'd take a $100K deductible on my homeowner's insurance if it was offered and lowered my premiums significantly, but it's my understanding the law won't allow that.
What are we betting that the Americans rebuild in wood again? It seems like they never learn. We had a single city fire like this 500 years ago and since then we haven’t… because we built the city back in brick instead of wood.
Americans used to build cities with brick and masonry. They were repeatedly destroyed by strong earthquakes, as would happen to your city if subject to similarly severe earthquakes. Americans paid for that lesson in blood.
European houses are not designed to withstand American disasters. A brick house that can survive a M8.5 earthquake, which is the safety standard where I live, will be almost purely steel structurally and very expensive to build. The brick would be decorative, which can be (and is) done on a wood frame.
The entire south and south-east of Europe has a similar seismic risk to most of California, and wooden houses are nowhere to be seen.
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Concrete + rebar and then a steel roof secured with hurricane-proof metal straps, or just tile roofing if the area isn’t hurricane prone. Concrete can also be used for things like insulated concrete forms (ICF) that save energy and improve insulation for both hot and cold.
I definitely understand what you are saying here, and it makes sense. But concrete is quite common in Europe these days, which I suspect would also be a good option for earthquake zones.
Earthquakes.
Options are wood again, or steel and concrete.
Somehow, all these nations around the world with earthquakes still have their houses standing.
Why is it always whataboutism with earthquakes when presented with "don't build houses out of matchsticks"?
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Where 500 years ago?
Europe, a lot of cities went though a few large fires and then went "facepalm oh!!! maybe we should try stone!"
Why don't insurance companies mandate significant fire abatement in new builds to be insurable? While it may not be possible to save every house, I wonder how many houses could have been saved with a thought behind "how can we minimize damage in a wildfire scenario"
This is happening already, it has happened to my neighbors. As resident of CA in a neighborhood which previously was not, but now probably is, 'fire prone' I fully expect to hear from my insurance company to provide evidence of defendable space and other modifications to minimize the likelihood of structure fire.
I've read that once more than about 5-10 house were on fire, there was really no hope of containment, due to the orientation of the streets relative to the wind, the proximity of houses, and the intensity of the wind. Thus the key is prevention -- not letting the wild land fire get to the first 5-10 houses.
In Australia, this is handled at the building code level, as well.
The term "uninsurable" is not linked to "too expensive" or (equivalently) "too high risk". It's linked to "unpredictable".
The business insurances are in is a business of statistics. As long as you can model things giving you an expected value and a standard deviation, you can offer an insurance policy which gives you X amount of profit with Y amount of risk, and the insurance premiums are adjusted such that the insurance's risk for negative profit is negligible, according to the model.
What does it mean for climate change? Current insurance models apparently don't work well, so they don't dare to offer policies in certain areas. But just like city planners need to adjust (build further away from shore, higher up, build in flooding protections) and home owners do (AC, think twice if you want a basement) and farmers (choice of crops, irrigation systems), so do insurances by finding better models that allow them to have better statistics.
My expectation in the long run is that insurances will be offered again, but with so high premiums for certain areas (of high risk) that it will just be too expensive to live there. Which is fine. Nobody lives on the moon either. And the public shouldn't be paying for somebody's privilege to have a nice waterfront property in a hurricane area.
TL;DR: The current public discourse about this topic conflates predictability with cost when talking about "insurability". They are very different things.
> What does it mean for climate change? ...think twice if you want a basement
Why is climate change a problem for basements? Is it to do with flooding? If floods are likely to affect basements, doesn't that suggest an opportunity for sacrificial basements?[0]
[0] "The construction of concrete ground structures or sacrificial basements is a recognised solution for construction in areas of high flood risk. The habitable spaces are raised a minimum of 600mm above the level of design flood risk, while the basement area can provide additional nonhabitable storage space." https://www.basements.org.uk/TBIC/Building-Legislation/Plann...
The problem is the materials used. Greedy developers building junk homes and making bank. People in those areas are able to afford fire resistant housing but most of them are being swindled into buying stick homes. The few properly designed homes fared far better. Code needs to be updated and consumers need to be educated.
A number of those homes were old enough to qualify for social security. I doubt it's reasonable to believe developers could anticipate the environmental conditions that would befall a home some half-century since breaking ground.
I think the problem is less the materials used, and more that urban sprawl has pushed cities to build out into areas they shouldn't be building.
Destroying the wetlands to build houses closer to the ocean has eliminated the natural hurricane protection (from storm surge, at least) that many low lying areas had.
Building into fire-prone hills outside of cities in Southern California was never going to end well.
I often hear people bring up the point that wood buildings are a risk for wildfires and brick/concrete would be safer. When I did some research on this topic years ago I concluded that brick/concrete is much less stable in an Earthquake, which is also a concern for LA. Is it possible to build earthquake resistant concrete structures?
Yes, you can build reinforced concrete structures rated to not collapse during a M8-9 earthquake. However, the quantity of steel and reinforcement required for the concrete structure to have sufficient strength makes it expensive and labor intensive to build.
The US has been pioneering other construction techniques using welded steel plates instead of reinforced concrete. They have excellent seismic resistance and are much cheaper to build because you don't need to place rebar.
I think the best solution is to own much less.
People keep wanting to live in huge space that they barely use, then buy a fuckton of appliances they use once or twice a month at the maximum and hoard stuff like there is no tomorrow. Then they cry when they lose everything or that nobody want to insure their pile of crap. Just insure the minimum to live comfortably. It is much lower than what you can think of.
Since I have been moving every 4 to 5 years I have been focusing on never hoarding too much stuff. My appartment can burn, I will be fine and as long as I can find a small roof[1] for me and my family (1 partner 2 teenagers) and we could buy back what we need to live comfortably with less than 10k€ and then rebuild gradually to live in a normally sized[2] appartment/house.
[1] by my standards, which I rate at 20 to 25sq/m per person living in the household.
[2] a bungalow, yurt, caravan or large camper would be enough for a disaster recovery.
> Then they cry when they lose everything
Yes, that's a normal human response. It's ok to have emotions.
Yes but OTOH between drugs/addiction, homelessness, traffic, healthcare, consequences of global warming, loneliness epidemy, crime, it is hard to have empathy when you see a whole country complaining of self induced misery.
The graph is potentially misleading in a few ways. Population has increased, more houses to get destroyed. House prices outpace CPI. Costs went up, but so did revenue for the above reasons. Obviously those factors are independent of hurricane and fire size and frequency.
It’s hard to view insurance as a viable business when overpaying executives has become the norm. Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023. The industry is rife with waste and high barriers to entry.
> Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023.
Honestly, no one would care about CEO pay if the insurance companies would just pay out and make customers whole. Instead, there are mechanisms and processes in place to keep premiums coming in and to reduce or refuse claim payouts.
Lets pretend the CEO made $0 over 2 years and that $50m goes to what?
- $350 annual bonus to the 67,000 employees?
- Lower the cost of the 91 million policies by $0.27 per year each?
- Cover an additional 50 homes in California?
Where should it go?
They bank it as any insurance company should do. Invest it cautiously. Hire sound decent people to run it with solid levels of accountability (including from a board of directors that is mostly made up of a rotating number of clients). Do it from the beginning of the company. Grow your staff slowly. Build enough of a cushion that can last the company years. Right? Right?
I'd run that company well for $250k/annually + benefits (an enormous amount of money).
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> If the state or federal government offers an open checkbook--we'll pay any and all losses, no questions asked--then those ultimately paying these astronomical bills--the taxpayers--will reasonably ask: why are we subsidizing people to rebuild in places that are clearly no longer habitable due to the probabilities of another fire, flood or hurricane?
There's two options:
1: Pay people to leave, perhaps 80% of the fair market value as of a certain date.
2: Pay people for their loss, but do not allow them to rebuild. (Unless the house is built to stricter standards, and meeting those standards might not be covered by the loss.)
I'm no insurance expert, but I know that insurance usually doesn't cover what's called force majeure — ie. "great forces" such as natural disasters. That's because insurance doesn't work if all insurees (or a large proportion) need to be compensated at the same time.
So my question is: is it even possible to insure against these events — e.g. hurricanes, forest fires, earthquakes — given that all insurance takers may need to collect compensation at once (in which case the price of a house insurance would need to be at least the same as the price of a new house).
Oh look, climate change does economic damage, but not at the source.
The answer is, of course, no. (Betteridge's law and all that)
Are there going to be massive changes in building codes? Yes. Will that make owning a building more expensive? Yes. Will the pundits tell you it is the fault of the what ever political party is in power? of course they will.
What is true is that 'pre-global warming' designed infrastructure is going to become uninsurable because it will be regularly destroyed. Once a track record is established for 'global warming aware' infrastructure, the cost to insure it will become more clear.
If you were wondering "How will global climate change effect me personally?", this is it. Your city's costs are going up as it has to rebuild itself to a new standard, if you own a home your insurance costs are going up until you tear it down (or it gets destroyed) and rebuild it to the new standard.
As long as you have population growth without increasing land , the density of people will increase and the more damage per square foot will increase.
Everything is insurable - for the right price. But if you aren't allowed to pay that price then I guess that's a problem.
Good. Building houses in tsunami-prone areas, areas downstream of large dams, and in known forest fire areas is stupid and insurance companies get to be the little boy who says "the emperor has no clothes" first.
I'm not sure I follow this: "why are we subsidizing people to rebuild in places that are clearly no longer habitable"
Does/Why would the insurance assume the subsidy is for people rebuilding in the same place? Money is fungible and so it doesn't need to be in the same place, at all. What I'd expect is that insurance for those hard-to-insure places would skyrocket and thus a new balance would be achieved.
You would expect that in a rational market. But go down a reading hole about flood insurance. tl;dr: in many places in the US, the only company that offers flood insurance is the US government because everyone else has pulled out. And people do tend to use the money to rebuild in the same location -- reasons as varied as "I like my beachhouse" to "my entire community was born and lived in this parish and I aint leaving".
Now that the physics of insolvency are starting to overcome political pressure of keeping Daddy Bailout-Bucks around, and people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.
>people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.
I know politics is famous for elites abusing it for their own benefit, but sometimes the population is truly not ready for something that the elites understand is utterly necessary and that's not a bad thing. The risks and benefits of an elite class, I guess.
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Fire insurers could begin ploughing some of their take back into educating clients, helping them harden their homes, and making sure clients are up-to-date on fire codes. As the world changes, businesses should expect to have to remodel their product.
No it’s just that the insurance companies want mandated insurance pools for which they just receive checks.
In health insurance they don’t cover the elderly, and until Obama they did not cover people with prior conditions.
For home insurance they don’t cover flood get your are mandated to carry one if you have a mortgage.
In life insurance they do not cover you if you have a disease.
It’s more like a lottery rather than insurance.
Some people have always been uninsurable.
When you become uninsurable yourself, all you're doing is crossing an imaginary line that has always been there, and kept in imaginary condition precisely to insure that your mental health is stable enough to keep on paying more than anything else :\
You're not supposed to notice this.
Whether or not you crossed that line due to any fault of your own, or from the line moving past you with a whimper or a whoosh, you're also not supposed to be able to tell the difference until it's too late.
Working with the big ships that are often covered by some of the most well-established insurers in the world, it turns out that when you really need them to pay a claim, the stronger your insurance company, the more likely their lawyers will outmaneuver yours, and the claim will not be paid.
Otherwise it could be paying the claim but denying further coverage which the limited number of alternative underwriters can also deny. That's a hell of a negotiating position.
If ship owners with hundreds of millions in assets cannot fight them, who can?
Bloomberg recently did an excellent series on just this issue (including insurers of last resort in different states). The first part: https://www.bloomberg.com/features/2024-home-insurance-real-...
The really issue is that most people don't understand insurance.
People reduce or stop caring when they know insurance will cover things. In my opinion this leads to higher losses and higher costs. Especially when people choose more expensive things.
> That neither is a solution to the actual problem is glossed over, because as a society, we've become accustomed to the idea that there is a political solution to all problems.
THIS. I have started thinking a lot about this recently, and this isn't a lot less obvious that it sounds at first. We tend to think that, if we find _some_ consensus to fix a problem, this will be fixed. But many problems emerge now that no consensus, no matter how global, will not fix.
And even that very idea that we are a reasonable species and we will converge to some consensus-based solution isn't actually true.
I'll insure you for cost + half... it's not a matter of insurance it's the price of which it comes in at.
Everything is insurable, it's just a matter of making the premium high enough. If people are willing to pay it, that's another question.
I guess the question is how much should the rest of America have to subsidize the folks who want to live near the beach?
So let me try to put the author's argument in order:
(1) The author tried to get homeowner's insurance, but was denied because their home was a significant hurricane risk
(2) The author (maybe?) got insurance through a state-run FAIR program, but then cites news reports that these programs are close to insolvency (As are a significant amount of non-state-run homeowner insurance programs).
(3) The author is like, "well, if it's so hard to insure my house, maybe I should think about living somewhere else." And then generalizes to "a lot of places should be uninsurable and uninhabited - apocalypse here we come"
Makes sense to me. Good comprehension
The question this article seems to ask is "is the world becoming insurable while maintaining a profit margin?", not "is the world becoming uninsurable?" These are different questions, with different answers.
Insurance profit margins are razor thin. Many insurers pay out more in claims than they collect in premiums, and the difference is made up with interest and other returns on investments from the insurer’s massive reserves.
Insurers are strictly regulated at the state level. They have to keep enough reserves to pay a surge in claims. And they have to collect enough premiums to pay out an average claim volume, or else the state requires them to shut down.
The title should be: Are some parts of the United States becoming uninsurable.
As long as so many things are not accounted for properly (negative externalities), what good is it to talk about the world being insurable or not? It's like putting a bunch of monkeys in the cockpit of a rocket and then asking if you can insure it.
Fantastic article. So what if one set of matket participants goes full blown denial and tries to force a economically unsound activity upon the state who forces it upon external unwilling participants aka a classic extractive empire going to war for extended reality denial? Economic idealisms or nostalgia with outsourced externalities what a concept..
There are different stategies for risk mitigation and delegation is only one of them.
It seems like "severe storms" have increased quite a bit, the other categories not so much. What does "severe storm" mean here? Doesn't seem to mean hurricanes or winter storms. So what gives? Is this just political patronage handed out under the cover of claiming a big storm knocked some trees down?
Ok so the source, https://www.ncei.noaa.gov/access/billions/time-series/US says,
"tornado outbreaks, high wind, hailstorms"
So most of this cost is roof damage. Which is an area rife with insurance fraud and getting worse.
The main problem is (a) the cost of roofers has gone up significantly, (b) as a country we switched from more durable forms of roofing like slate to cheap forms that are harder to repair and easier to damage, like asphalt shingles, and (c) the roofing industry is now full of bad actors committing near-insurance fraud.
Roof damage fraud ... my understanding is the insured has roof damage, takes a payment from the insurance company but does not repair roof, next storm comes along: roof damage again!
Easy enough I think to solve.
> This is the intrinsic limit of political fixes: we take the risks and losses and transfer them to others lacking the political power to contest the transfer.
This hits hard and close to home. While my heart goes out to everyone that’s shouldering misfortunes, I’m wary of the “private profits, public risks” phenomenon getting even more out of control.
Obviously we can’t afford to disappoint all the people that were forced to jump into an outrageous housing market all at once, they need affordable insurance, and also still expect to 10x their property investment, particularly in coastal areas. If we don’t do this, it will be another huge blow to the shrinking middle class.
Meanwhile, the flyover states with fewer hurricanes and wildfires will subsidize coastal insurance basically due to strength of Californias market clout, and yet flyover states won’t ever see a windfall from their own rising property values. Since remote employees in flyover states often get less salary for the same work, they are already subsidizing rent for higher density areas. Regardless of where you live, everyone should recognize that this is unsustainable and divisive.
Does it make any sense to talk about the foundations and the upper structures as being separately insurable ? Can foundations be reused ?
I assume the foundations are concrete, and the rest is wood, cardboard and any combination of the two, so I could see that the foundation would survive a fire
Get out of here, who is building a home out of cardboard?
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Maybe? I think its highly dependent on the age of the home and the willingness to reuse the outer plan to rebuild the home.
Ouch - so this explains why my home insurance almost tripled in a year - and I don't live in an at-risk area. Everyone I know had huge premium increases.
USA != World.
This is an existential problem for the insurance industry and they should fight the oil industry as such.
the world is always insurable
the more volatile it is (and the less you've mitigated the risks), the more expensive your insurance gets
This seems willfully naive.
As with any market, there will be a price that the market cannot bear; and if your 'floor', your minimum policy price offering, is too high for your market, then insurance (as an asset class) no longer has product-market fit.
QED.
> That the private-sector can trigger crises that have no political or technological fix is on very few pundits' radar.
Interestingly, there seems to a number of cultural solutions to this problem. Like, imagine if the people of LA adopted a fondness for living in dense urban environments, and a reluctance to "live near nature," the problem of wildfires becomes much more tractable. Or for example, a culture of maintenance (forests, power infrastructure, infrastructure fireproofing, risk preparedness, etc.), like outlined in the book "The Innovation Delusion," could very well reduce risk a considerable amount. Unfortunately our civilization is too much stuck in its traditional ways to consider such solutions.
Naive question, but why not raise taxes in hazardous areas, and use that money for a state-run insurance?
Naive answer, but I think this exists and is called the FAIR plan. See here: https://stateline.org/2025/01/16/california-fires-show-state...
That one doesn’t discriminate by location I think?
Insurance is such a crutch for some people, but it shouldn't be.
If something is worth doing, it's worth doing whether you have insurance or not.
In my opinion, the amount of resources spent on buying insurance would, in almost every case, be better spent on prevention rather than after the fact mitigation.
It's that "in almost every case" that's the problem. The whole point of insurance is to cover that case where it does happen, irrespective of how unlikely it is.
Case in point, my partner was diagnosed with a very, very, very rare terminal cancer at 32. Insurance turned out to be a great investment for us.
> If something is worth doing, it's worth doing whether you have insurance or not.
Taking a mortgage that allows you to buy a house you'll pay off over 30 years and then sell when you retire requires insurance.
Without insurance the investments we make in ours homes would need to be a lot smaller.
I'm not saying it's a bad idea, just that it's not without significant impact.
> If something is worth doing, it's worth doing whether you have insurance or not.
You're forgetting about insurance fraud.
Risks are only uninsurable if the government puts a ceiling on the premiums.
Something neat about the insurance industry is that it seems to be immune to irrationality. Whether or not someone believes in climate change, premiums are a function of actual measured risk. If risk goes up, premiums go up.
And because being accurate at assessing risk is directly connected to company performance, they’re likely one of the best places to go to get your finger on the pulse of what’s actually happening.
The one time this falls apart is when the government puts their finger on the scale and creates insurance that runs at a loss so that people can keep rebuilding in practically uninsurable locales.
I guess another nice thing about this is that the insurance company and you both have aligned incentives. Neither of you want to see claims being made. So they really care that you’re doing whatever you can to reduce risk.
I bet some of this is wrong, based on an incomplete read of the system, so please educate me. :)
My only hope for climate change is that insurance companies start lobbying to have a more predictable environment since risk models works better when things aren't chaotic, and that gives a monetary incentice for companies to do better
This is a great opportunity for developers to rebuild with greater density.
It's not clear how extraordinary the losses are - by how much home insurance losses actually outpace home-price inflation (not CPI).
For the moment let's set aside legitimate concerns of climate change or land-use policy inducing unanticipated risk.
Insurance is systemic in the sense of pervasive, but the question is whether the crisis is a controllable excursion from stability, or itself amplifies the problem.
The key factor in the 2008 crisis was how foreclosures reduced prices causing more foreclosures and higher borrowing costs - a vicious cycle.
With insurance, homes are already affected. What other specific markets? Does insurance company diversification spread the impact from real estate costs to other industries?
The destabilizing mechanism is insurer exit after over-exposure. Over-exposure comes not from extra assets, but from mis-pricing.
US Insurance is a private market facility, so pricing is competitive. If a competitor prices insurance below your risk-assessed value, your incentive is to meet their price and try to make it up in other markets or through better investments. This tendency would get worse in times of strong investment growth.
Thus the investment-dependent insurance industry loses when investments fail, and also tends to lose after investments have been winning. Insurance profitability in the last two decades may reflect a sweet spot of stock market performance more than improvements in risk-assessment.
Assuming over-exposure, then what? Both low prices and availability depend on diverse and competitive suppliers. After an insurer has suffered major losses in a market, particularly to the point of viability, they lose the confidence of both investors and customers -- and insurance depends entirely on that belief of reliability. So their best response is to simply leave that market, to maintain their reputation in other markets. Then as more insurers leave a market, prices go up, consuming all available price elasticity - which is very, very significant for homes as fixed assets that are key to other value streams like jobs, schools, etc.
Still, that seems limited to housing unless it takes down cross-subsidizing insurance companies.
But it does end housing in these markets. Individuals won't be able to buy homes because of the cost of mortgages and insurance. But if insurance is unavailable large companies could own apartments (or even subdivisions where they lease homes) and self-insure or enjoy more tailored insurance.
With entire neighborhoods destroyed by fire, developers could rebuild newer, denser housing. And insurers could stay in business by settling with policy holders using money combined with a stake in the new neighborhood corporation.
That's the ideal solution, but it won't happen at neighborhood scale because it would involve too many coordination costs. The state (California) would have to effectively take all the property to avoid hold-outs, and then arrange with various insurance companies and developers.
So the economic solution is for developers to buy up plots of burned-down neighborhoods. A single small developer could use California's SB-9 to build 4 units where there was one. And larger developers could buy a 4 adjacent plots and build a 30-unit apartment. Both could self-insure, or be well-served by insurance company that focuses on protectable, high-density housing.
Doing that at middling scale - lots of complex transactions - would make a good business, albeit not the typical YC. You'd combine a small tech firm with a boutique law firm, add a government relations team. You'd have to be up and running quickly to use the crisis to get the policies you need and start coordinating developers who are sure to be in demand.
The California (and Florida) situation is easily explainable [1]. As this video points out you have these forces in play:
1. The state who sets insurance price caps for political expediency, basically to increase house prices (because they'd go down if insurance prices could float freely). BTW we have examples of areas that are uninsurable like the Florida Keys;
2. The homeowners who want their house prices to go up and want to pay as little as possible for home insurance; and
3. Insurance companies who can't write too many policies so they remain solvent. Price caps ultimately lead to insurers leaving the market.
LA in particular has competing problems: wildfires and earthquakes. If you want to avoid total loss due to wildfires, first you wouldn't build in Pacific Palisades at all. It's a vegetation rich area between hills with potentially high winds. If you want to avoid fire loss, you would build out of concrete not timber-framed buildings.
But the problem is that earthquakes have the opposite building priorities. Lumber is actually quite good in earthquake zones because you tend to get less loss of life from the collapse of timber houses.
Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.
Ultimately all of this comes down to a malaise brought on by high house prices. Voters consistently vote for policies that increase their house prices with absolutely no concern for the externalities.
If it now costs $1 million to build an "average" house, then you're going to be spending $20,000+ a year on insurance. If your house only cost $100,000, you wouldn't have that problem.
It's even worse in California because a lot of property taxes are capped so the state government can't even recoupe taxes from a lot of high-priced property but they suffer the costs of it (eg by being the insurer of last resort).
[1]: https://www.tiktok.com/t/ZT2Jek6a6/
a lot of this here is really what the problem is. for whatever reason, california wants to try to micromanage this particular microeconomy (insurance), but it will fail.
> Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.
It's expensive here, but is it expensive in Japan? Here its' expensive because it requires extensive steelwork which takes you entirely out of the domain of rubberstamp building approval and into needing PE-stamped bespoke engineering and also gets overbuilt to a greater degree.
Get rid of the federal guarantee for homes that are deemed too risky for private insurance. Stop privatizing gains with publicly backed safety nets and people will engage in less risky behavior. But get ready to be labelled as heartless if you back or even suggest such.
What amazes me about watching californians interviewed about the wild fires is the discourse heads towards conspiracy and corruption:
- It's all part of planned land grabs and clearances - They don't want to pay to protect us
And so on. Nobody once mentioned the real driving factor of increasing incidences of natural disaster: climate change.
I wouldn't insure that attitude either.
The article lumps in the L.A. fires but the exit of insurers from that market was due to price controls, voted in by California residents.
From my personal experience in the UK, a few annec-data points:
A friend owns a Land Rover with such a notoriously bad engine that insurers refuse to insure it. Land Rover had to make their own car insurance [1].
Another friend owns an electric car that is becoming increasingly uninsurable. I'm told that due to the battery, any significant collision defaults to a complete destruction of the vehicle and not a repair. The second-hand market for electric cars is also terrible, almost no car dealer will touch them in the UK.
Another friend had a car that was insured for £5k, but it was actually worth more. An accident occurred that completely destroyed the car in a fire, and they offered £1.5k. They approached the insurer and said if £1.5k is adequate to replace the vehicle, then they could simply drop a vehicle off instead. Eventually they increased the amount to £2.5k, half of their own estimate, and far less than the vehicles actual worth.
Another friend got into an accident and was permanently injured. They got an initial offer from the other insurance company, which their insurance said to decline as they believed they should expect more. Several years of slow progress, with the original insurer shutting down and passing their work to several other insurers, they were told too much time had elapsed and they should have gone for the original amount. They offered a £50 "good will gesture" and then closed the case. In the UK we have the Financial Ombudsman for insurance disputes [2], which after review decided that £50 was perfectly adequate.
Another friend had their vehicle temporarily ceased by the police (the police were wrong to do so in this case, but you have zero right to appeal). They lost one of the sets of keys for the vehicle and scratched the car. The police told the person there was nothing they could do, and to claim on the insurance. They instead paid for the damage themselves, because the insurance premiums on such a claim would not be worth it. Just tonight I saw something similar where somebody's mirror was damaged in a hit & run, choosing to fix it themselves to avoid insurance premiums increase.
I used to send out parcels and insure them, but several parcels arrived damaged (admitted by the couriers) and they said they needed proof of packaging the items correctly. From therein I would video the packaging of all items and something occurred again, but they made it impossible to actually use their insurance.
My point is this: Getting insurance is becoming increasingly difficult, but also getting the insurer to honour their agreement is becoming increasingly difficult. In the UK you are legally required to have car insurance, but they are clearly robbing people with no recourse to justice. The system is already broken and not fit for purpose.
[1] https://insurance.landrover.co.uk/
[2] https://www.financial-ombudsman.org.uk/consumers/complaints-...
Again, insane that the president elect does not believe in climate change and chose to blame supposed DEI practices in California's firefighters while the fire was burning.
Nothing will change, houses will be rebuilt the same way in the same place.
Imho insurance is one of the most underrated problems in economic "science".
Punks feelin lucky are advised to Google (or ask any GPT about) "insurance paradox".
Haha
This seems like such a gloomy article. There are plenty of other solutions. If you can't insure a home, that home's price should come down. If there is a 5% chance my home is destroyed every year I would expect a steep discount. I could see myself gambling on such a home for 50% off. Alternatively if you don't wanna gamble, just move to a place that's less risky. If moving is too much for you, renting may still be an option. Yes the increased risk will push prices higher, but it will also crash property prices, so who knows what will happen. Yes land owners in these areas will be screwed, but you don't have a right to returns on your investment.
Real solution: assess risks and mandate building houses that can withstand those risks. Hurricanes? Find out what is the maximum possible hurricane and mandate construction standards that a house will withstand it with minimum damage (24" reinforced concrete walls etc). Same for fire.
Some years ago I contracted for a mega-big-global insurance company.
They would spread leaflets/internal publications on "Risk Profile for the Year 20##" every year. And they would issue updates every Q or H.
Insurance companies monitor every-little-thing. If it hasn't rained for X days in Z country, they KNOW IT, monitor it, and accordingly change policies, premiums, etc.
I always tell people that the most lucrative job (imho) is "Actuary" (https://en.wikipedia.org/wiki/Actuary) so for anyone who is young enough to make a career change or have kids on the verge of picking directions/professions, "Actuary" for-the-win!!
If history shows one thing- that is that a ton of political problems are just technological problems solvable with surplus bribery - and the fact that we have a ton of political problems indicates we have a misallocation of technological problem solving ability, away from what are the foundations of society, towards "luxury" perverted incentivized problems created by a wealth bubble. A million thinkers working and thinking about block chains instead of energy or fertilizers or carbon capture. This bubble and its misallocation shadow has to die, for the system to reboot.
The Third world has never been insurable. Insurance, supermarkets with self-checkout, home order delivery, all these things are only possible in high trust developed societies.
Home delivery works perfectly well in less developed society. As wages are so much lower it is very much cheaper to deliver to door and possibly even get documentation for signature. Big issue in the end is cost of living. Which affects everyone and most of things in live.
The problem with home delivery in a “low trust” area is that your delivered items will get stolen, unless you can manage to stay at home all day to receive deliveries.
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“Losses rise with inflation, of course, but the losses are rising far above background inflation.”
Losses are very much in line with asset price inflation. If a house rises in value for no good reason other than loose monetary policy, so does the compensation. At the same time, insurers struggle to find safe yields to match these cost increases when that same monetary policy keeps interest rates low.
Looking at the chart pictured, one would expect that extreme weather events have increased dramatically after 2000, but that is not the case:
https://ourworldindata.org/natural-disasters
Yes
Article seems a bit black and white. After fire insurance dumped my mother's insurance, the "Fair" Plan started out with some similar black and white with insights like "zipcode bad for fire" == "you get worst price". Recently their direction has gotten better, better clearance == better pricing, better building == better pricing, etc. This seems like a better direction. Monthly inspections maybe even == better pricing. Repairs == better pricing. Community changes == better pricing. I think there is a lot of gradual room for improvement here. Ie. More spacing between homes, yard clearance, hydrant locations, accessible fire water sources, quarterly inspections by qualified inspectors, etc. Maybe highly exposed communities would have 10,000 gallon water tanks every square block just for fire.
I think it is easy for people to "dump" on some of these higher priced real estate incidents seen recently but this is also affecting people on social security. What are we going to do just let their house burn down and then just have a bunch of homeless senior citizens in the mix. Why even have government? Seems like a terrible country to live in if a 30 year old needs to plan their house situation out into their 80s.
Also seems a bit ironic to me that you get insurance to cover unexpected future expenses but when insurance takes losses then they can just drop you because .. the losses were unexpected. They've known for 20++ years and I'm sure some... money was made... Did they put some away for this situation? Also if you personally experience a loss they also drop you almost immediately.
This idea that we'd just let insurance companies do whatever is *nuts*. Has that ever worked? Honestly pure capitalism seems like the real behind the scenes American dream or fantasy. This same climate change most likely was created by companies making buckets of money with no plan to deal with the side-effects we experience now. Just let the market take care of it....
These companies aren't about making "some profit" they want to make as much profit as possible. Is some 75 year widow living in her and her dead husband's house in Eureka, CA going to convince them to keep insuring her house at a reasonable price? Even if she paid the same insurance company for 30 years?
I think the solution is going to require some government intervention because insurance companies just don't care and it will be hard for new players to innovate quickly enough to tackle such a large crisis. Ie. legislating the inspections, legislating the fire-resistant building guidelines + insurance scale, subsidizing certain low income locations, working with communities to improve fire safety and resources. Some work has happened but clearly it is not happening fast enough.
People have lost their homes and everything they own to a natural disaster that was not under their control. I don't care where you live in the world, this could happen to you. The lack of empathy and victim blaming in these comments is absolutely revolting. I am done with this site. It has been taken over by heartless people with zero intellectual curiosity. Good riddance.
It's always been filled with smug self-important techbro shitlibertarians (edit: with egos more fragile than literal snowflakes). Luckily, what's they've sent around is starting to come back and they reeeeally don't like consequences.
When nerds like me were freaking out about climate change in 2003, what did people think we we’re talking about?!?
This is the exact scenario every single scientist I studied under openly discussed: probably not an extinction level event, but very, very expensive… Expensive to the point of it being cheaper in the long run to switch to renewables asap and hope for the best.
It’s like a 150M conservatives are all at once are saying “Wait a minute! We should do something about this!”
Uh… yea, no shit.
So what? Living without insurance is nothing crazy.
Many dogs (pitbulls, akitas..) are uninsurable, yet we see them everywhere. People just accept damages, and pay it out of their own pocket (or run away and do not pay).
An hour in and nobody in these comments is addressing climate change? The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change. Should people be forced to abandon their homes because the fossil fuel companies lied and misled the public and bought out our governments for the last 50 years?
IMHO we should be seizing the fossil fuel companies' assets and using them for disaster relief around the world due to the catastrophe they have deliberately caused.
The talk about insurance rates is a deliberate distraction.
We need a high per-ton carbon tax, with all revenue dividended out per-capita to offset the inflation. This would eliminate the green premium on a great number of clean alternatives and avoid the problems of the government picking where to invest, letting the market handle that instead.
And if those companies don't find other things to do (they'd be quite good at geothermal, or durable carbon sequestration, with all their drilling and fracking expertise), then they'll go bankrupt without needing to do anything so extreme as nationalizing/seizing/whatever.
If you ask Americans to vote to make gas more expensive to stop climate change (eg. the Washington carbon tax referenda), they say no. America burns lots of fossil fuels because it's what the voters want. If every private fossil fuel company shut down tomorrow, there would be riots in the streets, and then oil and gas would be imported from abroad.
Makes sense since even the French people protested a carbon tax back in 2019.
https://www.bbc.com/news/world-europe-46460445
Did you miss the part where I said the public has been lied to for the past 50 years?
I didn't say we shut off all the gas pumps tomorrow. It will obviously take time to transition off. I said we seize their assets and use the proceeds for climate relief. We can keep the revenue coming and using the profits for disaster relief while we transition off fossil fuels. It's not that hard to understand.
Don't agree. Well partially. I also think the privatise the profits socialise the losses story is strong, and the coal and oil interests should pony up more remediation costs.
But insurance is one of the best signals we have to true risk/consequence/likelihood, which commercial interests pay attention to
The best long term outcome here would be rebuilding safer but the downside will be "which excludes the poor" -that's where I think state and federal policy should apply the lever: require socialised housing outcomes.
Price controls on insurance forces socialised losses. Better is some middle ground: mandate insurance, demand adequate mitigations and defences. But losing the price signal is bad.
The losses were already socialized without the controls. Look at how the insurance companies always behave in these situations. They always find a way to stick the public with the bill. Don't listen to the corporate talking points. The price controls may have been stupid but they are a distraction.
The Los Angeles fires are not really about climate change. There have been wildfires there for centuries, it's part of the ecosystem.
The Santa Anas getting stronger is very much related to climate change.
Yes I remember as a kid in the 80s when wildfires woukd devastate LA every year. Oh wait no it did not happen until recently.
Yes wildfires do happen in nature. No this is not normal for this area. Yes it is about climate change. Stop believinf fossil fuel company propaganda.
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What evidence do you have that these fires have anything to do with climate change? They appear to be adequately explained by the known behavior of the region, and to the extent that they're not the radical increases in habitation and the systematic suppression of small fires is enough to cover any gap.
Ironically there is a great case that varrious environmental groups that vigorously opposed controlled burns are among the greatest proximal human causes of the current situation. If careful analysis concluded so, would you support seizing their assets for use as disaster relief?
Some relevant reading:
https://yaleclimateconnections.org/2025/01/the-role-of-clima...
The frequency and intensity of droughts in the area has increased due to climate change. The increased winds is due to climate change. It is obvious. It is not explained by "radical population increase".
Stop trying to distract with fossil fuel propaganda trying to distract with everthing else they can. Yes controlled burns still happen but it is also understandable that people would be jumpy about them with the problems fire has been causing in that area in recent years.
> The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change
I saw an article on npr [1] which basically agrees with the chart on the blogpost. I 1980, there were 3 disasters a year that cost $1B, inflation adjusted. In 2024, 24. The second chart in the npr article is pretty terrifying.
[1] https://www.npr.org/2024/10/08/nx-s1-5143320/hurricanes-clim...
Without accounting for population growth in high risk areas this is meaningless. If the population and housing units in a floodplain doubles, a $500M 1980s disaster becomes a $1B 2024 disaster. That's not to mention the above-inflation increase in the cost of housing which probably bumps these numbers up as well.
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a practical problem is that the financial instruments insurance companies create (insurance linked securities or ILS, catastrophe bonds, and other structured products) are not available to retail investors, who would likely buy a lot of higher risk investments if they were allowed to, and this would provide a lot more collateral for writing new policies. if you want more of it, deregulate it. it's that simple.
Part of this is that homes are too fancy and large. All of that translates into elevated costs and risks.
If people like them, they are not too big or too fancy.
It is if they cannot afford them. Most people would love far more than they can afford, but reality wins.
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Also, they are not building small homes anyway.
Developers here in the Midwaste aren't going to put a cheap house on a lot if they can instead put a 3500 sq. ft. home and get triple the profit.
And if the developers can't sell that house because it's uninsurable, then they will stop.
No it isn’t. It’s just unprofitable which means it can be fixed with higher rates.
There are to components, breakeven price for profitability and the price that an or will be paid.
If it costs 10 million dollars to replace a house, the insurance will be out reach for most homeowners.
My understanding is that some people are willing to pay, but it's illegal to charge that much.
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Sure, but state governments (in the US) also set what prices are allowed (disclaimer: I don't work in the industry but have friends that do so I might misunderstand). And that means that if the state says "you can only charge X for insurance", and it's still unprofitable, those customers are effectively uninsurable.
I see that as a regulatory issue, but of course, the end result is the same. I'm familiar with services being effectively unavailable as a result of regulation from living in Canada. (Health insurance / not being allowed to buy healthcare).
Betteridges law of headlines. No. Silly article.
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Not one paper cited. Just random recitation of climate change hysteria tropes.
Life on earth had dealt with 120 meters of sea level rise. So please.
No
https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
Apparently climate change causes reductions in fire department funding, amirite?
Insurance needs to be not-for-profit or a government enterprise. Physical projects and infrastructure should not be started until risk is assessed. Speculators and go-go finance has ought to be constrained. As for myself, I am choosing alternative ways to plan, finance, build, and manage infrastructure project. The current systems is a non-starter for most people under 50.
> Insurance needs to be not-for-profit or a government enterprise.
There are many examples of this in the insurer of last resort, which are non-profit or government insurance when the private insurance can no longer cover.
Insurers of last resort have the same issues with denying claims and not paying out like the private insurers. If you read the OP article, the only people asking for not-for-profit or government insurance are basically asking for infinite money, which is both a non-starter and impossible.
What really should be done is private insurers raising premiums to match risk. This may mean some consumers will be priced out of insurance policies.
To me this sort of thing just seems like a weird financialization brain disease of sorts.
At the end of the day if your house burns down you can go and get some wood / stone / whatever and build one somewhere else and this will basically always be possible to do to some degree.
The question is just about what the chance of having to do that per year is and what that represents in dollar value. It can’t not be possible.
Obviously insurance companies, and i of course, would prefer if nobody anywhere ever had accidents or got sick etc
And i'd love it every lottery ticket, and horse i ever bet on was a winner
Feels like insurance companies just don't want to do their job.
They're getting paid to take someone's risk and then refusing to accept it.
Not sure if this is accurate. It seems they’re refusing to take the risk.
they only want sure thing bets these days.
Imagine I bet on a horse and then demanded the bookies pay out because it wasn't forecast to rain