Feds are going to have to step in and take over.
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Feds are going to have to step in and take over.
That's my uneducated thought as well. Residential Housing is props up by the housing agencies, tax policy and so on. But I probably don't know shit.Quote:
Originally Posted by yeahman
Wouldn't it be nice if the insurance companies priced themselves right out of business?
But really it's no surprise homeowner insurance rates are skyrocketing because construction costs are skyrocketing. Rebuilding a home is going to take a lot more money now than a couple years ago. Two years ago I voluntarily raised my coverage by about 30% (this in addition to the inflation increase already built into most policies). I ate a $45 a month rate increase at that time. Not sure if this is why I haven't seen any rate increases since. Judging by Reddit people in Montana are seeing increases but nothing on the scale of what's going on in California.
Socialized insurance? We seem to be kinda heading that way...Quote:
Originally Posted by yeahman
wonder how much of this has to do with corporate greed and the deregulation of the insurance banking and securities industries back in the 90s
they have been using our premiums to gamble on the stock market
fuck them
Insurance is socialized as a construct. They aren't pricing themselves out of business, they're pricing risk. If you want to blow a massive hole in the fed budget, that's what getting involved would do (much as NFIP is a bit of a hole). Houses that were perfectly fine 10 years ago are actively at much higher risk given the changes in weather patterns and behavior patterns. It's a shit pill to swallow, but that's a lot of what's driving it. On top of that, the massive regulatory weight of 50 separate state schemas around insurance costs plenty as well.
Note also that pretty much every state (save for a few that go extra light on regulation *cough* texas *cough*) has very specific provisions that trigger well in advance of insolvency to remove an insurer from the state and make sure things get covered. Not to mention large reserve and reinsurance requirements.
You want things to improve? Make building cheaper and start mitigating climate risk more aggressively. Mandate and enforce barriers/firebreaks in wildfire country. Go after dishonest contractors/roofers/lawyers more aggressively. It's not like insurers get to set prices without input - states approve the rates.
Should we socialize insurance because people like nice homes with a view, ski town living, second homes and vacation properties, and investment real estate?
I thought we were supposed to be mad at the wealth gap…
Socialized insurance for beachfront property but not for people living on fault lines does sound unfair.
What about people who choose to live not on a fault line or beachfront?
Agree.Quote:
Originally Posted by neufox47
But if property in several states becomes uninsurable, doesn't that just increase demand in the states that aren't affected? Your Florida beachfront property loses 90% of its value, but houses in the Twin Cities spike 30%.Quote:
Originally Posted by neufox47
Without companies “gambling” on the stock market your premiums would be a lot higher. Many carriers just try to break even on their property insurance programs (before even considering corporate allocations) and make money on the investments. If carriers weren’t allowed to invest the premiums they would need to charge more to make a profit or they would just stop writing certain lines.Quote:
Originally Posted by fastfred
Construction is really expensive. Insured losses cost way more than uninsured losses. Handling claims is expensive. Most of the market intelligence I get say that prices have now stabilized in the reinsurance market.
Any of you with significant investments are welcome to participate as an insurer. Lloyds of London will still pay you premium for pledging assets as collateral. Then you too can experience a condo complex making a claim 18 months after a hurricane for $4,000,000, spending $250,000 on adjusters and engineers to show that said claim is mostly accrued maintenance and preexisting conditions, all to pay out $2,000,000 at appraisal because the appraiser just split the baby regardless of facts.
But socialized for profit - which differentiates it from a lot of other socialized things...Quote:
Originally Posted by schuss
heh, that's the joke. We could add people who live near forests too...Quote:
Originally Posted by Conundrum
it's socialized to provide appropriate indemnification. Let's take some common concepts:Quote:
Originally Posted by skaredshtles
1. "I paid in x over the years" - if you have a loss in year 1, should you only be entitled to premium payout? No, you should be made whole, that's done through socialization of premiums to pay losses.
2. Profit - profit is metered by state approvals, as states won't approve rate hikes if you're already making good money in the state. If you look at the healthiest earners - Geico/Progressive - they're still only getting a 10-15% profit margin. Go look at Apple or Google profit margins in the 20's and 30's. On the flipside, you have State Farm that's LOSING nearly 20 cents on the dollar of premiums.
3. "but investments" - yes, but investment returns are not always reliable, so it's a bit of a crapshoot. Also, a lot of what insurers invest in is not gambling as much as longer term payback stuff that requires a bunch of capital (think oil refineries), as it's usually more stable than market playing.
Would I take insurance that's a socialized nonprofit? Sure, but "how much profit do we need for capital reserves?" would be the undoing of that most likely, as after 3-4 good years you'd have people arguing to deplete them, only for a massive catastrophe year to roll through. Unfortunately, government is still mostly directed by politicians, who are mostly concerned with winning popularity contests, not hard fiduciary duties.
It'll be exactly like the health insurance exchange. You'll buy a plan from a private company through homeinsurance.gov and your premiums will be subsidized by the federal government, depending on your income level.
Yep - no arguments from me. Insurance is a pretty honed industry. After all, it has been around for hundreds of years...Quote:
Originally Posted by schuss
Umm.....no forests anywhere near Lahaina. The Paradise, CA fire was mostly structure fires; the trees in town were actually the only thing left standing. The recent massive fires in the Texas Panhandle? Not woodlands there either.Quote:
Originally Posted by MultiVerse
If you live around chaparral, sagebrush or scrub grasslands, that's prime fire country. As far as the actuaries are concerned, you're in the same pool of risk as the folks in the trees. Dense subdivisions in windy areas are also in the pool of risk. There's been some costly fires in the front range that were mostly brush and houses. That one in Boulder cost over $2B and it wasn't even fire season! That fire blowtorched during the cold months far away from any trees.
All you need is some tightly built subdivisions, 50mph winds, Mrs. O'Leary's cow and whoosh, the losses are in the billions.
We should 100% not be subsidizing anyone's insurance premiums unless it's tied to other things, like trying to vacate an area experiencing a stepfold change in flooding or something, as that's how we all end up footing the bill for millionaire beachfront insurance instead of those living there footing the bill.Quote:
Originally Posted by yeahman
Yep, the Marshall Fire (the Boulder one you referenced) started in brush grass land, and it was a fire that could. not. be. controlled. With no forests in sight. It was all about wind. So yes, any populated area subject to very high wind risk would seem to be at danger.Quote:
Originally Posted by neckdeep
If I remember right, it started at about 1150 on Foothill Hwy and by 1208 they were evacuating the Costco in Superior almost 4 miles away. 1084 homes lost, 50 mph sustained winds.Quote:
Originally Posted by Danno
Invasive exotic species are becoming, are have become, a major element in brush and grasslands. Especially exotic annuals like cheatgrass and brome that thrive in disturbed areas. I’ve read that abandoned sugarcane fields in Maui were covered with exotic plant species that carried the fires there. Combine that with years of disturbance and suppression, and climate change, and development in former wildlands and yeah - you don’t have to be in the woods to be at risk.Quote:
Originally Posted by Danno
I guess (flammable) subdivisions could be considered invasive.
Which is pretty funny because different insurers treat structural losses completely differently, especially in the context of roofing and general contractor overhead and profit, and even more especially where those two areas converge.Quote:
Originally Posted by schuss
Like how much does Safeco profit every year by refusing to include GCOP on all roof-related line items? Nobody else does that shit...except Liberty Mutual, which is the same company.
Oh yeah, damage payment structure and rules is a whole ball of wax and there's a reason those in the industry say pick a good insurer. Not to mention how much adjusting is farmed out to contract firms these days.
Damn. Didn’t expect full on tinfoil directed energy weapons up in here.Quote:
Originally Posted by neckdeep
But yeah. Fires out of control lately. Melting aluminum wheels and sparing blue umbrellas
Paint your roof blue.