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.
Tornadoes are quite a bit less common outside of North America, and especially the US. Some of that comes down to the absence of people in the places where tornadoes occur, so there's no one there to report them.
The Tornado Archive (https://tornadoarchive.com/) has a pretty well executed map to illustrate that. They report that between 2011 and 2021 (just the dates I punched in, so its possible the actual ratio is a bit different from that), the world saw ~20,000 reported tornadoes. North America reported 12,000 of them.
So its not just that Americans maybe don't know how to build tornado resistant structures. Its that the US and Canada's per-capita tornado rate is quite a bit higher than the rest of the world.
Tornados might be more intense but only for a short period of time and in a small area. I don't see any of those where the tornado is lasting days, causing sustained damage. There are some where there are multiple tornadoes in a span, but each individual tornado is itself quick and violent but localized within a mile or so at most.
Compare some incidents with, Hurricane Sandy, for example, where it traveled across the span of a thousand miles and lasted a week of damages.
Yes.
Tornadoes seem like a phenomenon for which insurance is actually a pretty good part of the solution. I mean, it is very unlikely for anything in particular to get hit by a tornado, but it is really devastating. It might take an unreasonable amount of work to build everything to the level where it can sustain a direct hit by a tornado. The expected value of tornado damage is quite low overall, we just need to deal with the individual catastrophes that occur.
Hurricanes… I mean, there are different sized hurricanes in different areas. For the ones that hit Florida, part of the solution is probably legitimately that we should have fewer people living there, because there’s going to be a widespread devastation there occasionally. And if you live in a hurricane-prone area, you are going to get hit by one eventually. (So like what’s the bet here? The insurance company knows they’ll probably have to pay out eventually).
Just to put a number to it, 2024 was apparently an unusually busy year for tornadoes, around $6B. That isn’t nothing! But one single hurricane cost $7B in 2024… and there was a $34B one… and a $79B one… who’s insuring the southern coast of the US? Seems rough.
If you have to be inside one, pick a hurricane. But tornadoes are so much smaller. This list is like... 10-20 per year with an average of less than 1 casualty and a dozen houses damaged? That's basically zero as far as insurance and habitability go. I found a study titled "Tornadoes in Europe An Underestimated Threat" and it has an estimate of 10-50 million euros per year in total damage. That's not even 1 euro per house in Europe.
Let's not be silly here. European tornadoes are not taking apart houses to the foundations. Ripping off roofs or flipping over cars or even when trees are falling on a tourist tent and killing them in process has nothing to do with how houses are built in USA and nowadays even in UK and elsewhere.
The real problem is that we're politically/socially unwilling to transfer the risk to the people who are responsible for creating it: Wealthy coastal landowners believe that the cost of home insurance should be about $2000/year. If their properties actually cost $200,000 per year to insure, then that's what they should have to pay! If they don't like it, they should either build something cheaper (that's the other half of the product) or move to somewhere with less risk.
Tornados are almost the perfect example of an insurable hazard: Very low probability, very high damage, very widely distributed across the affected areas:
https://mrcc.purdue.edu/gismaps/cntytorn#
Click around that neat interactive map, you'll see that the tornado is typically a few miles long and a few hundred yards wide, there are a few thousand severe tornadoes scattered all over the Midwest and somewhat fewer on the east coast in the past 70 years. It's not feasible to build houses everywhere that will stand up to an F5 tornado throwing cars. But they only cause a total loss of a tiny fraction of all houses in the country, and there are relatively few choices anyone east of Texas can make that would meaningfully impact their risk.
You could price insurance premiums at the risk of a tornado times the cost of the insured assets, plus a 10% administrative fee/profit margin, and those rates would be affordable. Maybe a handful of people would choose to live in Colorado instead of a few hundred miles east in Kansas because the cost of this 'tornado insurance' was higher in Kansas, but even in Tornado Alley it wouldn't be unaffordable.
Conversely, if you look at the hurricane incidence and storm surge risk map:
https://coast.noaa.gov/hurricanes/#map=4/32/-80
https://experience.arcgis.com/experience/203f772571cb48b1b8b...
and population density along the gulf coast:
https://luminocity3d.org/WorldPopDen/#7/28.541/-88.011
It's clear that people are choosing to build houses in the narrow strip of low-lying land that's right along the coast and vulnerable to high-probability storm surges! If insurance was priced at cost of assets + administration times risk of loss, it would be really, really expensive.
> If their properties actually cost $200,000 per year to insure, then that's what they should have to pay! If they don't like it, they should either build something cheaper (that's the other half of the product) or move to somewhere with less risk.
Or build something adapted to the risk it faces. In my home town there are houses that were built on flood plains that have recently been flooding every 5 years or so. Luckily they are brick and in order to get these covered you now need to install flood barriers over the doors, and your ground floor has to be adapted to flood without sustaining damage (tile floors, special plaster etc.)
Now when we have a severe flood warning people will move their valuables upstairs if they're house floods they just have to clean out the mud. There are also a couple new houses right next to the river that float and rise and fall on stilts when the banks burst.
I think most people would go for adapting their designs, but insurance companies would have to make that offer first since they ultimately decide which designs are insurable for which amounts.
> we're politically/socially unwilling to transfer the risk to the people who are responsible for creating it
This is important. Insurance was invented 2000+ years ago but aggressively deploying technology that worsens floods, weather, and fires is only around ~100.
The real issue is global warming causing an exponential rise in tail risk events. It's exponential because even a linear shift in temperature causes an exponential rise at the tails (look at how a normal distribution works).
Insurance is based on statistics. The math they use assumes stationary distributions. Insurance companies can't deal with shifting distributions well so they take the losses and then exit markets.
Global warming is going to mess up insurance as we know it for that reason. Not sure property insurance, but all kinds of insurance.
They exit markets due to regulations banning them from charging the true cost of risk. Large insurance companies don’t just go broke. They have re-insurance that caps their losses. It’s becoming far more difficult to get reinsurance and the premium caps make reinsurance unaffordable for the insurance company so they leave. The business model is managing the money - they don’t much care about the claim losses over the long term and taking 1 percent of rising premiums to be a manager is a solid business model.
The 2024 hurricane season damage totaled $128.072 billion.
I couldn't find data for tornadoes in aggregate, only individual storms.
> Economically, tornadoes cause about a tenth as much damage per year, on average, as hurricanes. Hurricanes tend to cause much more overall destruction than tornadoes because of their much larger size, longer duration and their greater variety of ways to damage property. The destructive core in hurricanes can be tens of miles across, last many hours and damage structures through storm surge and rainfall-caused flooding, as well as from wind. Tornadoes, in contrast, tend to be a few hundred yards in diameter, last for minutes and primarily cause damage from their extreme winds
https://www.americangeosciences.org/critical-issues/faq/how-...
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.
I recall reading the same thing, however I do recall that they were East coast native Indians, that cleared oak tree forests as a hunting grounds, so completelly unrelated to the problem in California. The story was about native land rights and if such looking after their hunting grounds can be seen as claims on property rights, which Indians did not knew as a concept, so it is a moot point anyway. The issues that plague CA seems to be chaos in organization level - from what I have read these wildfires are happening in the year, that did had moderate drought(compared to others), so I would look suspiciously in this with the mind, that if politicians are blaming climate, then it is a sign that they are absolutelly responsible for what they have not done and promised to people. But I do not own a house there and I have not voted for these people and I absolutelly would not hang them in the chimney of my house.
PS Also, there are many opportunists, that were burning their houses to receive insurance or compensations, so not all of those houses were burned by wildfires. It all looks ugly, regadless from what angle you look, because if there is no responsibility - even from the ones that have taken upon resposibility, then catastrophe is expected - sooner than later.
Yosemite NP, especially the iconic valley, looked vastly different when the Europeans first arrived in the nineteenth century. It was sparsely forested and had lots of meadows. After a 150 years of no controlled burns, it's a dense forest down there. It turns out the native peoples were managing the forest, after all.
> The truth is that the rich diversity and stunning landscapes of places like Yosemite and other natural environments in the United States were intentionally cultivated by Native Americans for thousands of years. And their greatest tool was fire.
I recall seeing a documentary on TV about this. Indigenous Americans were behind the effort to resurrect the practice.
https://www.nps.gov/subjects/fire/indigenous-fire-practices-...
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.
This was the whole issue. California made it illegal for insurance companies to raise rates, so the insurance companies stop renewals. Leaving everybody uninsured. Homeowners couldn't buy insurance at any price.
Public insurance. For housing, healthcare, maybe even cars (since the coprorate political complex insists that we HAVE to drive everywhere). At some point, we have to accept that the middlemen are siphoning value, not providing any. Vanguard it and let elected admins set the codes.
> Public insurance. For housing
This is California’s FAIR plan [1]. It’s a wealth transfer from non-homeowners to homeowners, homeowners in low-risk areas to high-risk homeowners, and from low-value homeowners to rich ones.
Isn't this thing going to be subsidized by taxpayers in the end anyway?
California already a dumb communal insurance thing, the "California FAIR Plan" for people who can't get insurance due to high risk. They force insurance companies who operate in the state to fund it. So basically everyone has to subsidize the high-risk people... but then the insurance companies leave.
https://www.cbsnews.com/sanfrancisco/news/california-fair-pl...
As someone who's home insurer pulled out of California and so I had to scramble to find another carrier, I looked at the FAIR plan and it is completely untenable for most people. My insurance was already high, ~$2000/year for coverage that would rebuild our house, and under FAIR it would have gone up to $12000/year.
I mostly agree with the article that insurance is grounded in statistical measures of risk and there's no point railing against it. Norms are going to have to adapt to increased risk and how we build homes and infrastructure needs to shift away from short-term, low-cost thinking to longer-term solutions with a higher-upfront cost and lower TCO given the new constraints. Things like burying power lines, aggressively managing fire danger, and homes that are built to be more sound to natural disasters have to become the status quo.
Most of these things are already possible today. In my neighborhood, PG&E did an assessment and it would cost every homeowner on the street ~$25,000 to have the power lines buried. I would have opened my wallet immediately to reduce the fire risk, but it got caught up in politics and policy. When we had some renovation on our house, my wife and I insisted on some of the work being done in ways that would make the house safer and easier to maintain over the long work. The contractor balked at first saying it would cost us an extra couple of thousand dollars. I had to point out that an extra $3000 to make sure things lasted an extra 5 - 10 years and was easier to maintain and upgrade meant nothing. But people have to insist on doing better because right now the norm is to cut corners on everything to save in many cases a negligible amount of money over the life of the work or against the cost if there is a disaster.
The building codes will need to reflect the new normal. Defensible perimeters, metal roofs and masonry or cementitious exteriors are a must for many areas going forward. Log cabins amongst the pines just aren't tenable in the West any more.
As a British citizen by birth, I'm amused by the idea that Americans may get National Insurance for houses before they do for healthcare.
It does seem to be backward. In my opinion, "insurance" is strictly about compensation for loss, and should absolutely be a private transaction, while preventative and emergency systems should probably be public. Healthcare coverage, despite being called "insurance," is really a system of preventative and emergency services, while California's state-run home insurance is the former. But this is what they get for trying to have price controls.
That's a great point. We'll get public insurance for houses only if the legalized bribery paid by existing insurance companies to block public ins. is less effectively applied than the money blocking public health insurance in the US. Old people don't care because they have medicare at 65+, while the rest of us slubs are going along with whatever we can find.
We get what we allow or deserve here in the US. Citizens United led to our current awful outcome.
The American ethos of "fuck you, got mine" in full effect. Middle-class Americans hate poor people but if you have a house to insure you're worth protecting.
> but if you have a house to insure you're worth protecting.
American home owners pay property taxes, any politician would not want to kill this income source off.
> Public insurance.
That only guarantees you have insurance. It does not guarantee that you will be covered or made whole in an incident or emergency.
See FL Citizen's insurance and other insurances of last resort as examples.
What really needs to happen is premiums go up with the cost of risk. But this also means pricing people out of homes, vehicles, businesses, etc. And no politician will allow this.
Public insurance would provide no benefit. The issue in California is that people have built their houses in dangerous areas and have not taken any measures to reduce fire risk. The state has already set limits to how much insurance costs can be increased (from a past generation of economic illiterates who wanted to stop "middlemen siphoning value"). Therefore, insurance companies are just pulling out, which disproves the entire idea that they are "siphoning value", since obviously there is no value there to siphon.
The only thing that public insurance would do is to provide a way for the state to incur another massive unfunded liability. Except, unlike healthcare or pensions which have the somewhat laudable goal of taking care of poor people and old people, this would go to bailing out rich homeowners who made a bad investment of a house in a flammable area and then refused to spend money on fire safety measures, either in their home or their municipality.
Of course these fire zone bag holders are now clamoring for the state to take on their bad investments by pushing conspiracy theories about the evil insurance companies.
It does seem like it's time to stop letting this "industry" profit off the misfortune of its customers. Making all of these a public service instead of private industry makes sense at this point.
The profit margins on insurance are usually pretty slim. Insurance companies are generally not well differentiated from one another, so they have few avenues to compete other than on price. A state-run insurance plan also has to operate at a profit/surplus or else it will have to be subsidized by the taxpayers. The effect is the same either way.
Slim from a percentage of total premiums but substantial when looking at the absolute dollar amount of profits. It's all relative to the size of the pie.
It’s regulated, not illegal.
“Experts say the insurance landscape in California is particularly tricky because, in addition to the wildfire risk, the state has a law that adds extra approval measures, including board approval and review by the insurance commissioner, if an insurance company wants to raise the rate of insurance by more than 7%. That’s been in effect since the 1980s.” https://www.cnbc.com/2024/02/05/what-homeowners-need-to-know...
Illegal seems fine as shorthand though. Same with housing -- "illegal" to build in many instances. Not technically illegal of course, but enough hurdles makes it effectively so.
If it's not permitted to raise the price of premiums to point where it covers the actual risk, then it's de facto illegal. Nobody will sell insurance policies at a loss.
I don't think it is incompetence of the governments. It appears to be a goal of most US politicians to add to the coffers of private business, insurance companies included, at the expense of all but the most rich Americans.
I'd finish your comment with "it's a goal of most US politicians ... to enrich the most wealthy Americans".
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.
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.
That doesn't align with the reality of these areas. To get insurance in these areas you have to demonstrate that you have created a defensible space around your house. This is enforced by local fire department inspections. I know this because I live near a fire prone area. Despite these things the area still burned. The problem isn't "lawns" or "wooden houses". In the case of the LA fires you would have had the burned out husks of concrete houses that would need to be demolished if everything was made of concrete. This was a black swan event that will require a thoughtful response.
> Despite these things the area still burned.
I suspect the rules for making a defensible house were wrong. For example, I read an article recently that posited that most of the fire was spread by burning embers on the wind, and not by intense heat from nearby flames.
The idea is to look at where embers accumulate and eliminate or fireproof those areas. For example, a low masonry wall a few feet from the house can stop a lot of heavier burning embers from piling up against the house. If you've got a swimming pool, add a pump to it that feeds sprinklers in the yard and on the rooftop.
There are a lot of homes that did not burn - look at them and figure out why they didn't burn.
For a related example, every airplane crash is looked at, and we always discover overlooked vulnerabilities. The tsunami that devastated Japan a few years ago also provided a lot of information about what worked and didn't work.
We're a long way from needing to give up. There's a lot of low hanging fruit.
From the recent events in California I have seen many photos of burnt houses with unburnt trees around. I think those houses were especially flammable more than some vegetation around it seems. After the fire nothing remained but the chimneys. I have never seen any house burn like that in Europe.
I live along the Mediterranean sea in France, many wood fires every summer, with wind above 100km/h; never seen so many houses burn like in California even when most of our houses are concrete but with wooden framework.
I'm pretty sure that if houses were built like here (concrete / concrete blocks with terracota tiles on wooden framwork) at lot less would have burnt. Maybe those near the wooded slopes but not in the middle of a neighborhood block.
I have looked on some videos of how those good looking US houses have plastic drainage, plastic material roof cladding and plastic panels inside and outside. And the first thing that I was thinking - those burn in an event of house fire. But I see more ond more building materials that were used in US now offered and being standard in building here in Europe, so most probably some of the newer houses in an event of fire will burn down in similar fashion. I'm just wondering if the commenter that mentioned "black swan event"(a very popular theme in Russia and unrelated to wildfires) actually understands that USA has plastic houses everywhere and nothing will change - new mansions will be rebuilt in burned areas with the same materials, but because they are going to offer them as fireproof branded, they will cost more. That's all - these areas won't be abandoned, because location, location and location is the only thing that matters in property business and in your property value.
Yeah, but it's California, so I'm not sure concrete is great for the earthquakes.
The reality is the fires didn't make it far into the city grid sections of LA proper. This is because these areas have less flammable material, and are more defensible.
>This was a black swan event that will require a thoughtful response.
Taleb would have a field day with this one. Broadly, I think a big part of the argument is driven by the assumption that the area will be rebuilt, despite being a known fire risk.
Because of the Santa Ana winds (with this apparently being more than usual), you'll continually have very dry conditions with high winds and the danger of a fire getting out of control. I don't see it as a black swan either. This is a repeatable scenario, every few years they'll probably have conditions like this. The climate is changing, maybe this will spread or move to areas nearby.
I live in an area that had a special warning last summer, we had a very very dry summer and there was a period with low humidity and high winds for a few days, it was considered an unusual scenario with extreme fire risk - but nothing happened this time. Now that I'm writing this I'm wondering what I'll do if it feels like an annual occurrence. Another parallel, the power company warned us they might shut off the power to reduce risk but I guess it didn't get that bad.
Those protections are all about keeping a structure from catching fire. That is different than designing a structure not to burn. A wooden house surrounded by fire protection is OK under current rules. But it is still wood and will, eventually, burn when faced by a wild fire on all sides. A house built out of rock/brick/concrete/sand will not. We need to go beyond flamability and start reducing the actual number of calories availible to be burned.
A forward looking (part of a) solution for Malibu would be the county acquiring and maintaining beach paths every few houses. Prescribed 10' wide fire breaks.
This solves the fire problem AND the limited access to a public resource that is common in Malibu.
Ideally a permeable surface without any growth, cleared at least 2x a year.
> the county acquiring and maintaining beach paths every few houses. Prescribed 10' wide fire breaks
Ooh, and make a bailout conditional on homeowners (or counties) agreeing to eminent domain.
Legal Eagle claims that embers can travel up to 2 miles:
https://youtu.be/5h1H36rdprs?t=1m51s
That would easily jump a 10' fire break.
houses however, survived with much smaller fire breaks.
https://m.youtube.com/watch?v=yZe-TlYxm9g&pp=ygUkaG91c2VzIHR...
especially for this fire, jumping doesnt mean that everything 2 miles down wind also burned down. buildings that far had the opportunity to burn, and if they dud, had the opportunity to burn their neighbors, and another 2 miles down.
i imagine ember density is more interesting than distance?
That would not have solved the problem in this fire since wind speed was so high. The videos showed embers traveling far and fast. Having a 10 foot fire break would not have prevented the spread. One thing to look into is how the fire started and if the electrical equipment can be made safer, like being underground in some places.
The break would need a low masonry wall to stop embers from being pushed along the ground.
Where is “here”? Are you sure you aren’t confusing hurricanes and tornados? Hurricanes rarely destroy houses in the US, either.
How are you making this claim? Every time a hurricane hits Florida, there are photos of entire neighborhoods devastated by wind and storm surge. How many people were permanently displaced by Katrine? Etc. Maybe many of the homes weren't technically "destroyed", but each storm brings millions or billions in damage.
A lot has to do with infrastructure.
In most of South Florida basically anything left standing is pretty well built to withstand hurricanes.
A category 1 storm hitting NYC or North Carolina is an unbelievable disaster. A category 1 storm hitting Broward County is usually disruptive to everyday life but that’s it.
Hurricanes are common. The general case is they hit hundreds or thousands of square miles and destroy none or at worst a tiny fraction of the homes they hit.
Take Katrina from my friends and family living in New Orleans, you’ll find city streets where none of the houses go significantly damaged. They lost power long enough you don’t want to open the fridge, but most of the city was fine in the hardest hit city from one of the most expensive storms on record.
Over 200,000 homes were damaged or destroyed in Katrina:
https://en.wikipedia.org/wiki/Reconstruction_of_New_Orleans
Not sure how that is a "tiny fraction" of homes. $125 billion in damage (2005).
Moving the goalposts from destroyed to damaged gives different results.
The issue is most to the city only sustained water damage, a solid chunk of the city is above the water level and was absolutely fine. Moving outside the city most homes in Louisiana, Texas, Alabama etc don’t need to worry about flooding.
Hurricanes usually don't affect the structure of a house. They might damage the roof, parts of exterior cladding, perhaps windows, and the flooding which accompanies hurricanes destroys personal possessions, interior furnishing, electrical wiring, and appliances.
In the US, manual labor is very expensive, home construction or repair is highly regulated and requires permits and multiple inspections from the local government, and the amount of flood-destroyable stuff - material possessions, furnishings, appliances - in a typical home is massive. As a result, a cyclone which a poorer country would survive with a shrug in the US becomes an extremely expensive disaster.
It sounds like we're quibbling over the definition of "destroyed"... if a home is rendered uninhabitable for days/weeks/months, I'd consider that "destroyed" even if the framing is in fact salvageable.
And certainly as it relates to insurance, the trend sure seems to be well on it's way towards "coastal Florida is insurable" (either the price goes up beyond the means of the residents, or the insurers leave the market). Something like 5% of the state is covered by Citizen's Property (the government insurer of last-resort). Some coastal areas are ~10%. I have to imagine it won't be long before it's cheaper to pay people to move elsewhere than rebuild where they are.
Good to know. The news always seems to find footage of destroyed suburbs whenever the US is hit by a big one.
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.
It rather blunts your point when 50km/h winds are a far cry from 160km/h winds.
Specifically, I'm now questioning if your drought was actually more intense. Not exactly sure how you measure that one.
You’re comparing apples to oranges.
A Santa Ana wind is extremely dry and this one hit 100kmh (not 50). And it hasn’t really rained for 8 months (since May 2024). And we had a very wet winter last year, so there’s extra growth to fuel any fire. And finally, there’s 10 million people live in LA County, it’s a target rich space.
Please let me know where else is having the same sort of fire without destroying homes.
The 50 km/h was sustained, not peak, but ok, I don't think we reached 100.
We have 7 million people living around, and yeah, only 6 months without a single drop of rain (19X days, where I don't remember what X was). Fire often destroys some homes, we got luck last year.
It's not a competition. Both can be sights that people view in awe. Are you "Four Yorkshiremen-ing" wildfires?
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.
You’re ignoring one critical difference between these two scenarios. Humans, and all human related activities, produce heat as a waste product. It’s much easier, and consumes less additional energy, to heat an occupied space, than to cool it. Thanks to the fact that your average human produces 80W of heat just to stay alive.
So every human in your cold space is 80W fewer watts of energy you need to produce to heat the space. But in a hot space, it’s an extra 80W that needs to be removed.
Add to that all of the appliances in a home. It’s not unusual for a home to be drawing 100W of electricity just keep stuff powered on in standby, and that’s another 100W of “free” heating. All of this is before we get to big ticket items, like hobs, ovens, water heaters etc.
So cooling a living space is always more costly than heating a living space. Simply because all the waste energy created by people living in the space reduces the total heating requirement of the space, but equally increases the cooling requirement of that same space.
All of this is ignoring the fact that it’s easy to create a tiny personal heated environment around an individual (it’s called a woolly jumper). But practically impossible to create a cool individual environment around a person. So in cold spaces you don’t have to heat everything up to same temperature for the space to be perfectly liveable, but when cooling a space, you have to cool everything, regardless of if it’ll impact the comfort of the occupants.
> So cooling a living space is always more costly than heating a living space. Simply because all the waste energy created by people living in the space reduces the total heating requirement of the space, but equally increases the cooling requirement of that same space.
This simply is not true for a furnace or electric resistive heat.
My furnace produces 0.9W of heat for every 1W of energy input. More efficient ones do 0.98, the best you get with electric resistive heat is 1W.
On the other hand my air conditioner moves 3.5W of heat outside for every 1W of energy input.
> My furnace produces 0.9W of heat for every 1W of energy input.
I assume you mean that 10% of the energy immediately escapes your house?
My AC works in both directions, in winter it moves more cold outside than the power it consumes. Not sure what the factor is exactly, but I think same as for cooling.
Thermodynamics unfortunately disagree. As your temperature deltas get smaller efficiency goes down.
"Thermodynamics" is singular :) As for the numbers, my AC's manual shows COP of 3.71 for heating and 3.13 for cooling.
So you are spot on, in winter temperature deltas are larger, and efficiency goes up.
> "Thermodynamics" is singular :)
> plural in form but singular or plural in construction
(https://www.merriam-webster.com/dictionary/thermodynamics)
I think American and British English treat words like this differently.
Those high COPs are probably for relatively small temperature deltas. Heat pumps get _less_ efficient when the temperature deltas are larger. See page 18 of the manual linked below for an example. As the temperature gets lower, the heating COP gets lower. The same should be the case with cooling (higher outdoor temperatures lead to lower COPs), but the data is not presented in the same way.
https://backend.daikincomfort.com/docs/default-source/produc...
You are saying that heat pumps get less efficient when deltas are larger, and the parent post says they get more efficient when deltas are larger. In a sense, you're both correct.
There are multiple relevant temperatures for a heat pump, and the pump is more efficient when some of those are higher and some lower. A heat pump has two heat exchangers, one on the inside of the building and one outside. Each of those heat exchangers has two temperatures: the refrigerant loop temperature at that point, and the ambient temperature (air for air source heat pumps, ground for ground source heat pumps). There's also a fifth relevant temperature that has indirect influence: the setpoint (the desired indoor ambient temperature).
Efficiency increases when the temperature delta between the refrigerant and ambient temperatures is higher (both indoor and outdoor). But those temperature deltas vary inversely with the delta between the indoor and outdoor ambient temperatures.
So, in summary:
- Heat pumps get less efficient when the temperature delta between indoor and outdoor temperature is higher.
- They get more efficient when the temperature delta between refrigerant and ambient temperature is higher.
The net effect of this is that heat pumps become less efficient as the temperature becomes hotter outside in the summer and colder outside in the winter.
I see, the previous commenter stated the opposite :). Anyway, both numbers are > 1.
"cooling a living space is always more costly than heating a living space" Man I wish this was true but it definitely isn't in anyplace that gets significantly cold. Heat pumps are super super efficient at cooling but they get less efficient at heating the colder it gets. Humans and appliances create a pretty negligible amount of heat.
> "cooling a living space is always more costly than heating a living space" Man I wish this was true but it definitely isn't in anyplace that gets significantly cold. Heat pumps are super super efficient at cooling but they get less efficient at heating the colder it gets. Humans and appliances create a pretty negligible amount of heat.
I thought any place that is significantly cold can still dig underground and at some point you can get enough heat to run your heat pump?
Right, but that's expensive too (initial outlay and maintenance) and needs to win a lot of efficiency before it pays off.
Heating is more costly if you use technology created for cooling. When you try to cool a cold space in order to heat hot space, you will have a bad time. You could use electric heater for heating, it should have no problems with heating, but will use more electricity. Or you could use something actually cheaper, like wood or fossil fuels. If you use more expensive method (like electricity) it will be more expensive.
This might be true for you. I have lived with free wood for heating and it was more expensive for me than using a heat pump. What is expensive depends on a lot of factors, political, social, location, time and knowledge. It is not a clear dollar per delta T.
Chopping up a tree is kind of fun, we bill that to the entertainment budget instead of the heating budget. And it usually happens during a hotter season, so I might have to go inside to take a break, get a cool drink. So, we can bill some of the tree chopping activity to the cooling budget!
I also point out that Phoenix's "summer" last longer than Berlin's winter:
https://weatherspark.com/y/75981/Average-Weather-in-Berlin-G...
https://weatherspark.com/y/2460/Average-Weather-in-Phoenix-A...
The figure you are looking for is heating/cooling degree-days.
For each day, use the average high and the average low. Subtract the desired maximum dwelling temperature from the average high: if the result is positive, add it to the cooling degree-days total. Subtract the average low from the from the minimum dwelling temperature: if the result is positive, add it to the heating degree-days total.
Over a year, that gives you comparable figures on how much you will need to cool or heat the space. Many agencies calculate this for specific areas.
Here, for example, are the current season numbers for Boston: https://www.massenergymarketers.org/resources/degree-days/bo...
Generic regional numbers for the US: https://www.eia.gov/energyexplained/units-and-calculators/de...
A lot of what you said is intuitively/directionally correct, but misses a lot of important physics related to heat transfer in buildings and operational questions of space heating equipment.
This is your most accurate/relevant point:
> All of this is ignoring the fact that it’s easy to create a tiny personal heated environment around an individual (it’s called a woolly jumper).
Whereas this is plainly wrong:
> It’s much easier, and consumes less additional energy, to heat an occupied space, than to cool it.
And then the following is correct but the marginal reduction in load is minimal except in relatively crowded spaces (or spaces with very high equipment power densities):
> Thanks to the fact that your average human produces 80W of heat just to stay alive.
The truth is it is generally easier to cool not heat when you take into account the necessary energy input to achieve the desired action on the psychrometric chart, assuming by “ease” you mean energy (or emissions) used, given that you are operating over a large volume of air - which does align with your point about the jumper to be fair!
Generally speaking, an A/C uses approx. 1 unit of electricity for every 3 units of cooling that it produces since it uses heat transfer rather than heat generation (simplified ELI5). It is only spending energy to move heat, not make it. On the other hand, a boiler or furnace or resistance heat system generally uses around 1 unit of input energy for every 0.8-0.9 units of heating energy produced. Heat pumps achieve similar to coefficients of performance as A/Cs, because they are effectively just A/Cs operating in reverse.
Your point about a jumper is great, but there are local cooling strategies as well (tho not as effective), eg using a fan or an adiabatic cooling device (eg a mister in a hot dry climate).
> So cooling a living space is always more costly than heating a living space.
Once you move to cost, it now also depends on your fuel prices, not just your demand and system type. For instance, in America, nat gas is so cheap, that even with its inefficiencies relative to a heat pump, if electricity is expensive heating might still be cheaper than cooling per unit of thermal demand (this is true for instance in MA, since electricity is often 3x the price of NG). On the other hand, if elec is less than 3x the cost of nat gas, then cooling is probably cheaper than heating per unit of demand, assuming you use natural gas for your heating system.
Solar power works very well in summer and can be used for cooling.
It is true that heat is easier to generate. Berlin is considered mild while Phoenix is considered very hot. They just happen to have the same temperature deltas. On the whole, the world spends many, many times more energy heating living spaces than cooling them. The coldest cities people live in just have much larger room temperature deltas than the hottest.
This is a good point that I had not considered, and I will add a few additional thoughts:
* In cold weather, solar heat gain can work in your favor as well. Much of the effect will depend on the orientation, shading, and properties of your windows, though. On the other hand, as another commenter pointed out, more sun in southern, cooling-dominated climate can also mean more, cheaper electricity.
* If you have a heat pump water heater, it will actually _cool_ your space significantly. The heat is transferred from your home to your water and mostly goes down the drain with it.
* At 65F (18.3C), most people I know would already be wearing a jumper/sweater. That's why I chose a lower target temperature for Berlin. The best source I could find[1] indicates that in November-December of 2022 (in the context of rising energy prices due to Russia's war with Ukraine), Germans actually kept their houses at 19.4C, on average.
* Maybe I'm moving the goalposts a bit, but I chose Berlin mostly because the numbers worked out conveniently. As someone who grew up in the American upper midwest, I wouldn't consider Berlin to be particularly cold. Phoenix, on the other hand, is the hottest city in the country and its summers are some of the hottest in the world. In general, the hottest cities are still closer to what we'd consider room temperature than the coldest are.
[1] https://www.cleanenergywire.org/news/80-percent-german-house... (original report is on German)
There’s some element of comfort vs necessity here, I think… really, people could be keeping their houses at, like… 55F and they’d be totally fine. They just need to get acclimated to it.
On the other hand, depending on the humidity, heats over like 85F start becoming a health risk for some activities.
> So cooling a living space is always more costly than heating a living space
Nope. That's precisely wrong. Tl;dr heating normally uses less efficient technology than cooling and has to work across a higher temperature difference.
In Alberta or Minnesota, where the delta in the winter can be as high as 60 degrees centigrade (-40 outside, +20 inside) but only 20 degrees centigrade at most in the summer (+45 outside, +25 inside), heating is far more costly. Even accounting for waste heat from appliances. Most heating is done with furnaces, not heat pumps. Air conditioners are heat pumps and are 3x as efficient as a furnace. There are also less energy intensive cooling methods - shading, fans, swamp coolers - commonly used in the developing world and continental Europe.
On the other hand in a place with warm winters and hot summers, such as south east Asia, obviously cooling is more expensive because heating is unnecessary.
The highest temperature ever recorded is around 60 degrees centrigrade, a mere 23 degrees above the human body. The low temperature record is like -90, 127 degrees below body temperature. Needing to heat large deltas is way more common than needing to cool high deltas. And cooling is done with heat pumps, which are more efficient than the technologies used most commonly for heating (resistive or combustion).
> when cooling a space, you have to cool everything, regardless of if it’ll impact the comfort of the occupants.
Keep the house at 25 degrees centigrade and run a ceiling fan. 23 if you're a multi-millionaire. You'll be far more comfortable outdoors if your house is closer to the outside temperature. The North American need to have sub-arctic temperatures in every air conditioned space in the summertime is bizarre (don't even get me started on ice water).
100%. And can be wonderfully done by efficient heatpumps that cover the warmer months too. Also nice correlation between hot and sunny areas which means solar can get you to net zero pretty quick. (Says man looking at his solar panels right now covered with snow.)
you cannot win this argument with the average person who lives in a chilly European country. it just does not compute.
there are whole important cultural lifeways related to opening and closing windows at proper times for efficient cooling and ventilation. these work really well — in Europe — and are treasured traditions.
getting people to accept AC is sort of like trying to convince the average American to go grocery shopping on a bicycle. some may accept the idea but only the most European influenced already.
Recently it was -7C where I lived. Even without heating, my indoor temp didn't go below 15C. In regions where cold temperatures are common, isolation and heat retaining materials are very common. Is preventing heat gain as simple as preventing heat loss?
Yes, insulation works both ways. My garage is unheated and insulated. If I go out there to work on something in the winter I always compare the temperature outside. On a sunny day it might be pleasant outside and freezing in my garage - so I'll open the door and let it warm up.
Insulation makes the house more resistance to temperature change (relative to the inside and outside).
One thing people forget is the delta is very different in the summer and winter. Lets say your thermostat is on 70 year round. If it is 100 degrees out you only have to cool 30 degrees. When it is 0 F out you have a delta of 70 degrees. So for this scenario, expect to use more energy in the winter.
Yes
This is such an interesting perspective that I've never thought about. Thanks!
a greenhouse can heat a space by enough to be comfortable for free, but not cool it. Windows and sunlight matter.
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.
I won't disagree with you, but it's a big change.
When European descendants started colonizing that part of the world they treated all the resources as free for the taking. You went into nature, developed some land for agriculture, and it became yours by right. The same with the water. It was essentially homesteading.
So water was treated as property the same way the land was. Whoever used it first, owned it. Leaving out the natives because apparently nobody cared about them, it made sense.
How we fix it now within that legal framework is the question.
> 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...
Sure Japan did it, so did Mexico. The latter is probably much more important as an example for the US.
https://www.preventionweb.net/news/not-drill-how-1985-disast...
Many of the gouses burning weren't built to current codes, but the cost to retrofit houses to code was insurmountable by any of the owners and apparently by the state or even the nation. So they will just wait for them all to burn and then rebuild them I guess?
I would be interested to know how Japan combats wildfires. Historically at least it was quite a big problem, if I recall correctly.
> 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.
Comments like the last here irritate me. No, we all learn that wood is the only appropriate building material and the Salesforce tower in San Francisco required a whole forest of trees to construct.
The root comment is based on a very dated concept. Of course we can built earthquake resistant megastructures from steel and concrete. A lot of that building technology was created in California. It's either naive or willfully ignorant to think we can't solve this problem.
The issue with those materials is cost. Spread out, suburban design without density is expensive and wood frame construction is a great way to affordably build housing. Wood frame single family houses are not the problem - it's how we design our cities that's the problem.
Hy from Brazil... You know, a poor country.
We make single-level houses with a reinforced concrete structure, because it's cheap.
You know what isn't cheap? Wood. Wood is incredibly expensive to put into a shape, even if you are willing to cut forests down to get it.
This was surprising because here in the US, concrete is expensive to build with. I'm considering a build and by far log homes seem my cheapest option.
Yes, people from the US always say concrete is expensive and wood is cheap. And unless you are designing a tent (by the way, zinc is way cheaper than wood for a tent), only people from the US say that.
There's something distorting your economy. Concrete is incredibly cheap as a material, extremely prone to use in a large supply chain, and requires way less labor than wood.
You make houses siting over finely built wood lattices... how much do you pay to the people building those? Because I can't imagine it being justifiable with Brazilian salaries.
Wood is incredibly cheap in North America. We're not cutting down forests for it, either. Much of the wood used for residential construction is milled from trees grown specifically for that purpose.
Lumber is quite a bit lower quality than it used to be, because we're no longer using old-growth timber. Less dense wood burns faster, as does the laminated strand board that long ago replaced plywood (unless you're really fancy) (and toxic fire retardant treatments be damned).
The low cost of lumber is one of many things in America that don't make sense economically, but that persist because of momentum, with each generation receiving an inferior facsimile of what the previous ones knew. See also: car-centric policy (from infrastructure to gas prices) and retirement planning (pensions to IRAs to nothing).
> We're not cutting down forests for it, either.
The largest share of the illegal wood extracted from Brazil goes to the US.
The illegal hardwood is not used for residential framing or sheathing. It has nothing to do with fire resistance or insurance.
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.
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?
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.
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.
Less about the question (that has been asked so much now its tiring) but more on how when people do ask it, they always ask in such a negative way. Its not why are so many homes built out of timber/wood but rather why are they built out of sticks?
It draws a compelling portrait in people's minds. Everybody knows how easily sticks burn.
are there people besides the posters that find this kind of hyperbole compelling?
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.
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.
It’s not just the exterior material. You also need to screen or eliminate openings that embers can penetrate.
Look at houses in California. Most have fire resistant stucco exteriors. It's the style out here.
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.
> That is actually how pretty much all new houses in the UK are constructed
This claim struck me as unlikely, so I did a quick fact check.
Accroding to the most recent report I could find[1]: "Figures from the National House Building (NHBC) suggest that timber frame market share has developed from 19% in 2015 to 22% in 2021 and that market conditions, as described above, present the opportunity for this to develop to circa 27% by the end of the forecast period (2025)"
This appears to be driven by Scotland where 92% of new builds were timber framed in 2019, while in England (where the majority of new houses are built) it was just 9%.
[1] https://members.structuraltimber.co.uk/assets/library/stamar...
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.
I think you missed the point. Its the same as me asking about the drab prisons you live in. Not to mention your cherry picked examples don't really hold up. A 2500sqft home filled with natural gas has a different explosive potential than a small apartment. I am also not sure it makes sense to build homes expecting for a natural gas explosion, not even a measurable risk. You can absolutely build a home that is fire resistant which most modern homes in fire risk areas are.
A lot of people do, in fact, talk like that about eastern european homes (them selves included).
>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.
>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 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.
Its a country built on seismically active volcanoes.
If there's earthquake insurance in japan, it should be do-able.
"In and around Japan, one-tenth of earthquakes in the world occur. " https://geoscienceletters.springeropen.com/articles/10.1186/...
Why would anyone tear down a 20 year old house? Where I live the houses are 80-100 years old and they’re better built and nicer to live in than most newer homes.
The traditional materials used in Japanese construction of everyday homes aren't really in the "built to last" category: https://www.youtube.com/watch?v=i1DP5xpM3Y8 . In some cases, trying to make a house that was resistant to floods, fires and earthquakes at the same time would have been prohibitively expensive. I'm sure that led to forming habits that have continued into more modern eras of building styles where it's less required.
They're also smaller, which makes construction costs cheaper which means people are more likely to make dramatic changes when fashion changes. And then there's more of a culture of prefab house building rather than extensions etc. Planning is also a lot more liberal which allows the rebuilt house to be more different and also reduces the cost of the process.
I think even in Europe some of the older houses are houses of theseus though. The exterior shell is the same, but there's plenty of buildings in the local city centre that were tenements, then small business offices, then apartments, with significant remodeling that occurred. Or the house I used to live in was built in the 1880s, extended in the 1950s and significantly modernised in the 2000s. Each time there would have involved largely gutting the interior and rebuilding.
Interesting, thanks! The regulatory explanation makes a lot of sense- I once tried to pull a permit to install a ceiling fan in a small USA town, and it was a nightmare.
Basically houses in Japan are treated like cars -- as something that doesn't appreciate in value as in most places but rather depreciate over time. Some of this is maybe cultural from the time when houses in Japan were literally constructed with paper.
That is a fascinating cultural perspective and explains a lot of things to me:
I've always treated cars like houses are in the USA- I buy an older higher end car like a Porsche, keep it in perfect shape, and expect it to appreciate- and it does. Most cars I've owned I ultimately sold for much more than I paid. I've never understood why anyone would waste money on a depreciating car, especially when a fully depreciated high end car is so much nicer and cheaper than a low end new one. Airplanes are not mechanically that different than a car, yet generally last and hold value if maintained.
I've also never understood why people in the USA assume houses will always appreciate, as if it is a law of nature or something- when at its core houses can't appreciate forever relative to inflation, because there is a hard cap somewhere below people paying 100% of income for housing. This basically proves it is just a combination of a culture that values older housing in the USA and regulatory capture preventing new construction. New houses are often seen as "cold," "sterile," or "lacking character" in the USA- and the stereotype of a successful wealthy person is in a giant old mansion.
You could Google it and find out.
I could but I won’t… do you think I asked that question because I urgently need accurate data on Japanese housing? Why does anyone join forums, or discuss things with friends in real life when they could just Google things?
Retire this meme. Google sucks now.
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.
Climate change is gonna be really expensive. Some people have tried to point this out.
The problem is liability, to an extent; if you imagine a perfect market system, then maybe it would fix climate change; the parties responsible would be on the hook to pay for their externalities, so would be incentivised to stop producing them. In the real world, ah, not so much, though I do wonder if we'll see insurers/reinsurers attempting to sue big CO2 emitters in the near future.
"Pakistan floods: One third of country is under water - minister"
Pakistan mentioned! Let's go!!
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.
For sure, they're not fireproof of course, but they do survive and seem to be more resistant than non-native species [1].
And, like all things, of course there are many interdependent pieces in play, like those hurricane force winds, but oak trees don't burn the same as a palm [2]. I just keep seeing that viral video of a firefighter trying to put out a palm while a guy escaped his house on a bike -- it was shedding embers like crazy. [3]
[1] pdf warning: https://www.fs.usda.gov/psw/publications/documents/psw_gtr21...
[2] https://abcnews.go.com/US/elderly-couple-battles-flames-la-f...
[3] https://www.nbclosangeles.com/news/california-wildfires/pali...
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?
1. Santa Ynez Reservoir right above Palisades was empty for the past year, depriving fire hydrants of water. (State incompetence)
2. La City defunded fire department removing 100 fire trucks from service due to maintenance. (City Incompetence)
3 Severe fire warnings reported days in advance of the fire. Rather than take precautions and position fire trucks and equipment etc as was done in the past, the Mayor flew off to Ghana. (City Incompetence, Fire Department incompetence (but partly because of cut budget)
4. Forest maintenance has been stopped. (State incompetence)
Competent management is needed or even worse can be expected in future.
This is nonsense disinformation. Citations? This wasn't a forest fire so forest management isn't an issue. California makes massive investments in wild lands maintenance. It hasn't "stopped". Also most forest land in California is Federally owned. Perhaps our incoming president will invest some money in maintaining the peoples forests. This disaster deserves better responses.
I'm not sure what you mean about forests not involved: "The fire was first reported at about 10:30 a.m. PST on January 7, 2025, covering around 10 acres (4.0 ha) of the mountains north of Pacific Palisades" [1] California spending money has nothing to do with the outcomes in reality.
I imagine they're rejecting the word "forest" to describe the landscape there. Locals would reserve the word "forest" for the coniferous zone of much higher elevation mountains. For example, the fire that destroyed Paradise, California some years ago was what we would all consider a forest fire.
The wild areas near Malibu and Pacific Palisades are more a mixture of chaparral and hilly grassland. There may be some oak trees scattered about, but it feels like more trees exist in the private home landscaping than in the actual wild areas.
re: point #1, the fire command team captain himself refuted this disinformation in an interview with Musk.
I don't know about the other three offhand, but it's absurd to claim that state and local governments in California are somehow not taking fire risk seriously. Do you seriously think that the state that has annual wildfire season just happens to be "incompetent" when it comes to preparing for wildfires?
How does the statement of "not taking fire risk seriously" explain the fact that the Santa Ynez Reservoir was and still is empty, and is a primary uphill source of water for those fire hydrants, or that the mayor defunded the fire department and left for Ghana after getting extreme fire danger warnings?[1]
Because Santa Ynez was empty (for the past year), water was supplied from downhill water sources and the pressure needed dropped off to the point there was no longer any water out of the hydrants.
[1] https://www.google.com/maps/place/Pacific+Palisades,+Los+Ang...
you seem to be asserting that you know more than the Fire Chief.
I'm asserting that anybody saying anything has nothing to do with the actual facts. I just offered you a 2025 aerial view of the reservoir designed to provide water at pressure to hydrants that is empty, for example. The Fire Chief warned about the effects of the defunding. [1]
[1] https://clkrep.lacity.org/onlinedocs/2024/24-1600_rpt_bfc_12...
From my point of view, you're talking to someone deep in the left leaning bubble. They don't even know some of those things you mentioned because they've only consumed left-Leaning news, which is blindly protective of the entrenched left wing government in California. We can talk objective facts till we're blue in the face, but we live in a different reality.
If you actually want to know the answer to this question, this is a wonderful and well-researched book on the topic.
pretty much any area can get flooded though by freak rainfall
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 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.
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.
In cusco basin in Peru spanish colons realized their brick made building were falling down at every earthquake. They also realized incas building made of thin walls built on top of large stones that can move relative to each others during an earthquake were resisting much better. They then decided to reuse the foundations of incas buildings and put their brick build constructions on top of it to have earthquake resistant building.
Earthquake resistant constructions made of stones have been known for centuries by the incas and probably other civilizations without having building entirely made of wood, why can't californians?
I don’t know but do they have ~7.9 earthquakes like California? I’ll bet they were not multi story homes with vaulted ceilings, giant glass windows with tons of natural light, and efficient insulation?
Wood is extremely cheap, and extremely earthquake resistant… it is an appropriate material for the area despite a slightly higher fire risk.
They have had up to ~9.0Mw earthquakes in their history. https://en.wikipedia.org/wiki/List_of_earthquakes_in_Peru
You can also look at some states like Chiapas in Mexico. There are daily earthquakes in Tuxla. Last 8.2 was in 2017 in Tapachula. They typically live in small building made of mud bricks and stones. https://earthquakelist.org/mexico/chiapas/#all-latest-earthq...
In practice, it is probably impossible to innovate on housing materials in California- I doubt you could get a permit or insurance, which is a shame.
Plus, I and most people wouldn't personally want to buy a any type of stone or brick house- it would take a lot of evidence to convince me it was earthquake safe, and I'm not sure how one could produce such evidence. Resale value and demand would be very low for something unusual.
Wood houses in practice aren't a big problem. There is something like a 3% chance per century of a wood house burning down in California, and almost all of those are centered on specific locations that are known to be very high risk and can be avoided if desired.
In most cases you would escape safely and be covered by insurance (neither of which would be the case with a stone house in an earthquake). In California almost everyone has fire insurance, almost nobody can get earthquake insurance. Probably if a stone house was in a large fire, it would still be burned to bare walls and still be as unlivable and expensive to rebuild.
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).
I never understood this. We build in Europe, over earthquake-risk zones, with bricks and steel and we follow rules to make them earthquake resistant. It is not a problem anymore since like the 1980. We now have also methods to make old and very old brick buildings earthquake resistant without demolishing them
It works fine for commercial buildings and multi-family structures here too , there’s even a ton of brick buildings in Oregon (which are currently being retrofitted), but not as well for single family homes because of the cost.
There’s a lot of historical context to understand here. The neighborhood that just burned down in the Eaton fire (Altadena), was built up by African Americans and Latinos who were redlined out of Pasadena even after desegregation. Some of them built their houses on land that they bought for under $100 in the 1950s and 60s. They wouldn’t have been able to afford the kind of construction they’d need to be both earthquake and fire resistant. Their choice was between owning an old tinderbox or renting from slumlords.
What? What earthquake zone in Europe is similar to the fault lines in California? We are talking about entire cities wiped out by earthquakes just 120 years ago.
Southern Italy. I believe the rest of Europe is quite seismically stable.
It works for Taiwan and Japan
Japanese houses aren't built with brick.
Is that brick or is it reinforced masonry?
Both. Older single story tends to be brick.
Newer multistory is typically cast in place with rebar reinforcement from what I can tell.
In the countryside, you might find more masonry block construction, but not in dense urban areas like Taipei and Taichung where the norm is to build up. Most "single family homes" are what we would consider very large condos in the US.
It’s not just the West coast, brick buildings are simply not common all throughout the US, in places fault lines don’t exist.
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).
Building out of wood is cheap and perfectly strong for most areas.
Engineering is always a set of trade-offs.
Given the choice between earthquake-proof and fire-proof I'd go with earthquake-proof every single time since you can't run from an earthquake.
I don't get how can one put his own future in a cheaply built building you're one fire or thougher-than-usual natural event away from losing.
It's normal nobody wants to insure such risky assets, especially as nominal value of this wooden crap is stellar due to the skewed demand/offer ratio plaguing good parts of US.
In my life I've seen my and my family's real estate being hit by a tree, fire, floodings and I've never had to face anything close to a total loss.
Huge expenses? Sure. But never anything close to a loss.
The only thing that could put my real estate on a serious risk are earthquakes, I guess that's a scenario where lighter built houses would have instead an advantage.
Define "cheaply built". These houses are already hugely expensive, to the point that we cant even afford to build more.
It's mostly that there is virtually no one in America who knows how to build with concrete/bricks.
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.
> 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.
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...
We don't do this in e.g. aviation, where after every crash we study it and make changes if possible. Not sure why we don't seem to care in housing.
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.
That's not really true. The introduction of so much extra energy into the atmosphere is going to make weather extremes worse all over the world, and harder to predict as historical models become less relevant. Large scale pattern changes like the AMOC shutting down are going to completely change many local weather patterns so that e.g. places that have little history of tornados will start having them, or places that used to be too wet for wildfires will suddenly experience them in extreme drought conditions. Despite scientists' best efforts, we're running a global experiment with no control group and predictions will only become more difficult the harder we push the system into a new state.
A significant portion of human structures are located close to the coast (seaborne trade having been a huge enabler of economic development for a few hundred years) and are exposed to flooding from rising sea levels, or built in valleys that are increasingly at risk from flooding due to far-above-long-term-historic-norms precipitation runoff (higher atmospheric temps lead to more energy in weather systems; see eg massive floods in Europe in the past few years).
Compared to the other challenges climate change poses those are fairly simple engineering problems. The Netherlands manage fine with large parts of the country below sea level.
You’re ignoring things like the geological conditions in the Netherlands, they have very peaty soil which is fairly impermeable to water. Which makes the task of keep the sea back pretty easy, you just build a big wall.
But if you look in places like Florida, the ground conditions there are substantially more porous. If you try to keep the sea back there with a simple wall, it’ll just flow under the wall through the soil. You would have to dig all the way to bedrock and install some kind of impermeable barrier to prevent most of Florida from flooding due to sea level rise. Something that’s unbelievably cost prohibitive to do.
The Netherlands only exists below sea level because their ground conditions meant it was possible to pump out the country using technology available in the 1740s. If the ground conditions weren’t basically perfect for this kind of geo-engineering, the Netherlands simply wouldn’t exist as it does today.
You’re using an example that exists purely as a result of survivorship bias, as an argument that it’s practical to apply the same techniques or achieve the same outcomes anywhere else. Completely ignoring the fact that your example only exists because a unique set of geologic conditions made it possible, and those conditions are far from universal, and not in anyway correlated with places we humans would like to protect.
Karst Topography enters the room....
The Netherlands has been planning for the impacts of sea-level rise for decades now. At least twenty years ago the government broached the idea (with TV commercials) that they were going to have to abandon some are areas to the sea.
A few critical ingredients being: no denialism about their vulnerability, strong social and economic commitment to reducing vulnerability, lack of reflexively blaming floods on illegal immigrants or trans people
Also they don't blame the climate or weather on democrats there.
I forgot that one! The Dems controlling the weather. Big one!
and sea level rises are slow enough that countries with more high ground than The Netherlands can just not rebuild/maintain old houses in vulnerable positions and build higher (often just a bit further in) instead.
Some buildings buy the coast (especially in port cities) and have steep rises anyway.
There is a huge threat of cultural loss - e.g. Venice.
I don't know about that. The Iberian peninsula is not historically at much risk for natural disasters, and we now suffer alternating forest fires and floods pretty much every year...
I remember forest fires yearly in northern Spain in the 80s. Are they more violent now?
Climate change deals frequency, rather than novelty. Oh and as crypto bros like to say: we're early.
> Even pessimistic scenarios don't predict threats to buildings
Floods, storms, droughts, fire? They appear to be getting worse.
More restrictive codes designed for better fireproofing buildings, for instance, can solve a number of problems in California in fire prone areas. Another thing that has a political solution is forest management. Lack of water can be solved by desalination, which becomes an energy problem rather than a water one. Very dry areas can benefit from solar panels because they reduce water loss from evaporation, thus reducing the pressure on water supplies.
It is expensive, but that's another problem.
Seems like having the ocean at your door would be bad for the structure? Or burning down in a hot dry period…
Why would a city like London or Paris burn down in a hot dry period?
1666 has entered the chat.
You're refuting a lot of established facts about the risks of climate change, in a way that seems indicative of a certain ideology. Can you explain more what your position is?
My position is that climate change is an existential threat to civilization, but buildings are not at a risk that would make them uninsurable. We build cities both in very wet and very hot and dry climates without much trouble. Those are engineering problems we can solve without much trouble.
But with lots more money, which is what insurance deals with
Of course they’re insurable at some premium. The question is whether there is any premium someone is willing to pay that can also cover the risk.
It's also a social coordination problem. For example a neighborhood where all the homes have to be fire resistant is going to fare a lot better, and probably be cheaper for the individual home owners to build and insure, than the one fire-resistant home in a neighborhood of tinder boxes. I don't think the prognosis is good for the U.S. in that regard. We have very little social cohesion and a lot of parties interested in making the situation worse for their own benefit.
You literally pulled this take out of your ass. Water and fire can shockingly ruin buildings.
Except for Fire?
Still waiting for the water to flood New York...
Hurricane Sandy flooded big parts of lower Manhattan and Brooklyn. I have friends who couldn't go back to their apartments or offices for months afterwards.
That happened six years ago: https://www.businessinsider.com/severe-rainfall-hits-new-yor...
And last year: https://www.youtube.com/watch?v=CxqswOkZMSI
Hurricane Ida in 2019 brought torrential rains which flooded the city, especially the subway.
Pole drift.
Does it really matter if my house burns because of pole drift or because of climate change? I don't like it burning either way. So if there is something I can do against my house burning, (and I know there are things I can do against that) I will definitely try that. And I believe we agree that we could do things, right?
Magnetic, rotational, geodetic .. ?
What are you trying to say?
> What are you trying to say?
Perhaps https://en.wikipedia.org/wiki/Cataclysmic_pole_shift_hypothe...
Can there even be geodetic drift of the poles? I sort of assumed that our lat/lon system is based on the poles being fixed points as a matter of definition.
Each ellipsoid is rigidly defined (well, some historic ones are sloppy), so WGS84 won't drift .. (that's a bold statement, is it true down to the micron and if so what are the absolute* datums to reference against?).
That said, there are literally hundreds of historic pre WGS84 ellipsoid|datum pairings, each with a somewhat different "survey map pole".
Historically geodectic poles have shifted as a function of datums.
The main point here, such as it is, was to poke at the infomation free aspect of "polar drift" as a comment .. which pole and what does that have to do with climate change? etc.
We still use many of those old ellipsis and datum’s today. When you’re doing human things, like surveying land, and defining property boundaries. It’s nice to work with a coordinate system which remains fixed relative to the area you’re surveying, and doesn’t drift due to annoying things like tectonic movement, or your entire country slowly tipping into the ocean.
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.
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(?)
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.
The key thing to understand is that you don't get to choose when the house gets destroyed or get advanced notice. Which means you might be in there, or your kids, or all your belongings. But yes, after you're dead in the rubble someone else can rebuild your house and it might be cheaper.
These wildfires produce surprisingly few deaths.
Did you know the most destructive wildfire in California history, the 2018 Camp Fire, destroyed 19,000 buildings but only caused 85 deaths? [1]
[1] https://oehha.ca.gov/sites/default/files/media/downloads/cli...
Yes of course, but everything in life is a risk trade off. Presumably the person you’re replying to understands that.
There’s not much rubble for a house made of wood!
How about the cost of your life? If the house resists the earthquake and you are inside it, you don't die.
Building to protect occupants and building to make the structure salvageable afterwards may be two different goals. Think crumple zones in cars.
This is not a good analogy.
Crumple zones in cars exist under the assumption that they will not be occupied by humans. In a house, on the other hand, any place could have a person inside of it during an earthquake, meaning that basically the entire house would need to stand to avoid any human being hurt.
I'm not an architect and don't live in an earthquake zone, but I was under the impression that wooden homes flex in earthquakes and if and when they do fall on you, do less damage than concrete homes which are stiff up until a point and then crack and fall.
So the human surviving may come at the cost of more houses collapsing.
Can personally confirm. Wooden houses do flex and often survive unscathed. The only major damage is usually due to any masonry attached to the house (see: chimney) or the house moving off of the foundation (see: before ties were in the building code).
It absolutely happens in steel and concrete construction in earthquake loading, when loading past the smaller earthquakes.
Plastic/non-linear deformation is intended in shear panels of steel connections and the core of well confined concrete beams/columns. The idea is to provide a lot of energy damping due to the nonlinear nature of the f*D hysteresis curve. This works long enough for the earthquake to go away and the people to get out of the building, at which point, you need a new building but hopefully no one has died.
Nice point. Still, in wast majority of cases, house keeps standing -> habitant survival chance goes up.
Cars being on the move, makes that distinction much much more relevant
For inhabitant survival a sifficient goal is something like “remains structurally intact for ~30 minutes after the end of the earthquake”. Which is significantly leas than is required for staying habitable
Where is the crumple zone in the burned out buildings in California?
Evacuation. Hardly anyone died in these fires.
That's traffic lights, not crumple zones.
We were speaking in the context of fires previously - in which case it's usually more about preserving the neighbourhood and land than anything else, you have to evacuate regardless.
Earthquakes are different and you'd need a house that stood anyway (though I'd guess most houses don't have a problem with earthquakes insofar as not collapsing on inhabitants, though they'd probably be damaged)
Loss of life from fire and earthquake isnt really high enough to be a concern. This is primarily a cost and inconvenience question.
Maybe be there is no longer "cheap" and that's the issue
I don't understand the downvote. I think this hit the nail on its head.
People whine about insurances pulling out. All they want is for somebody else to pay for their risk. It's their choice to live in that area, they should bear the consequences. It's not like it is or has ever been a secret. Climate change is known for decades now. Many people just chose not to "believe" in it. Well, their choice, but now that sh* hits the fan, they shouldn't come whine that everything gets sprayed with poo.
But this cuts both ways. The insurers chose to provide their services in the area for the amount of money agreed upon. If anyone was more aware of the risks and probabilities, it's them.
Why do they get to pull out now when it's time to hold their end of the contract?
That depends on what you mean with "pull out". Typically you pay a premium and that means you are insured for a certain period. A year or so.
Everybody who is insured at the moment of course needs to be paid by the insurance under the terms they had agreed to. The insurances should not be allowed to "pull out" of this responsibility.
But what about the next year? If no insurance wants to offer you another term, especially not for those same conditions, then it's their choice to "pull out" in that sense.
On the other hand, suddenly not offering cover at all is a problem for people who have established interests in a property.
I can see an argument for not writing new policies in an area. But I can also make an argument for allowing existing policyholders to renew -- maybe not at the previous rate, but at an appropriate rate for the risk.
As a matter of public policy, we ought to match the risk put on a homeowner with a mortgage by the bank with the risk assumed by the insurer when the homeowner pays their policies. Not let the insurance company lay the risk on the homeowner if they notice the risk has gone up before the loss is realised.
Alternatively, we need to start treating buildings insurance more like (UK) life cover: I took out decreasing life insurance when I took out my mortgage, it'll pay off the mortgage if I die. The amount of cover goes down every year to roughly match me paying off my mortgage. No matter what happens to my health in the meantime, if I keep paying the premiums then I keep the cover -- even if I wouldn't qualify for new cover.
Or maybe we need to say that if an insurance company declines to renew because they think the risk has risen too much, the customer should be allowed to claim on the expiring policy even if the house is still standing, because it's obviously worthless, and it's obviously due to a risk that was covered by the policy.
If you want a longer reinsurance term, it needed to be agreed to upfront. I'd guess insurance companies are well aware of the risks of writing long-term policies and so don't usually offer them. That being said, your comparison to term life insurance is quite apt - I wonder if such insurance policies actually exist. I would guess they'd cost more than a yearly renewing policy, but who knows.
Your other proposals as extensions to yearly terms certainly go too far. Annual renewal policies are commonplace, and it should be well understood that there's no obligation on any party to continue it.
Oh, definitely. At least not without a lot of discussion around how much the extra insurance would have cost. I'm not in a position to implement it either :).
If we're going to have state intervention though (and it seems at least under suggestion, I've no idea how seriously, in CA) then rather than an insurer of last resort, we (or rather they) should consider what they actually want from their insurance.
There are specialty insurance companies that will underwrite almost anything, for any duration, for a high enough fee.
But if the state regulator sets a maximum cap they wouldn’t be allowed to…
California law limits how high the insurance companies can charge for premiums. Did that law or those limits exist when they started offering coverage in the area?
Maybe they didn't, and then the law or limits were imposed at a time when the insurance companies needed to increase the premiums to match the new risk. But if the law prevents them, then they have no other choice but to pull out. Why would they as a business stay if the risk is to great for the premiums they are allowed to charge? They certainly are not obligated to stay.
Please do let me know where I can live that is guaranteed to be safe from unexpected natural disaster.
Maybe people don't like to restart their lives like that if it's avoidable, even if it costs more.
Only you also take into account your cheap home will likely accelerate the problem. Which never happens.
Hah financialization strikes again. Try explaining this to a person from a third world country, they would say "what are you talking about". Also they would have better health care than your average American.
(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.)
What collapsed was the newly rebuilt part of the porch, not the old one built to those codes. It has nothing to do with insufficient building codes, hence a corruption scandal.
Not really. Old concrete cannopy collapsed. It was minimally modified as part of station reconstruction by adding some glass panels, but cannopy itself and its suspension beams were not rebuilt. It's not clear at this point whether this modification was responsible for collapse, but what is clear is that old cannopy and beams were not even inspected during this renovation. That's a major blunder which lead to loss of 15 lives, and main reason for that is systematic corruption where minimal work is performed while full price is billed by private companies close to rulling party.
> 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?
All the properties that survived in those LA neighborhoods all had some pretty basic and intentional fire resistance
I’m curious about how many others did that burned down too
But so far the ones highlighted had super obvious mitigations that its astounding to see were not more common
The fire problem can be managed by burning or removing some of the dead wood, and building adequate water storage. Apparently California has been neglecting those two problems for decades.
The problem is the houses.
In lots of pictures from LA, there are green trees right beside burned out houses. The video in this NYT article is a great example: https://www.nytimes.com/live/2025/01/15/us/los-angeles-wildf...
One of the biggest problems are vents in the eves. Typically these vents have a single screen with a coarse mesh. Embers from fires easily pass through these vents, land on a surface, and start a fire.
Replacing the one coarse mesh with two or more layers of fine mesh significantly reduces the odds of an ember getting into the house.
This is a trivial improvement that dramatically increases survivability.
The real problem is the FIRE. The houses could be made fire-resistant, but making houses to be fire-resistant is going to be more expensive than managing the forests to reduce wildfires and storing more water. I don't believe that a tiny screen is going to make this huge difference you think it is. These fires are HOT and don't just catch houses on fire with little embers. They are hot enough to set wood and plastic on fire from a pretty good distance away. Green trees don't easily burn because of their high water content. Trees have evolved to survive fires as well.
It could also be helped by not building houses out of cardboard.
The amount of walls in Europe that you could punch a wall into is low enough that you shouldnt try.
And give many of Europe's house's a small rattle and they would fall down.
I'm in Christchurch, 6.2 Earthquake in 2011 and wooden framed houses dealt with it pretty good - they flex - lots of the houses survived and are still used.
Just about anything old and bricky was a deathtrap (fortunately many were unoccupied because condemned after nearby 2010 Earthquake).
We had some earthquakes before, I was on the 10th level, you could feel the house "flex" in a way. Nothing happened and it's been standing there since Soviet Union or longer (obviously with maintenance).
We don't get many earthquakes here though, we do get storm but it doesn't cause power outage at all.
And considering most of Europe is basically low risk territory, it makes sense?
Afaik, only Turkey and a small part of the Balkans is considered earthquake territory. And there's no fracking in Europe to induce minor manmade earthquakes either.
Some parts of Italy are at earthquake risk https://maps.eu-risk.eucentre.it/map/european-seismic-risk-i...
Despite being hit by earthquakes more often than other parts of Europe, usually only buildings and houses not built up to standard or old ones crumble, other buildings just shake and that's it. Of course, I do not know the exact risk of earthquakes in California and their intensity, but it's definitely possible to build earthquake resistant brick buildings
My first night in Switzerland there has a 5+ earthquake.
> And give many of Europe's house's a small rattle and they would fall down.
In areas where we don't have earthquakes, yeah, what's the problem?
I think the problem is suggest that an earthquake zone's fire problems would be solved by building houses like they do in a non-earthquake zone
Frankly, this is just an ignorant take. Put Twitter/Elon Musk down for a bit. The Palisades Fire was not a forest fire. Please dispel your myths and learn what 60-80 mph winds, sometimes 100 mph gusts, can do.
While having above ground power lines
While having unmanaged accumulated flammable brush
While having an empty reservoir under repair
While having the public water source unable to maintain water pressure for multiple hydrant usage
While having too few fire fighters dispatched in the area anyway
While having houses made out of wood
is it an ignorant take when the houses not made out of wood with their own watersource were able to withstand 100mph wind gusts and firestorm? it really really makes everyone else look ignorant
All of those are a result of American's favorite hobby though, not maintaining infrastructure, because ooh no taxes. LA has not raised enough revenue for decades it seems. The amount of pot holes in even the most expensive neighborhoods was already to damn high.
At some point the US really needs to do bit of cultural reform so they can start paying for all that low density development and the costs associated with it. So stuff can actually be maintained.
LA and California as a whole have some of the highest taxes in the nation, along with the most mild climate. The amount of waste, fraud, and abuse in California is stunning. The problem is mismanagement above all, not a lack of funds (at least in this case).
> LA and California as a whole have some of the highest taxes in the nation
The City of LA has a lower per capita tax revenue than most large Texan and southern cities, largely due to property tax caps.
Peak internet right here. I’m out
Frankly, everyone has been warning about the risk for years. The fire started as a forest fire (whether it was arson or not), and was anticipated by insurance companies who dropped policies on thousands of people in the months leading up to this. The winds are a big problem of course, but if there were not so many acres of kindling around the city along with insufficient water reservoirs, then a fire like this could not spread as easily as it did. I will give you that the fire could have still happened and been bad either way, but insurance people who literally study this stuff for a living and have skin in the game knew it was likely to get out of control well in advance.
The government banned insurance companies from raising prices. They used tax payer money to subsidize this for a while which increase home prices. Eventually insurance companies stopped offering insurance.
When state actors even dabble in socialism disasters happen people die.
> Gov. Gavin Newsom just released part of his solution to California’s home insurance crisis, and it boils down to a push to allow carriers to move faster to raise rates.
> In most cases, the Department of Insurance would be required to act on an insurance carrier’s rate request within 60 days, unless extensions are necessary.
> The proposed bill expedites the timelines laid out in Proposition 103, which requires insurance companies to have changes approved by the Department of Insurance and dictates how quickly the department must act on change requests.
> Critics fear that shortening approval timelines will allow insurance companies to jack-up premiums without room for public appeals and sufficient review by the Department of Insurance.
https://sfstandard.com/2024/05/30/california-insurance-crisi...
> The government banned insurance companies from raising prices. They used tax payer money to subsidize this for a while which increase home prices. Eventually insurance companies stopped offering insurance.
Obviously. Such a move by the government is just plain stupid.
> When state actors even dabble in socialism disasters happen people die.
No need to overgeneralize. Not every stupid move is immediately "socialism" and everything smart is "capitalism". It's obvious to every socialist that this move was stupid. In contrast, it's pretty clear that a purely market-based health system costs lives. Nobody is claiming though that "whenever societies dabble in capitalism it results in deaths". Pick your optimization target and then the right tool to reach that target. Sometimes that tool is to let prices regulate risk, sometimes it is laws to regulate risk, and sometimes it's something else entirely.
> it's pretty clear that a purely market-based health system costs lives.
That was literally the take about insurance. And here we are, again.
> It's obvious to every socialist that this move was stupid
Is it? Or is this post hoc rationalization? I really dislike playing the “both sides” card, even for a moment, but it’s hard to deny that there are questionable takes on both ends.
I agree with you that not every regulation equates to socialism, and it’s ridiculous to claim it is. However, the narrative of “insurance companies bad” is incredibly prevalent among left-leaning perspectives, and any regulation around insurance premiums tends to be automatically celebrated as a clear victory.
Ironically (because it's a free market argument), it’s a not-uncommon argument that if insurance companies can’t provide their services for no more than some arbitrarily-decided amount annually, they’re being inefficient or greedy and should go bankrupt and let a new competitor take the market.
Ah yes. Socialism is when intervention and subsidies.
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.
> Florida was obliterated in 2024
That’s an huge exaggeration. FL was not obliterated in 2024.
Stats:
Total storms 18
Hurricanes 11
Major hurricanes (Cat. 3+) 5
Total fatalities 401
Total damage $128.072 billion
(Third-costliest tropical cyclone season on record)
That damage is like 10% of Florida’s GDP.
That’s absolutely nuts.
It’s also a lot worse than the pure numbers suggest because the damage here is taking away actual built up stock, so capacity for generating future GDP. And the GDP in Florida includes a lot of economic activity used to rebuild after past damage.
And all of this without Miami even being flooded out of existence. Miami can’t even build dikes due to the porous ground it’s built on.
The weird part of living near the tropics is we all look at that and go "not too bad a hurricane season". Everyone not-from-the-tropics stares at your list in horror.
I forgot that any exaggeration is not allowed on HN!
128 billion dollars is equivalent to 200,000 homes, or even more, which does not represent total obliteration, however, if that level of devastation happened in the UK, the only comparison would be what the Luftwaffe did during WW2.
> 128 billion dollars is equivalent to 200,000 homes, or even more, which does not represent total obliteration,
As of 2023, FL has over 10.4 million homes.
> however, if that level of devastation happened in the UK, the only comparison would be what the Luftwaffe did during WW2.
If you are referring to The Blitz, the numbers I have access to is that over 1.1 million homes and flats were destroyed in London alone.
Those 1.1 million homes were destroyed over a period of years, not days.
> ideally nobody has living memory of the last [...]
Funny, I would have said the exact opposite. If people forget how bad things were, they seem more likely to repeat them.
Nazism, for one. And the rise in antivax sentiment - people today have never come across an iron lung, which is a testament to medical technology, but it means some silly opinions get way more traction than they should.
"Those who cannot remember the past are condemned to repeat it" - George Santayana
Yours is an interesting point as I am now questioning:
> "Those who cannot remember the past are condemned to repeat it" - George Santayana
I have expressed that idea with different attribution before now, but, on reflection, it is a 'trite quote' that can be trotted out far too easily!
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.
If the regulators have defined 'price gouging' as a price substantially below the break even mark, literally any profitable insurance product is implicitly believed by them to be price gouging. The US does a weird thing where "insurance" no longer means pooling risk but some sort of transfer payment welfare system. If they're going to define "price gouging" as profitable activity it is hard to see how the economy is going to function.
Allowing insurers to make a profit and run a business without interference is going to be cheaper - and in most instances better - than whatever the politicians are trying to build here. If you get rid of all the mandatory-this and price-gouging-thats then to stay in business insurers have sell products that people want to buy at a competitive yet sustainable price. It works for food, it'd work here too.
The math of insurance suggests that, if it needs to be widely carried (either due to things like mortgage requirements, or the simple realization most people don't have enough resources to absorb a major catastrophe themselves), the most economical way to go is to have a single risk pool that's as broad and diverse as possible, so it can swallow a large clustered crisis more easily. Yes, this is a bit of robbing Peter to pay Paul.
I always found it funny when insurance marketing talks about "personalized rates", when the goal is to DE-PERSONALIZE the risk. If you have 10,000 customers in Los Angeles, and 5 million elsewhere, you can either isolate the LA customers and charge them the "real" price of the risk, which will be unviable as a business and probably politically touchy too, or you can include them in the broad pool, and the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
The concept probably works better if you have some concept of social cohesion to lean on-- you might not get the best possible outcome personally, but the system itself is more robust for everyone.
What if Paul built his house somewhere less flammable? I see options here where Peter doesn't need to be robbed, he could pay a fair rate and Paul could make less risky decisions.
If one pool of people are taking a bad deal vs the market rate when buying insurance then it isn't really insurance any more. It is a transfer payment a.k.a. welfare. Which is cool and all in the sense that welfare is a social tool that exists. But calling it 'insurance' is needlessly polluting the language. If people expect to hoover money off others then they should be charged more until the expected return of everyone in the insured pool is equal. If the payouts are going to be held equal in the event of a disaster then that means the price of insurance has to vary depending on the risk profile of the customers.
> It is a transfer payment a.k.a. welfare
Its called solidarity and yes, it means some people NOT have to pay more but others recieve more. Paul AND Peter get the security of disaster coverage in exchange. This is what you pay for. A big risk pool and not your individual disaster recovery.
If you want "solidarity" you need a government service. Private insurance has every incentive to price things accurately and not subsidize higher-risk people. If you tell insurance companies what they have to charge, they have every reason to say "nope, I don't want to offer that service at that price, that doesn't make economic sense".
Insurance that is able to quantify risks precisely and set prices individually based on that is useless. If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone. Whereas solidarity can bring a better society - which even those who have to occasionally pay more benefit from in the end.
> Insurance that is able to quantify risks precisely and set prices individually based on that is useless.
This is simply untrue.
This may be true for health insurance, because there is a strong moral case to be made that is unfair and illiberal to make people pay more for genetics or simple bad luck that result in them being likely to need more health care.
It is not true for home insurance, where people can choose where to live and choose what kind of housing to live in.
The purpose of home insurance is to reduce time-based variance for disaster, not for people in low-risk properties to subsidize people in high-risk properties.
It is not "solidarity" for someone in a steel-and-concrete house with a metal roof who clears brush and trees from around their house to subsidize someone who lives in wooden mansion who doesn't take any fire precautions. It is a perverse incentive.
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
Again, it is not the purpose of insurance for it to be positive expected value for people in high risk homes! It is expected for insurance to be negative expected value. The point is to reduce variance.
Surely you don’t want your taxes to go into rebuilding other people’s beachfront houses as many times as needed. Show a little empathy!
https://reason.com/2024/01/10/the-feds-shouldnt-subsidize-fa...
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
It is insurance. You pay money, the company takes away the risk. That doesn't make it a bad deal, that makes it a service. That is like complaining about a hypothetical garbage company that charges for taking away trash even though the trash might have some notional value.
Insurance isn't an investment scheme. If you want to pay money for a positive-expected-value deal, go buy stocks and bonds.
whole point of insurance is that you pay for avoiding risk
in other words, you pay more than you would on average loss from bad events - but you avoid catastrophic losses that would break your life
that is why insuring your phone is likely a bad idea (as you can pay for a new one) but liability insurance or insuring your home/flat may make sense
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
paying 3k per year, to avoid 1% risk of 250k losses may be a good idea, especially if 3k loss is survivable without trouble and 250k loss would be more than 90 times worse.
> paying 3k per year, to avoid 1% risk of 250k losses may be a good idea
You are basically guaranteed to pay 3k to avoid financial risk with a mean value of 2,5k. That sounds like a fallacy to me (isn't it the same as saying that paying 3k for 1% chance of winning 250k is a good idea?), may make sense psychologically though.
Incentivizing people to build homes that are likely enough to burn down as to be economically uninsurable is an absolutely wild abuse of the term "solidarity". Solidarity is the idea that an injury to one is an injury to all, not the idea that choices should have no consequences and the environment shouldn't constrain humans; the only way you can possibly sustain a world in which people actually treat an injury to one as an injury to all, is together with some effort to avoid people from gratuitously exposing themselves to injury.
The tricky thing about global climate change is the "global" part. Funny how that works.
The LA fires aren't a climate fire though.
For other disasters, while climate change is "global", the effects are pretty much localized and to various degrees. Some places have had adapted construction to those kinds of blue moon disasters since centuries, so why should they part with more money?
> If you have 10,000 customers in Los Angeles, and 5 million elsewhere, you can either isolate the LA customers and charge them the "real" price
That's the only way.
> which will be unviable as a business and probably politically touchy too
Why would it be? If you live in Los Angeles - doesn't mean you don't need insurance (even if it several times the cost of insurance in the safer areas).
> or you can include them in the broad pool
No, you can't. Your competitor who doesn't do this will offer cheaper insurance - because they doesn't distribute high risk of small group to everybody else.
> the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
Why would they do that? 20 bucks is 20 bucks.
> The concept probably works better if you have some concept of social cohesion to lean on
You mean if you with totalitarian governance deprive people of the ability to choose? Yeah, that could work. I mean, that's how the gulags were justified.
I'm trying to understand how what you're suggesting is different from mandating everyone just get a personal savings account, where they must pay some specified minimum calculated to cover them in the event of a loss of their personal property?
Are you saying that we should only pool risk between people in the same risk bucket?
How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
> I'm trying to understand how what you're suggesting is different from mandating everyone just get a personal savings account
Because insurance will cover you even if your house burns down in the first year of coverage, whereas a personal savings account will have only a very small amount of money in it in the first year of home ownership.
That's the whole point of insurance.
I don't know where the idea came from that the purpose of home insurance is for people in low-risk homes to subsidize people in high-risk homes, but it's a very strange idea.
Right, that is the purpose of insurance, to take risk and spread it across a population.
Now the simplest way of doing that is you decide whether someone is "insurable" or "uninsurable" and then for everyone insurable, you define payout criteria and a fair pay in rate (premiums) which is based on your ability to calculate their risk and taking some extra on top for providing the service.
Your skill at:
1. assessing risk correctly as to whether you take them on as clients
2. calculating their risk correctly and mapping it to a price to charge them (premiums)
3. defining payouts in a way that allows you to pay out when things happen to your clients so others trust you to pay out, but not so often that you have no working capital
broadly determine how well you'll do.
You can do all kinds of other complicated things on top of that, but from what I can tell, the fundamental idea seems to be that given those considerations, the insurer pays out, so the fact that someone has a high risk home should be priced into their premiums or they should not have been taken on in the first place.
Now you appear to dislike that people who have different risk profiles are grouped together, what I'm trying to understand is how that works.
For example, in the case of the house burning down:
1. The insurer pays the homeowner out and increases their premiums
2. The insurer pays the homeowner out and places them into a different risk category of people who own similar homes, but have had their house burn down, works out their new premiums, which are now likely much higher as they're in a riskier category and it's likely that population is smaller.
I assume you're arguing for something like 2 to happen?
Or is it something else?
> Now you appear to dislike that people who have different risk profiles are grouped together
There is no problem with pooling properties with different risk profiles so long as each property pays premiums that adequately represent that property's risk profile.
Don't people who live in higher risk homes already pay higher premiums?
Do you believe that's not the case? Or that insurers are giving them discounts? Or are the risks miscalculated?
> Are you saying that we should only pool risk between people in the same risk bucket?
People should be free to make that choice even though it increases net costs for higher-risk or less-affluent individuals.
> How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
By allowing private actuaries to make these pricing decisions: skilled organizations will succeed, others will fail.
I'm trying to work out how what you're describing works, first I have to understand you before I can form an opinion on it :)...
Ok, I get how you want to value risk, independent actuaries. I suppose, there's some bias there as insurers might lean on them to adjust the risk to be more favourable to them and as they'll be repeat business, they're likely to comply, but let's assume we find some really honest ones.
So given say a pool of people with similar risk profiles, say young professionals in high earning careers, and you calculate that they're effective risk is the same so you pool them together.
Now, what do you believe an insurer would insure them against? And of the things, what would not take them out of the pool they've been placed in and put them into a different, perhaps smaller pool?
I'm not quite sure you understand what insurance are. You have risk, you don't want to have it, so you pay other people to took that risk away (to some extent). How those people are expected to assess risk? Somehow. That's their problem.
It's like how a hair salon owner evaluates the difficulty of a haircut. And generally, when you want to have simple haircut, but they are gonna charge you extra because Jason Statham is their client, and he has very sensitive and delicate hair ends, each of which requires a careful individual approach... You naturally start wondering what Jason Statham's hair situation has to do with your haircut.
> I'm trying to understand how what you're suggesting
Nothing. It's definition of insurance - selling your risk.
> Are you saying that we should only pool risk between people in the same risk bucket?
I mean, why would people want to be in a bucket with people with higher risk?
> How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
These are the problems of insurance companies. At the end of the day, the consumer simply chooses the best price for his risk.
Except if insurance company A does that, insurance company B will call the full-cinderblock home and say "hey, we can save you $20".
If it's a product you actually want everyone to carry (like health insurance) it should probably be the government offering it.
Which implicitly means: "everyone must always pay into the government pool."
If low-risk individuals are allowed to make their own choices, they will choose an insurer that caters to their group, thus depriving the government "option" of "premiums."
Just like with school property tax vouchers: if people are allowed to directly appropriate the benefits of their funds, less "desirable" schools would receive less funding.
Mandated government "insurance" is a form of welfare.
>>>Mandated government "insurance" is a form of welfare.
Yes? Of course? That doesn't make it a bad idea.
> or you can include them in the broad pool, and the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work
And you immediately start loosing customers to insurers that either did the former or left LA alltogether. This changes $20 surcharge into $25 surcharge, causing more customers to leave, causing surcharge to increase and so on.
you can either isolate the LA customers and charge them the "real" price of the risk, which will be unviable as a business
NOT lining up the premium with the actual risk is what's non-viable.
> I always found it funny when insurance marketing talks about "personalized rates", when the goal is to DE-PERSONALIZE the risk.
Actuarial science is not often associated with “fun” but they have been partying for centuries.
“In 1662, a London draper named John Graunt showed that there were predictable patterns of longevity and death in a defined group, or cohort, of people, despite the uncertainty about the future longevity or mortality of any one individual. This study became the basis for the original life table. Combining this idea with that of compound interest and annuity valuation, it became possible to set up an insurance scheme to provide life insurance or pensions for a group of people, and to calculate with some degree of accuracy each member's necessary contributions to a common fund, assuming a fixed rate of interest.”
> you can either isolate the LA customers and charge them the "real" price of the risk […] or you can include them in the broad pool
Maybe you don’t understand that the insurance business is based on including everyone in one pool (so it can swallow a large clustered crisis more easily) AND charge them (more than) the real price of the risk.
This completely ignores incentives. If insurance isn't allowed to charge people more who live in fireprone or floodprone areas, more people will live in such areas, and overall society will have to spend more money rebuilding when disasters inevitably hit those areas. Personalised insurance pricing would allow insurers to charge much more to people living in such areas, which incentivises people not to live there. It's also a moral issue: if everyone pays the same rate, then people who did the right thing and chose to live in an area that wasn't fire or flood prone are subsidising people who did the risky thing.
He wrote about risky business too https://substack.com/home/post/p-154965705
> This completely ignores incentives.
For socialists this is a goal, not an obstacle.
What about the people who drive cars, vote for more suburban sprawl, and actively work against reducing CO2 emissions? When are we going to charge them THEIR fair share?
By eliminating personalization you’re doing the same thing - removing price as a signal.
It’s good when insurers personalize! Install screens to prevents embers from entering roof vents? Great. You should get a discount!
It’s a win-win. Consumers are incentivized to take measures to reduce risk.
A lot of the "big boy" insurance on ships etc actually have inspectors - they'll come and inspect your ship (or industrial plant etc) periodically to confirm it meets the agreed safety standards. And if it doesn't, no insurance! That really aligns incentives.
This is a good point.
You also have insurance companies that will incentivize risk reduction by subsidizing alterations - if you clear any trees within X ft of home, they will give you $1000 towards it.
But yes on the inspections. I’ve had home insurance inspections around electrical and plumbing. They wanted to make sure it was at code as it was an older home.
This sounds like a very US-centric view and id strongly disagree that only the profit motive keeps economies and people going.
You almost said it yourself, "The US does a weird thing where insurance no longer means pooling risk". Why? Is it the profit motive or gov. regulation?
My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose, insurance companies are justified with.
Free markets have down sides and failure conditions too and only principled gov. regulation can fix it.
> This sounds like a very US-centric view
> My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose
What’s the non-US-centric view? Lloyd's of London is older than the US.
profit motive does keep the economy going. if you do not believe that youre like a flat earther.
> unregulated insurance market; price gouging.
with sufficient competition, it is impossible to price gouge.
So if there is supposed price gouging, then there must be insufficient competition. Therefore, the source of the lack of competition would need to be removed (ostensibly, by gov't - such as increasing business loans so that new insurance companies can be started).
Or, you need to be pragmatic, realize that you're not gods and won't create a perfect system that can't be exploited, and instead tackle the issue from multiple angles while revising your approach as the exploiters attack.
Don't let the perfect be the enemy of good enough.
What are you trying to say here?
I'm saying that running a government is a lot like running a ship:
You can't just let the currents and tidal forces ("the invisible hand") run the show unconditionally because even though they can propel you great distances at very low cost, they'll eventually throw you upon the reefs.
And you can't just let the rowers and tillers (legislators & executive) run the show unconditionally because they'll end up exhausting themselves with little to show for it as they fight against the winds and currents when they should cooperate.
It's a balancing act that requires some science, some experience, some luck, and a steady hand - and a capable and honorable captain and crew who believe in the mission.
I still don't follow.
If I'm reading it right, and the prior context, we shouldn't allow private insurers to charge the prices they want for insurance?
What do you want us to do? Ultimately someone has to pay for the bad outcomes happening here - either that's homeowners in risky areas, insurance shareholders or the general taxpayer, depending on where you fall.
If you don't make the ultimate originators of the risk pay for it (people in risky areas) they won't stop doing the stupid thing and others will bear the cost. Arguably that is the greatest strength of the "free market" - directing the efforts of everyone in the same, positive, direction.
Because although in the recent LA case we're dealing with rich folks who could shoulder the increased burden, often it's the poor areas that are riskier, and where the people there have little choice over where they can live.
There's no universal solution. A "free market" approach will work in some areas, and fail spectacularly in others. Same goes for a full-on centralized control approach.
And in all cases, you also have the confounding factor of bad actors gaming the system - and your current tools may be insufficient to meet the challenge.
So you need a human guiding hand to make sure things don't go too far out of whack.
This isn't an either-or decision. Stability doesn't care about whose motives or approaches are more "pure".
Agree to disagree.
The "human hand" guiding outcomes still needs to get it's resources from somewhere, presumably from government tax income. I disagree this will necessarily result in better global outcomes than the free market.
In cases where almost everyone agrees people should always have access to a service (healthcare) I think it does make sense to obligate everyone to pay. I don't think it makes sense in this specific case of wildfire insurance.
The free market here seems to be failing by your definition because it can't make money. To me that's it succeeding. It's demonstrating that it's underpriced, and people being unwilling to pay the necessary prices shows that they need to find somewhere else to live.
Amusingly enough, the lack of housing itself is another problem caused mostly by human-guided hands in government, not the free market. Enlightened despotism always sounds great when they agree with your perspectives, the reality is rarely so smooth.
Where do we find an honorable captain in this day and age? And how do we get them into the captain's seat?
"good enough" assumes a lot about the rules of the game here. Imagine, the game is: "heads I win, tails you lose" and then read your comment.
And these kinds of defeatist attitudes are what allow the bad guys to win.
You either fight the good fight, or roll over and die. Your choice.
Or, the market lets the gods do their work, rather than the government acting like one.
—esoteric capitalism
I mean, there's sometimes simply not enough capital available to support the creation of further competition in a sector. And government subsidies in the form of cheap business loans are sort of robbing Peter to pay Paul. You're simply allocating capital from one sector (the one being taxed) to another
For what it’s worth, you can get a house with no insurance or mortgage. They tend to be cheap. I had an uninsured thatched cottage for a while, it was 68k
You can have a mortgage with no insurance (after purchase day) here in New Zealand. The bank won’t like it, but also won’t know.
You are right that you can get away with it in NZ.
For total loss then bankruptcy might save you money (assuming you have no other assets or kiwisaver; since you still owe the debt).
But part of the contract with the bank is allowing the bank and insurance company to verify/update.
If you cancel your insurance, the insurance company is incentivised to tell the bank since you will probably sign up for insurance again when told to by the bank. I don't believe the banks or insurance have push updates. I would guess banks batch check if insurance is still live annually?
I live in Christchurch and I believe insurance is valuable risk management - plenty of people gambled and lost with Earthquakes. That said: I own an as-is house because I bought a 3 bedroom on 800m2 for $190000 (cheap because you can't get a mortgage for it because it is uninsurable due to subsidence - I only paid land price).
(For those unfamiliar - $190000 New Zealand is roughly $106,000 US, and 800m2 is about 1/5 acre. I know neither Christchurch real estate nor its geology - but obviously that 1/5 acre carries a big "will it keep subsiding?" caveat.)
Banks in Australia were the same, but some are now starting to demand proof of insurance yearly to counter that loophole.
What's the thinking here? The bank is loaning you money and they want to ensure you buy a particular product.
They're the ones with the money. They can easily guarantee that you buy the product they want. All they need to do is give you less money, buy the product themselves, and give it to you.
I think what you mean is what I wasn't sure about (but found with a quick search), some banks do offer home loan and insurance bundles here in AU. I found one that offered a discount on the insurance if you get the loan with them, for the life of the loan.
But legally, you are allowed to change insurers at any time. They would probably not be allowed to include that as a contract-breaker clause in the loan itself due to free-market-reasons, or force you to take only their insurance to have the loan (we tend to have a few laws about keeping conflicts of interest like this at arms length but I'm not sure about this case). But if insurance is legally required, I suppose they can ask for proof periodically after you leave to terminate the loan.
The insurance is with anyone. They own the house, not you, and so they want to ensure it's not going to burn down (or more likely get washed away in a flood, where I live) and be irrecoverable, so they require you have the home insured. They care naught for contents insurance, just the house/building.
Is it different in the US to the UK? Surely you own the house and have a liability on the mortgage?
When we bought our house in the UK (a long time ago), it was a condition of the mortgage that we had buildings insurance. The theory is that if the house burns down or similar, the bank will want the rest of their money back and the house buyer is unlikely to be able to afford that considering that they needed a mortgage in the first place.
It's basically the bank just outsourcing a lot of risk to the insurance company (via the house buyer).
Why would they go via the house buyer? They can insure the house themselves.
It's common for the house buyer to want extra insurance (e.g. contents) whereas the bank is only interested in the house as a sellable structure, so it makes sense for the buyer to take on the insurance requirement (it's also less paperwork for the bank).
But if they're the ones that want the building insured, it seems like it would be better for everyone if they're the ones that source the insurance.
I don't know what you mean. Banks loan out money for you to buy a house, but you don't technically own it (that is, you have no title) until it is paid off. The bank wants the house itself as collateral for the loan. It cannot be collateral if something destroys it in the 30 years or whatever during which you are repaying the loan. Therefore, they demand insurance to make sure that they will be repaid. The insurance requirement protects you but also the bank, because what do you think the odds are that someone who just lost their house in a fire or something is going to keep making mortgage payments for a pile of ashes?
You can do that in the US too. As well the banks won't like it, so what they'll do is protect their assets with force-placed insurance that you pay a hefty premium for.
A quick google suggests a similar situation in that there's no legal mandate but most lenders in NZ require insurance.
What did you do for liability insurance?
For the first year I had a policy similar to what farmers use for ag land, then it got cancelled and I was uninsured, which wasn’t ideal.
I sold the house after a while, it was an interesting experiment in cheap living but ultimately it wasn’t great.
Annoyingly I couldn’t insure it because it was thatched, and I couldn’t change the roof because of heritage. The Irish government has screwed over thatch owners brutally.
Price gouging isn't actually what we're seeing in the most disaster prone areas. Insurance companies aren't charging open ended prices, they're simply exiting the market. Florida for example.
I believe Florida market exits had more to do with litigation-friendliness than premium caps or disaster risks. E.g.,
> In 2020, 79 percent of homeowners insurance lawsuits nationwide were in Florida—even as the state accounted for only 9 percent of the U.S. homeowners insurance claims, according to the Florida Office of Insurance Regulation.
There were some recent reforms in response (HB 837, 2023; SB 2-A, 2022).
Ah, fair point
They're exiting the market because the states have limits on how premiums can increase y/y. The risk modeling (which is turning out to be right) says premiums are fractional of what they should be. So unable to raise premiums, the companies just leave.
Rock, meet hard place.
The big risk that we need regulation for is not that insurance charges too much, but too little. There will always be the temptation to charge less than the other guy, get lots of customers and hope nothing really bad happens.
This is a great callout, although I suspect the two main things insurers need but can't get today, due to regulations:
1. Ability to raise price based on risk. Regulation example: State won't let insurance company modify their fire risk maps. I believe this has come up in central Oregon for example.
2. Ability to drop people out right. i.e. if they think risk of home insurance is 50/50 next 10 years, they won't insure at all.
P&C insurance is a pretty competitive industry, and there are plenty of mutual insurance companies in the P&C business that don't have a price gouging incentive. Most of the regulations that are about reducing counterparty risk for the insured are probably necessary, but price controls are not, and generally, they only distort the market.
Can you define “price gouging”?
Insurance (at least the kind we are talking about) is only mandatory if you have loans, and even then it is not 100% mandated. We do need insurance regulations, but price caps limit what things actually make sense to cover. To put it another way, you are free to buy land in a risky area if you want, but nobody has to insure it or loan you money for it. If you find someone who will loan you the money if you can get insurance, then you can't get insurance, that sucks for you but nobody owes it to you to hand over money on a losing investment. These requirements can be abused, but there really isn't much evidence of insurers, lenders, and investors colluding to rip people off.
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.
> Resistant homes will pay nearly the same prices as everyone else.
but this means the insurance company is mispricing (or is being forced to misprice) the risk of resistant homes.
In theory, when correct pricing happens, these resistant homes should face less claims, and thus the premiums paid on them is high profit margin; ala, the customer is a good one, and the insurer should persue this customer more than another. This ought to results in a discount for said customer's premium, as more insurers vie for this customer over another.
This does happen, it's just done at neighborhood level. That makes some sense, the biggest fire risk factor for your house is probably your neighbor's house burning down.
I kinda figured it was self-destructive arson (detected or undetected) or gross negligence, and I'm mostly paying for those.
Similar to when I look at causes of death for my age group and can pretty much eliminate the top 2 of 3 causes for myself.
I would actually guess that biggest risk is internal. Either faulty wiring, appliance or simple user error in kitchen or with live fire. Entire neighbourhoods burning in general is rare event.
Don't know about the us but here we have fire breaks everywhere in the form of low depth waterways (non navigable). They also act as backup water reserves when the mains runs dry. So by design only parts of the neighborhood will burn down.
Yep, those exist across the western US too. I think many people are underestimating the scale and intensity of the winds California experienced. A single house on fire with relatively regular weather conditions isn't likely to spread to others - despite the "ha American houses dumb and wood" sentiment on this topic, there are building codes and fire safety is absolutely considered. But the Santa Ana winds are extremely dry and extremely powerful.
It's a hard engineering problem to solve, but an increasingly urgent one now that these major events are becoming more intense and frequent.
This is more a matter of market rules than an inherent property of insurance; currently we do not let insurers get sufficiently granular due to some assumptions about wider social benefits of a less individualised system.
This might be reworked to allow for fire resistant designs to be a factor.
> Biggest factor is age, and even then, difference between 20yo and 35yo driver is 38%.
That's because age is both observable and strongly predictive of risk.
Try and extend this logic to other highly correlative, immutable individual factors.
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]
Interesting video, didn't know about truss plates
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.
People don't understand the exponential change. As you correctly stated, the effects of climate change are exponential. Why? Because if you take a normal distribution and shift it linearly, the area on the edges grows exponentially. This is why even a linear shift in temperature can lead to an exponential rise in disasters.
Math is hard for people, even on HN.
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.
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.
More like can't care about anymore. Median household income is 63k in OK and housing costs are through the stratosphere, it's no wonder people will pick any home over none.
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?”.
Yes, as a European I'm always confused about what Americans think is the moral of that story..
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.
Brick does tend to survive. Brick as an insulating layer can save lives. Brick also explodes violently under conditions where wood merely burns. Neither of these save homes in our wildfires, though; it turns out what saves homes is things no one realized at first:
Don’t plant trees within fifty feet of a structure. More, if you didn’t inflate your home like a balloon to fill a property to the brim with home. Cut them down and make a firebreak. Clearings exist for a real and serious reason. Aesthetics have been given precedence far too long in this regard.
Make your home airtight (or positively pressurize it, if you have the power and tech to do that safely) so that embers don’t get pushed in by the winds and pulled in by the temperature differential currents and catch your house on fire from inside its walls. Not much fun in having a brick building burned out from embers that were forced in through a poorly-sealed door.
Saturate your roof with water, so that it doesn’t trap embers and act as a fire repeater to the next house on the block. Not only will your roof not burn, but every ember that lands on it will likely go out. Even if your roof is metal, consider installing sprinklers anyways. Maybe you’ll help save your neighborhood someday.
It’s not the building material that’s the one problem here; it’s the carelessness of building code, safety enforcement and absence of federal and state aid to fireproof homes in known fire zones. It’s the catastrophically incorrect hundred year old policy that would rather burn down a chunk of homes every ten years rather than admit that policy is wrong and that the indigenous people were right all along. Brick or wood or concrete or steel, none of these will stop the hottest fires with any certainty. We know what does, and we’ve allowed it to become unsafe to have wood homes. We know how to stop these wildfires. Build with brick if you like, but:
Only fire can prevent forest fires.
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.
I am not sure the wood framing matters much in this case. The fires are burning houses because the roofs are flammable, or embers are getting in the house through the eaves or a broken window. So in the end you have a completely burned down wood-framed house or a hollow concrete house that is no longer structurally safe.
WW2 saw urban firestorms in European cities built of brick. The insides are still flammable.
Wind-stoked wildfires are not cat4 or something tornadoes.
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.
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.
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.
> 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.
> 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.
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.
Much more practical solution is more aggressive defensible spaces, cracking down on gardens, and proper management of fire reservoirs
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.
Health insurance's issue is probably how it induces pure waste everywhere as everyone has to play this dance of ever escalating paperwork which consumes a lot of labor. It's not profit, it's waste. Same with the ever increasing amount of admin. Why is that admin increasing? I estimate insurance or requirements created by insurance is part of the cause.
There is also a lot of other smells of a lack of a competitive market. Very opaque pricing, limits to how many hospitals can be opened in a region, needing paperwork to push against that limit, limits in residency slots, the entire hazing ritual of residency in the first place, limits in opening medical schools, ever escalating requirements to become a doctor, restrictions against doctor owned hospitals or clinics, the fact something like an epipen is still not out of patent and not having many clones by now, large barriers to make medical devices and medications, while simultaneously having great issues with generic drug quality, a horrible food system compared to Europe, while simultaneously having a much harder regulatory state medically compared to europe, etc.
This is spot on. It’s not that I think health insurance companies are making insane profit margins. It’s that their very existence in the system is a pure negative and in fact a moral blight. Inflicting profit into a system that is entirely dedicated to human health is by definition a conflict of interest for basically everyone involved, even if it operated at a hypothetical 100% efficiency.
Lots of things necessary for life are run by for-profit businesses — for example, food production. Do farmers have a “conflict of interest”? What about healthcare in particular makes profit immoral?
If the grocery store decides to remove the prices from everything, and require its shoppers to first call its billing department only open until 5pm to receive a set of numbers, then call their third party subscription service only open until 6pm to receive a non-binding estimate, for every item in their grocery list, then wait weeks or months for the grocery store to have its cashiers take time away from checking customers out to petition the third-party subscription service to allow its customers to buy any item deemed to require prior authorization…
You can typically endure hunger for 15 minutes for the time it takes to go to another food store.
On the other hand, if you are bleeding out in the ER, no such luxury exists.
Insurance executives have a fiduciary duty to maximize the profit of the company.
If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
If the company loses money treating patients, then it has a financial incentive to deny treatment as much as possible.
Unless a legal structure is found which scales profit with quality of care, ethical choices will be at odds with the fiduciary duty of the company officers. Having an AI say “no” and putting someone on hold is a lot less expensive than paying out for a cure that cost billions to develop.
In the case of government-run healthcare, the government at least sees the consequence of poor health outcomes in decreased productivity, competitiveness, gdp, and/or tax revenue, as well as increased use of social services.
In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
There are lots of perverse incentives at work, and vanishingly few people even try to understand them, I think because most people simply don’t believe it could possibly be as bad as it is. And by the time they learn otherwise, they care more about getting healthy again than overextending themselves trying to solve a massively complex problem.
> Insurance executives have a fiduciary duty to maximize the profit of the company.
Probably not. Many insurance companies are not "for profit" companies(not a 501c3, something else). Certainly some are, but most of the giant ones, State Farm, etc are not. Most are Mutual Insurance companies: https://en.wikipedia.org/wiki/Mutual_insurance which handily includes a list of them.
I.e. they are operated more like Vanguard, the investment firm than they are Fidelity(a private for profit company) or Schwab a public for-profit company.
Also, this fiduciary duty thing is not really true, but people think it's true. They do have a duty to work in their shareholders best interests. Lately that's been taken to mean profit above all else, but that's a recent(last few decades) interpretation.
> If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
It depends on if they share the cost(s) of keeping patients healthy or not. Incentives matter. If they are incentivized to keep people healthy, instead of just treating X disease today, it would be a different conversation.
> In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
> There are lots of perverse incentives at work
Agreed. But mostly it's just excess waste as far as I know. I'm not an expert in healthcare, so I'm at best a armchair quarterback here.
Oh yes, these things are exactly equivalent. Problem is, nothing about the health system's incentives aligns with consumer benefit. The most profitable outcome for an insurer is that everyone pays premiums and never uses any services. The most profitable outcome for hospitals is that they charge maximum prices for every service and yet don't really fix underlying problems or prevent future problems. Hospitals profit the most off patients that need a ton of care and have deep pockets. They lose money on giving care to people who cannot afford it and won't pay. They lose money in the long run when preventive care prevents later catastrophic (and expensive) conditions later. Pretty much all of the profit-maximizing forces in the for-profit system are deeply unethical.
If you're going to tell us that because health care providers and health insurance companies are some kind of magic counterbalance against each other that benefit consumers, uh, nope.
>Pretty much all of the profit-maximizing forces in the for-profit system are deeply unethical.
Are you talking about healthcare specifically or businesses in general? AMD wants to make the best CPUs for the most amount of money. Is that "unethical"?
> healthcare specifically
Yes, it is deeply unethical that someone can be bankrupted and become homeless because of a treatable condition because the "market" has decided a price for the service that is astronomical without insurance, while at the same time tying insurance to employment, dividing up insurance markets, and making coverage subject to inscrutable, unappealable decisions made by people sitting behind desks in a completely different part of the country, while the leadership of said organizations and investors make higher profits than ever. It is deeply unethical that a CEO can make tens of millions of dollars--which for most regular people is several lifetimes worth of earnings--in a single year, while dealing in a market that regularly denies coverage to people who then suffer, are financially ruined, and die.
It's not the same as making a better CPU for more money. Not. At. All.
> Oh yes, these things are exactly equivalent
A: All men are tall, therefore Giannis Antetokounmpo is tall.
B: Your proof is wrong: see this man here, he isn’t tall!
A: Clearly he has nothing in common with Giannis. He’s not even in the NBA!
> When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.
Meanwhile, the health care providers:
> But if you look at the list of companies with the highest [return on equity], you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers.
* https://www.noahpinion.blog/p/insurance-companies-arent-the-...
Definition of "healthcare provider" really confuses me. Why is my nurse lumped together with people researching drugs? Is the CEO of the hospital a "provider"?
> 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.
When you consider that single digit percentages of trillions of dollars is still an obscene amount of money it makes sense. People making tens of billions by applying formulas to spreadsheets and shuffling other people’s money around doesn’t sit right with most people.
I hear the same thing about supermarkets. Their margins are razor thin (1-3%), and yet people look at the overall profits and complain, ignoring the fact that the company had to deploy 50-100 times that capital to make that profit.
An alternative is to split these companies into smaller companies, which will each have much lower profits but also higher costs due to lost efficiencies, but people will not be happy with that either.
>People making tens of billions by applying formulas to spreadsheets and shuffling other people’s money around doesn’t sit right with most people.
The federal government will pay you $4.4 billion a year[1] if you lend them a trillion dollars, no "shuffling money around" required.
[1] current 5-year treasury yields
Those people are not collecting the profits by moving their own money around.
The profit margin doesn't include things like CEO salary, correct? I could see a scenario where the issue is still corporate greed just not greed that's measured by profit.
All employee compensation, including CEO and board of directors, is included in the expenses used to calculate profit margin.
Profit margin is all revenue minus all expenses.
Isn't that a bit misleading? Salaries wouldn't be included, but a lot of compensation at the very high end is based on owning stock, and dividends i assume would be part of that profit margin.
>Isn't that a bit misleading?
In practice yes, but technically no. If a "non-profit" brings in 100 million dollars, and pays all 100 employees a million dollar salary, then that "non-profit" has made no profit. But when someone hears that a "non-profit" made "100 million" dollars, they think it is some kind of scam or something.
Compensation, even in the form of equity, has an equivalent cash price that is owed at the time it is awarded. The receiver has to pay income tax for this compensation, even if it is not cash, and the business has to record it as an expense.
>and dividends i assume would be part of that profit margin.
Dividends and share buybacks are not expenses. They are not money spent for the purposes of operating the business, they are awards to the shareholders. As such, they are not an expense. Dividends and share buybacks happen with the profit, so they will never be included in expenses used to calculate profit margin.
There are lots of highly qualified people at the SEC and FASB working to ensure some semblance of accountability. There is a reason why people from all over the world want to invest in a developed countries’ public equity markets, and that is a belief that most of the time, the numbers are very close to the truth.
Executive pay is such a tiny fraction that eliminating it would be lost in period to period fluctuations.
>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs
Do you have any source for this?
I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems
Insurance fees are not high because the insurance companies are making huge profits.
They're high because providers are making huge profits.
Now granted, they may ultimately be the same thing, but that's a different discussion [1]
In the context of housing (fires, hurricanes etc) insurance is expensive because housing is expensive to build.
[1] insurance companies have to invest their income somewhere. It makes sense to choose companies will high returns. Which includes some health care providers. Which can basically change whatever they like because of structural reasons that have been well discussed.
> Insurance fees are not high because the insurance companies are making huge profits.
United Healthcare alone made $23,000,000,000 in profit in 2023. Health insurance companies have collectively made $371 billion in profits since the passage of the Affordable Care Act.
Property & Liability insurance (home, car, etc) have relatively modest profit margins, but health insurance companies absolutely are making huge profits.
Using absolute numbers here doesn't really make sense. 23B sounds big but its impossible to say if its a high or low profit margin without context.
It’s profit and it’s very large.
That's going to be true for any nation wide insurance company.
> alone made $23,000,000,000 in profit in 2023
why is this number considered huge? What measure are you using? These absolute numbers are meaningless, because you have to put it into context. That's why profit margin is what analysts use, not the absolute number.
If i changed those figures to: they made $77 per person, per year in the USA for providing healthcare services, does that still seem as big? Or is it now reasonable?
$23,000,000,000 profit/29 million insured makes $793 profit per insured person.
That's huge isn't it? $800 bucks in profit per customer? What does Apple make? Or Unilever?
Why compare to Apple, when the healthcare is arguably more complex and expensive?
They are just other things people commonly spend money on
the original OP is claiming that the healthcare industry is too profitable. So you have to compare it to something to see if it is too profitable.
Right, but why use Apple ($800 phone every 2-4 years) compared to say, an automaker ($40k in depreciation over 10 years) or a REIT ($2000 in rent every month)? Moreover, why focus on absolute profits? If the healthcare industry split into 3 (eg. doctors, dental, drugs) but with the same margins, does that mean they're suddenly not "too profitable"?
No, UnitedHealth Group made $22B in profit in 2023. Only about half of that profit came from the UnitedHealthcare insurance business. The other half came from the Optum side which is a mix of non-insurance stuff. Optum makes huge profits on software: if the software business was spun out it would be one of the top 20 US tech companies.
https://www.unitedhealthgroup.com/investors/financial-report...
The issue in the US is that there is no price regulation for different procedures (other than Medicare), plus the providers (hospital chains) are intertwined* with insurance. The end result is everyone charges as much as they can and the premiums need to be high, even if insurance technically negotiates the rates down from the “sticker” price. Insurance companies are willing to take a small percent of profit because there is so much money being taken from customers.
* https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...
Right, low profit margins are not a valid argument for why it’s invalid for consumers to suspect there is some inefficiency compared to other markets. Saying the system must be efficient because profits are low is like saying boiling water should be as cheap as 98->99 degrees C because it’s just +1 C - profit margins aren’t as good an indicator of whether there is an unusual amount of disorder in the system, compared to extremely context-sensitive resource costs for hypothetically identical systems.
I think the point is more that the insurers are not the real target for your wrath. You should not motivate your congress person to do something about the insurance necessarily. It's probably better to look at a level further up the chain for example.
Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc.
The shareholders take home only a fraction. But a lot of money gets spent that simply doesn't need to be. Other countries avoid the deadweight loss of the middle man.
>Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc.
that's not a sophisticated analysis. it would be like saying mcdonalds is unecessarily expensive because executive pay, and cars, and dry cleaning, etc. etc. yet, if you tried to found a competitor, you'd have all those same expenses. even charities have to pay management.
insurance companies make money because their aggregate risk is less than your individual risk, and you really don't want your individual risk so you are willing to pay them extra, a premium, to get them to shore up your downside. After that it's like any other company selling any other thing.
The genius of the US way is that the politicians avoid the heat when healthcare coverage is denied. Whereas UK and Canadian politicians have to answer to their constituents.
Of course, now that getting murdered is on the table, the US health insurance executives might want to up their compensation.
> Whereas UK and Canadian politicians have to answer to their constituents.
Yeah, and "politicians have to answer to their constituents" is how we got the failed insurance markets in California and Florida. This thread has now gone full circle.
That is the problem with conflating insurance and subsidy.
To buy votes, politicians sell “insurance”, but in reality it is a subsidy to a specific group of taxpayers.
When a government directly pays for healthcare, it can’t be called insurance, and so limits to the subsidy are easily attributed to the government leaders.
Whereas, if a government has the population buy “insurance” from non governmental entities, then it can pretend (for the layperson) that it isn’t a government subsidy and so the laypeople can blame limits of the subsidy on someone else.
Obviously, health insurance in the US is far from health insurance and premiums are closer to taxes being paid rather than premiums for one’s own health risks.
That isn’t so true in property and casualty insurance, at least not until governments like California step in.
no offence but that murder had nothing to do with what is right or caring for the people just a game same reason trains got graffiti on them. At most a beautiful lesson in the power that comes with controlling the narrative
That’s because healthcare is unusually expensive in the US, not because insurers’ profit margins are unusually high.
These are all the publicly listed health insurers in the US, with public financials, so the numbers come from the 10-Q and 10-K reports filed with the SEC.
Note that the first one, United Health, has slightly higher profit margins than the rest because UNH has an enormous business selling healthcare itself, not just insurance (they own a lot of doctor groups and outpatient clinics and employ a lot of doctors and nurses).
https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...
https://www.macrotrends.net/stocks/charts/ELV/elevance-healt...
https://www.macrotrends.net/stocks/charts/CI/cigna-group/pro...
https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro...
https://www.macrotrends.net/stocks/charts/HUM/humana/profit-...
https://www.macrotrends.net/stocks/charts/CNC/centene/profit...
https://www.macrotrends.net/stocks/charts/MOH/molina-healthc...
The other big insurers will be Kaiser Foundation Health Plan and various plans franchised with Blue Cross Blue Shield, but they are all non profit.
https://projects.propublica.org/nonprofits/organizations/941...
Some Blue Cross Blue Shield Association members are for-profit corporations now.
As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
> Some Blue Cross Blue Shield Association members are for-profit corporations now.
In this list, I couldn’t find a single for profit BCBS licensee other than Elevance. They all seem to be mutuals/member owned/non profit.
https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Associa...
> As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
Interesting, I didn’t know UNH sold software!
In this list, I couldn’t find a single for profit BCBS licensee
other than Elevance.
At a quick glance Highmark and Wellmark are for-profit. And I believe the South Carolina licensee is as well. Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
Highmark is non profit:
https://projects.propublica.org/nonprofits/organizations/821...
Wellmark is a mutual insurance company (profits go back to policyholders, seems not comparable to a for profit insurance business, and for this discussion, is not going to have a profit margin that results in higher costs to policyholders):
https://en.wikipedia.org/wiki/Wellmark_Blue_Cross_Blue_Shiel...
https://en.wikipedia.org/wiki/Mutual_insurance
>Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
I see no successful lawsuits, though. Still seems like Elevance is the only for profit BCBS licensee.
>In 2014, BC/BS of Illinois (Health Care Service Corporation) was sued over its nonprofit status. The lawsuit was dismissed, with prejudice, and the dismissal ruling was upheld on appeal.[62] Similar suits occurred with similar results in other states such as Oregon.[63]
To be clear if Elevance is the only remaining for-profit BCBS licensee it's because they bought the others.
Highmark got labeled as for-profit on its Wikipedia entry likely because they own a variety of for-profit companies including e.g. Highmark BCBSD Inc. and Celtic Hospice LLC.
https://projects.propublica.org/nonprofits/organizations/453...
But Highmark, the parent organization, is still a non profit. Based on their revenue and expenses on their 990 going back a decade, the entire organization is not delivering profit to any owners, it’s just spending money earned in its for profit subsidiaries elsewhere in its org.
Specifics aside, I think it is conclusively shown that no health insurance / managed care organization earns a ton of profit margin. No one is going to become billionaire rich by starting up a managed care organization, because they will spend almost all they earn.
It’s such a low profit margin business, that Buffett, Dimon, and Bezos abandoned it:
https://www.healthcarefinancenews.com/news/haven-disbands-en...
But Highmark, the parent organization, is still a non profit.
> They're delivering profit
To who? Are there shareholders profiting? Employees on the take?
> Unlike the non-profit Mozilla Foundation, and the Mozilla open source project, founded by the now defunct Netscape Communications Corporation, the Mozilla Corporation is a taxable entity. The Mozilla Corporation reinvests all of its profits back into the Mozilla projects.
https://en.wikipedia.org/wiki/Mozilla_Corporation
It’s the same with Highmark, assuming there isn’t massive fraud happening.
You can literally read the 10-K statement from any of several publicly traded medical insurance companies. Average industry profit margin is about 3%. There are also some non-profit insurers but their fees generally aren't any lower.
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.
You ever think it's curious that for-profit insurance companies pay out 2–3x what Medicare does for the same procedures?
> Or they see that as a cute bit of misdirection. Profits are capped as a percentage of healthcare costs, sure. [...]
You know what else is "a cute bit of misdirection"? Mentioning that profits are capped without mentioning why it's that way in the first place.
>You ever think it's curious that for-profit insurance companies pay out 2–3x what Medicare does for the same procedures?
...because the government low-balls healthcare providers?
...because the government low-balls healthcare providers?
You do realize health insurers have federally mandated caps on their profits, which simply incentivizes creative accounting to make money in more oblique ways, right?
Health Insurance IS a huge racket. Insurance profits are only a small slice. Executive compensation isn't part of profits. The profits of the required sole source medical supplies company isn't part of insurance profits. The contracts, salaries, benefit packages, overpayments, and waste of healthcare systems and pharmaceutical companies aren't reflected in insurance profits. Just looking at the raw profit percentages returned to shareholders is absolutely meaningless.
You have to look at the entire healthcare picture and realize that insurance is the system driving the exorbitant costs. There is no legitimate reason for healthcare prices to be so insane.
>Health Insurance IS a huge racket. Insurance profits are only a small slice. Executive compensation isn't part of profits.
"Executive compensation" is even a "smaller slice" than profits, orders of magnitude smaller.
> There is no legitimate reason for healthcare prices to be so insane.
these profit margins are why some people claim that the US is actually subsidizing the rest of the world's low cost health outcomes.
These companies make money in the US, at high margins, which enables them to operate at low margins in other more regulated countries.
This might apply to Pharma, which actually operates in international markets, but not to US health insurers, PBMs, or for-profit Healthcare providers.
> 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.
Soon, people will realize that the entire economic system that caused climate change in the first place will not save us. Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
>Soon, people will realize that the entire economic system that caused climate change in the first place will not save us.
Disagree. "the entire economic system that caused climate change in the first place" is also responsible for the green transition, including cheap electric cars and renewable energy.
>Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
Alright, what's your solution to "the entire economic system that caused climate change in the first place" that aren't just "lol just stop capitalism"?
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.
Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so?
To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX?
If State Farm didn’t exist and the state ran insurance instead, and were willing to insure all comers, they’d be subsidizing people who can’t be insured profitably. That’s not crazy on its face (the state subsidizes lots of different things), but it’s at least worth asking why we should be paying for people to live in high-fire-risk areas rather than any number of other things the state could be spending those resources on.
State Farm notified its customers in August of its non-renewal (not cancelling) of policies, plenty of time for homeowners to get new policies or fall back to the state fund.
And what is fire insurance? Is that something unique to CA?
My insurance was cancelled but I don’t blame the insurer at all.
CA regulation basically capped their premium increase and my insurer did calculations that said “this is a net negative business”.
If I had a business making a loss I would get out, so why would I blame my insurer for doing the same?
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.
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.
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.
https://www.clydeco.com/en/insights/2025/01/california-wildf...
> The Bulletin was issued pursuant to California Insurance Code section 675.1(b)(1), which states that an insurer “shall not cancel or refuse to renew a policy of residential property insurance for a property located in any zip code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency . . . based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”
I imagine this won't apply if the insurer just leaves the state.
Yep. These are terms to operate as an insurance company in the state. If you don't want to do that, the rules have no bearing on you.
Which effectively means that anybody in a less risky area of California is just subsidizing those who live in the risky areas. Premia across the board will increase as a result.
Typical California redistribution...but this is from the bottom to the top.
Gotta catch up to Florida
> 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.
That’s insurance?
Change the euphemism from government to private insurance to satisfy capitalism gods and keep their giant foot from squishing us… still “on the books” as a co-mingled pool of funds to shift around to solve problems.
Aw …sad… other people exist and need resources too. Not just about your first world skin suit playing temp host to a run of the mill electromagnetic field effect.
People choose where they live, and should bear the cost relative to the amount of risk they chose to take. Government funding is not a magical blanket that somehow makes it moral to take from someone who made good decisions and give to another who made poor ones.
I get that we're on a tech forum but the vast, vast majority of people in this country don't have the financial ability to just move wherever they want. I'm not saying that means that Floridians shouldn't worry about this, but this bootstraps narrative is ridiculous. Everyone here makes substantially more money than the average Joe.
Agreed in general, but is it reasonable to say to people living in multi-million dollar houses on some of the world's most coveted real estate that they are should assume the risks of it? Or move?
The dutch aren't insured against a dike breaking (Which has its own history).
But the dikes have been collectively maintained through laws and regulation from a local semi-democratic system for 800 years (separate from government). It was a necessity as 1 delinquent could screw up everything.
The point is that the costs (to build the dikes) are fully internalized by the people who live there, rather than being cross-subsidized by people far away.
I’m building my next house right on an active volcano. Thank you for subsidizing my idiocy. You should see the view!
>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.
Insurance Companies do need to make a profit and Local, State and Fed Gov is allowing building in very risky areas. Just look at Florida, that is a very risky area for weather and sea rise.
So in reality the burden is falling on Insurance Companies. High rates will in a way prevent building in those areas.
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
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.
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.
If you’ve actually done the calculations with real numbers share the math. Otherwise stop assuming the conclusion.
There are plenty of very rich people living there who can afford the house burning down every single year. So false.
Afford doesn't mean you can technically throw money out the window. At some point, you are going to give up if the risk is high enough to have >2 events in your lifetime - time is also a cost to factor in, as well as loss of possessions. It's not quite that simple.
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.
> 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.
Youre about 20-30 years late to the game, but arrive in time to see the conclusion does not match your assumption. See california for fire, florida for fstorm damage, and everywhere in the us for federal flood coverage. It doesnt work. CA FAIR has higher rates to account for increasing the coverage pool, but it doesnt look like premiums will cover the current or future loses. Which is the universal story when your policy attracts all the high risk/payout buyers. And FAIR, roughly, is setup to go recoup losses from all the _other_ insurance providers in the state. Even ones not insuring those policy holders _or that type of insurance_. Its just a layer of indirection to subsidize fire risk against all poly holders.
In all of those examples you have the for profit private insurance leaving the market because it's not profitable enough. When you take away excessive profits and allow the governmental pool to compete with for profit insurance, risk is leveled across the pool and consumers pay less. If the big private insurance companies can't be more efficient or have better risk models than the government, well they should stop trying to sell policies.
The people are risk pay less, all of the other people forced to participate in your general insurance pay more.
If I live in the middle of a city in an apartment block should I pay the same rates to insure against wildfire as someone in the middle of a dry forest? Probably not, but govenrment-mandated insurance programs force me to.
Premiums should be based on risk, not flat. I don't know where you are drawing that line of reasoning from. Just because the government is providing coverage doesn't mean it's all the same rate. Every insurance product has a risk model to set prices. I was just advocating that we have a non profit minded entity with deep pockets do it vs private companies motivated by maximizing profit.
Public benefit corps fit this model as do regulated utilities.
Edit: i think were talking past each other until agreeing that risk/cost/rates are being intentionally suppressed by or on behalf of the public. Kind if like this other housing related mortgage thing Ive heard if that may be mispriced/misstructured in favor of many at the expense of all.
I dont get it. Your argument is that if everything was priced accurately and aggregated "fairly" insurance would work. Ok, totally true statement. Very much the case that's not what is happening now for any of the example markets or gov programs.
You appear to believe "profit" is the problem, which is true in that negative profit is known as "loss" which is what has and will be occurring even with the public "last resort" rates. The private insurers are not withdrawing because their "fantastic" 6-15% margin on disaster insurance isnt enough. Using CA as an example they withdrew because 1) the state required they dont use risk based modeling for individual rates and 2) they dont include reinsurance costs as a rate signal. Shockingly their CA insurance pool turned upside down on costs/losses in a decade or two and they bailed.
FAIR is exactly the sort of or youre talking about; non profit government mandated insurance pool, open to all residents, with proportional policy/loss assignment, rates set based on regulated-interpretation-of-risk-exposure + costs, regulated by the CA Dept of Insurance. And yes, their policies are risk adjusted, but theyre not _accurate_. And yes, insurance should accurate according to risk and (payout) costs but basically none of the public last resort issuers can!
See again florida, national flood, etc. In every case 1) risk & cost modeling (accurate pricing) is suppressed on behalf of the public 2) risk prices/costs soon exceed private risk markets 3) private insurers withdraw 4) public "last resort" insurers emerge 5) risks/costs continue to grow, private insurers withdraw, the "last resort" insurer becomes the risk aggregating insurer 6) last resort insurer shockingly cant meet its commitments 7) public funds and/or backdoor insurance taxes socialize losses due to unprices disk.
> 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.
This has baffled me ever since Obamacare was first passed - it seems that each year the insurance companies have an incentive to drive up the cost of healthcare, since that’s how they earn more money in absolute terms. Is it not so?
That is so, to an extent. But it's balanced against employer demands to hold down medical costs because they pay most of the bills. If your HR department can save 5% on employee medical costs by switching from Blue Cross to Cigna next year they'll absolutely do it.
Any idea why Obamacare didn't follow the European model? Other than the freedom argument
People on HN always talk about European health insurance seems like an easier route than to murder people lol
First of all there isn’t one “European model”, every country in Europe has its own system.
To answer the substantive point, it’s extremely difficult to pass substantial laws in the US due to the structure of its political system. The mandatory coalition of the president + 60% of the senate + 50% of the House of Representatives is a much higher bar than any other democracy. So laws aren’t written to be optimal policy, they are written to satisfy this extremely high coalition requirement — Obamacare in particular was very fundamentally weakened from some of the more expansive initial proposals to address the concerns of one or two senators and get them on board.
but people always talk about how insurance is guaranteed in europe something must be working if gunning down a CEO is pro the people wouldn't copying one of the European countries be even more pro the people?
what makes senators hate something that is pro the people? wouldn't that give them better ratings? I come from a dictatorship so sorry if this is a dumb question
There is an unlimited amount of potential financial gain from American politics, both in lobbying and campaign financing. It is also widely true that the candidate with the most money spent in a campaign is heavily favored to win the election, with the exception of the presidency which is more contested. Now consider that in the 2020s the richest people now have more money than God.
The short of it is that you can get anyone you want in office, to do anything you want even if it directly opposes their constituency, as long as you spend enough money on them to get them in office, buy their vote, and keep their PR afloat.
Gilens and Page (2014) found that "average citizens and mass-based interest groups have little or no independent influence" on American government policy: https://www.scienceopen.com/document?vid=e4797592-9d73-4f2b-...
Worth noting that this paper saw pushback for many years after the fact but measurably, its conclusion has been true since its release.
Murdering people is not pro anything.
The answer was already given: it was politically infeasible to pass a single payer variant in the US. And it’s not clear it would have been good even if it had been feasible.
Senators have to spend $$$ to get elected
> How about profit caps?
Transfers wealth from shareholders, patients and taxpayers to management, bankers and intermediaries.
Broadly speaking, caps are stupid—akin to treating liver enzymes directly when they spike versus seeing them as the sign of deeper problems.
I think that's a great metaphor for the situation, when you get a patient running a 105 fever you put them in an ice bath and then consider what underlying problem is ailing them.
You do the first part so they don't die before the long-term treatment kicks in.
Correct. Caps are fine as a short-term measure.
In the long term, they’re putting a patient running a fever on immunosuppressants. The fever will go. But the patient will die.
Sure. Because the response of a failure in governance is more government? What you are proposing is "unfair". You are essentially suggesting that the rest of the country subsidize a subset who wants to live near high-risk areas. Me too want to live in a dense forest and also have my house by the edge of the river.
You could make the argument for this for healthcare, since no one can choose which illness he is born with. But choosing your housing location is a "choice". And you can/should move somewhere else where it is less risky.
> Because the response of a failure in governance is more government?
Are you this incredulous when the response to a failure in "the market" is more "market" ? Or when companies fail, and the response is "more companies", do you question that in the same way?
I'm not taking a position on the meat of your point, but this particular angle strikes me as very strange.
I'm not saying everyone pays the same, I'm saying you take away the for excessive profit nature of insurance. If you live in a tinderbox you are going to have more risk and more costs. Yeah somebody has to model the risk and set a price, but I'm saying it shouldn't be someone who has an incentive to make as much profit as possible.
Your seem to be under the misapprehension the problem is insurers charging usurious prices. The reality is Paul in the forest got used to paying whatever 5kpa to insure against a 100 year fire, not 50kpa to insure against a 10 year fire.
It sounds like a lot, but if the risk is actually that high then the prices will be too. Houses aren't cheap. Insurance is a very competitive market, it's easy to comparison shop. The root problem is the high risk, not "unfair" private profit.
(Numbers picked out of thin air to make a point)
Yes, I'm advocating people pay appropriately for risk. The issue is with high risk, insurers pad profits to compensate for excessive risk or leave the market with no option other than some last resort insurers. Having government step in with regulation around profits over time keeps the rates in check. You can have a Lloyd's of London, but they need to have open audited books. Otherwise you can have a not for profit, ie government entity run the book.
People choose to smoke, overeat, engage in risky activities that can cause injury near and long term (Rock climbing, riding motorcycles, football, MMA). Why should society pay for these choices?
> Why should society pay for these choices?
Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage.
Do a search for "ACA three legged stool":
> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.
> So insurance regulation has to be accompanied by the individual mandate, a requirement that people sign up for insurance, even if they’re currently healthy. And the insurance must meet minimum standards: Buying a cheap policy that barely covers anything is functionally the same as not buying insurance at all.
> But what if people can’t afford insurance? The third leg of the stool is subsidies that limit the cost for those with lower incomes. For those with the lowest incomes, the subsidy is 100 percent, and takes the form of an expansion of Medicaid.
* https://archive.is/https://www.nytimes.com/2017/07/10/opinio...
This 'architecture' was developed by Jonathan Gruber:
* https://cdn.americanprogress.org/wp-content/uploads/issues/2...
* https://en.wikipedia.org/wiki/Jonathan_Gruber_(economist)
It is a form of social safety net.
> Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage.
The alternative that is always there is to repeal EMTALA.
> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.
This misses the problem: [the ACA causes a moral hazard for lower classes likely to use it.](https://pmc.ncbi.nlm.nih.gov/articles/PMC8567089/)
The issue is a policy designed for a highly uniform, high social class, high status state (Massachusetts) was applied to the USA as a whole.
> The alternative that is always there is to repeal EMTALA.
I suspect you think it's not great having homeless people on the street.
Wait till you see what it looks like when they actually start dying in the street because emergency health care is no longer available to them, nor to many of their housed neighbors, family and friends.
I don't see what EMTALA has to deal with homelessness in this context. It largely comes down to uninsured, even post-ACA. If we can't afford the current system, it's not a matter of if, but when, either hospitals or providers leave medicare. To put it in perspective, the AMA reports (https://www.ama-assn.org/practice-management/medicare-medica...) that physician medicare compensation has declined 29% since 2001. At a certain point, it will simply be financially unsustainable. Whataboutism to distract from the fact that medicare alone is 3.7% of gdp and is forecast to grow to 5.1% by 2033 (https://www.cato.org/blog/fast-facts-about-medicare-social-s...) doesn't fix anything.
And FWIW, US Medicare spending alone is shaping up to grow to almost as much as some EU nations on a % of GDP basis (https://ec.europa.eu/eurostat/statistics-explained/index.php...).). Medicare isn't the solution. It's the problem.
> If we can't afford the current system,
What we can and cannot afford is a choice, not some immutable fact of nature.
A cynical, if realist, version of this would be: if we choose to not spend any more ...
But that's still better since it acknowledges that we, as a nation, have agency in this.
And FWIW, US Medicare spending alone is shaping up to grow to almost
as much as some EU nations on a % of GDP basis
https://www.bea.gov/news/2023/gross-domestic-product-fourth-...
https://crsreports.congress.gov/product/pdf/IF/IF10830
The U.S. Bureau of Economic Analysis puts the 2022 GDP at $25.46 trillion ($25,460 billion). Congress puts 2022 spending on private health insurance at $1,290 billion (5%) and Medicare at $944 billion (3.7% of GDP).
Yes, we are tracking to grow to as much as some not all or most. Emphasis on tracking to grow which you should see the source for 2033 forecast.
The fact that one program (Medicare) is growing to be as large as the NHE should be cause for pause.
So your argument is that Medicare spending might potentially approach the same proportion of the GDP as a European country that doesn't spend a lot on its healthcare?
Pretty much. And that's just one program that services a small portion of the population. The issue is we can't make this level of spending work, why should we believe spending more money will be successful?
Because from a moral standpoint most people agree that we shouldn't allow people to go without treatment, regardless of their poor choices. From a national standpoint it also doesn't make sense to allow people to become cripples for lack of money, reducing their economic value.
Injuries also hurt, so it's not like people don't have other disincentives to avoid injury aside from the price. This isn't the case in other areas, where it's purely a monetary penalty and thus removing that penalty results in way more of that thing taking place.
After a society brings in universal healthcare coverage, more rules discouraging smoking, overeating, and engaging in risky activities often follow. Which is either a nice way to get the people of the country caring about each other's health, or an awful government overreach depending on your political bent.
> People choose to smoke
Cigarettes can be taxed with proceeds going to care with those with lung cancer. Dangerous activities can have a separate insurance. For a popular sport, it means most people are engaging in this activity. Houses on the top of a mountain are for a very tiny minority (and a very rich one too). They should finance their lifestyles themselves.
Profit caps presumably create perverse consequences. If the profit I'm allowed to make is proportional to X, then I'm incentivized to maximize X. If X is my costs, then... Maybe that's where these unbelievably high line items on medical bills come from.
Insurance companies have pretty thing profit margins regardless, even in areas where profits are not capped. It's a competitive marketplace!
I'm not sure I believe your factoid. Can you cite? UHC is one of the wealthiest companies in the world.
their september 2024 earnings put them at 6% margin. that’s not very good. for reference apple is 15%, mcdonalds is 32% and costco is about 3%. that being said compared to a competitor, elevance at 2.5%, they’re doing well. a little worse than allstate (car and home insurance), which is about 7%.
To be fair, they play a shell game by steering people towards their subsidiary owned medical providers (avoiding loss ratio limits of 15% to 20% by putting the money into providers, which have no profit cap).[0]
[0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...
The 6.0% margin (for UnitedHealthGroup as a whole) already includes that. UnitedHealthcare (the subsidiary health insurer) had a slightly lower operating margin of 5.6% in Q3. https://www.unitedhealthgroup.com/content/dam/UHG/PDF/invest...
Yea, and after all that they still only eked out a 4% net profit after tax for 2024.
Health insurance does have profit caps, so like the sibling commenter said their margins are small (6%) but also decently under the cap (20%) in the first place.
The insurance subsidiary will have a cap, but provider subsidiaries have no such cap.[0]
[0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...
> How about profit caps?
What period do you put it over for property insurance? Profit caps work for health insurance because claims are typically not correlated. The percentage of your customers with cancer won’t 5x one year and go back to baseline the next. New drugs or treatments (or a drug going off patent) can cause correlated swings, but generally costs to health insurers don’t change a lot year to year.
For property insurance, you need to bring in profits most years to fund the year when there are multiple category V hurricanes or large fires.
The book of business has to be large and the pockets deep. Which describes our current insurance market and the government. The way we handle this now is with reinsurance.
Or maybe C-suite pay/benefits caps, ha ha.
I'm all for this, lol.
Most regulated insurance markets do have profit caps. California certainly does, but there was still a price cap added.
> 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).
why not have a 100 feet buffer clear of vegetation around housing? seems like an easy fix.
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.
How does just offering higher deductibles, hurt the 'poors'? Nobody said do away with lower deductibles. Are you saying they are not sophisticated enough to understand a proper deductible for their situation?
Higher deductibles generally lead to a lower overall money pool raising overall prices. They allowed that here in a far more regulated market and the effect was about 4pct higher prizes across the board. Effectively the people who cannot afford the higher deductibles are subsidizing the ones who can as the end result.
How does offering a deductible ranged well outside what the majority of households in the US can actually pay hurt anyone? If that isn't self-explanatory I'm not sure what to tell you.
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
> Steel frame, flame retardant insulation and cladding, rammed earth, .. these are all options.
Don't even have to go that far.
Wood framing is fine: make your cladding stucco would do a lot (or brick). You can even have siding as cement-base stuff is available:
* https://www.jameshardie.com/blog/siding-types/what-is-fiber-...
You could have metal or clay roofing, but shingles with a Class A rating is available as well:
* https://www.ameriproroofing.com/blog/asphalt-roofing-shingle...
> flame retardant insulation
Which are almost definitely known to the state of California to cause cancer.
Elsewhere fiberglass and mineral wool insulation aren't regarded as carcinogens.
https://pubmed.ncbi.nlm.nih.gov/1947241/
https://mesothelioma.net/fiberglass-connection-to-mesothelio...
mineral wool insulation aren't regarded as carcinogens
https://www.jm.com/content/dam/jm/global/en/MSDS/20000000205...
From your link:
SECTION 11. TOXICOLOGICAL INFORMATION
IARC No component of this product present at levels greater than or equal to 0.1% is identified as probable, possible or confirmed human carcinogen by IARC.
ACGIH No component of this product present at levels greater than or equal to 0.1% is identified as a carcinogen or potential carcinogen by ACGIH.
OSHA No component of this product present at levels greater than or equal to 0.1% is identified as a carcinogen or potential carcinogen by OSHA
Trace amounts can possibly sweat out in specific conditions .. which is why you might choose to install with a vapor barrier.
Trace amounts can possibly sweat out in specific conditions
Those limits are:
recently manufactured products contribute no more than 9 µg/m3 of
formaldehyde into the indoor air
https://downloads.regulations.gov/EPA-HQ-OPPT-2023-0613-0230...
Yes absolutely, and as another poster pointed out, earthquake codes exist. Metal framing is probably a bit easier to adapt to the same earthquake codes that timber framing has.
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.
That's false. Hurricanes are not getting bigger or more frequent due to climate change.
They aren't getting bigger or more frequent at all.
NOAA has stated this multiple times and you can read an article addressing it here:
https://www.climate.gov/news-features/blogs/beyond-data/can-...
It's well known that hurricanes go through multidecadal swings.
Why this keeps getting repeated when it's obviously false is beyond me.
Great article, scientifically written. I wish it was as confident as you are in your conclusion.
> No, we cannot confidently detect a trend today in observed Atlantic hurricane activity due to man-made (greenhouse gas-driven) climate change. Some human influence may be present
> The importance of this distinction between potential causes of AMV for future hurricane projections is clear: if strong man-made aerosol forcing and volcanic forcing were responsible for most of the “quiet period” of Atlantic major hurricane activity from the 1970s through the early 1990s, then a return to this more “quiet” regime in the coming decades may not occur. But if the “quiet period” of the 1970s through early 1990s (as well as the earlier quiet period of the early 20th Century) was caused mainly by internal climate variability, one would expect to return to relatively “quiet” conditions in the coming decades as the climate swings back and forth between more active and inactive Atlantic hurricane periods. This is an important research question that does not yet have a clear answer.
Meanwhile we continue to see stronger storms.
> Another hurricane metric, the fraction of rapidly intensifying Atlantic hurricanes, was reported to have increased since around 1980 (Bhatia et al. 2019), and they found that this change was highly unusual compared with simulated natural variability from a climate model, while being consistent in sign with the expected change from human-caused forcing. Even so, however, their confidence was limited by uncertainty in how well the single climate model used was representing real-world natural variability in the Atlantic region.
We do know for a fact that the ocean temperatures are rising. Also from your article,
> Global surface temperatures and tropical Atlantic sea surface temperatures have increased since 1900 (by around +1.3 ˚C [+2.3 ˚F] and +1.0 ˚C [+1.8 ˚F], respectively), unlike the reconstructed hurricane counts or U.S. landfalling hurricanes. Finally, a number of studies have found that several Atlantic hurricane metrics, including hurricane maximum intensities, hurricane numbers, major hurricane numbers, and Accumulated Cyclone Energy have all increased since around 1980.
But climate science is about studying a complex system, and finding direct causations is hard.
> However, in a 2019 tropical cyclone-climate change assessment, the majority of authors concluded that the recent hurricane activity increases mentioned above did not qualify as a detectable man-made influences (meaning clearly distinguishable from natural variability).
Another study linked recently from climate.gov (near the bottom) https://www.climate.gov/news-features/blogs/beyond-data/2024...
>[R]ecent studies in attribution science show that climate change is causing an increase in the frequency and/or severity of tropical storms, heavy rainfall, and extreme temperatures.
So at the end of the day, it's fine to say there is no smoking gun, but it is absolutely not 'obviously false'. I think your biases are showing.
Ofc they hint towards it, it's climate.gov. But the actual data shown, shows no increase at all.
You won't find a "smoking gun" because it's not happening.
Your biases are in-fact showing that you don't realize you went from claiming it was true to "well we have no smoking gun".
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.
The US has a practically limitless amount of wood. Europe doesn’t. Wood also holds up well to earthquakes and can be treated to hold up to fire. And if there’s a catastrophic failure, it hurts a lot less than concrete does when it falls on your head. It’s a great material that the US is right to use.
> We, the non-USA folks, are looking yearly at either fires or hurricanes destroying these wooden houses there and people keep rebuilding them.
You can build wood framed (2x4, 2x6) buildings that are resistant to fire:
* https://www.youtube.com/watch?v=yZe-TlYxm9g
A stucco, brick, or fibre cement siding, have 2m/6' clear around the base of your house, tempered windows, and either a metal roof or shingles with a Class A fire rating.
Place a piece of wood inside the hot environment of a fire and it will burn down releasing more heat than it absorbs, adding to the fire. It doesn't matter what stuff you add to it.
You can make wood not burn on the kind of environment where it would be the only or main object releasing heat. That is still a completely different category from non-flammable materials.
Earthquakes make this a much more expensive option. To give you some idea, the design seismic acceleration for my house is like 3g. That's more sideways than down. The forces involved are the weight of the structure times this value. Concrete ways a LOT more. It absolutely can be done, but it's not clearly a superior material compared to wood.
The rest of the world has mudslides, floods, earthquakes, volcano eruptions, etc. Or they have no natural disasters, just like so many parts of the US.
> We, the non-USA folks
Isn't that a sad way to look at yourself?
> 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.
> 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.
And those precautions are… putting out the fire before it spreads, right?
No. Forest fires should be allowed to spread to prevent fuel buildup. It’s bad when they cross into developed areas, though, so you want to prevent that.
If anyone ever implements your drone-based surveillance-state wildland fire suppression system, please let me know so I can avoid hiking in the area.
That seems incredibly dangerous. As you said the wind can pick them up and cause an inferno.
If you want to do controlled fires IN ADDITION to the fire suppression system, you can. If fires are the only way to neutralize the fuel, at least control them, and don’t allow any uncontrolled fire to spread and get out of hand. The controlled burns would be planned in advance, done on good days and isolated from spreading too far. Of course those burns would be excluded from the fire suppression system.
But it seems reckless to just “let the fires spread”. You need actual control over fires if you want to have any chance of avoiding disasters.
Imagine you did this in any other area where you're in charge of a system. For example you run a forum and refuse to implement any sort of moderation or spam control. You claim we shouldn't put anything in place to clamp down on it and need to let things run their course naturally, because sometimes risking spam is necessary to get really good updates about stuff by experts. The proper thing to do, then, is to intercept spam from spreading as much as possible but then carve out a whitelist of exceptions. Not to simply not have an anti-spam system at all.
That's not how these fires work. Wind and dry fuels mean they can't be put out by the time they've been identified and someone has verified they're not some dude burning trash. Drone armies can't carry enough water.
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
OK it’s not just an alleyway but an entire half of a city block trash heap with dumpsters make one think that they neglected to build anything nice in that fourth corner. Oh and two streets away are tribes of homeless people. Watch the first 5 seconds of my video.
In fact my video literally shows trash on the street as well in SF, as well as homeless.
Seriously, other cities have city hall. There are no dumpsters around it. We have courthouses and government buildings.
Certainly none around Lincoln Center which has the Metropolitan Opera and NYC Ballet and Philharmonic. It doesn’t smell there. There are beautiful fountains etc.
I took some photos of the homeless in SF juxtaposed in front of the skyline in the background. It is very pervasive there. LA and SF seem to be magnets for homeless.
If I was mayor I’d give them all a $50 phone preloaded with gigs including ones from the city, like sweeping the streets and from businesses such as handing out flyers. Have the app unlock mini storage and showers, and help them have digital ID. This ain’t rocket science. Crowdfund the support for each homeless the way we support kids in Haiti. Give them opportunities. But instead the bureaucracy just kicks them around and denies them opportunities without an address.
Anyway…
There are 8k homeless in SF and 350k homeless in NYC. I was surprised at the huge difference!
Larger buildings like a city hall or Lincoln center will have better waste management than a bodega or small shop. The larger places will have a loading dock and probably a compactor. Source: I worked at a waste tech company
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.
Isn't that overly pessimistic, not optimistic?
Surely if plants are absorbing more CO2 than we thought, that's a good thing for climate change? (More CO2 absorbed by plants -> less CO2 staying in the atmosphere -> less warming. No?)
>(More CO2 absorbed by plants -> less CO2 staying in the atmosphere -> less warming. No?)
The vast vast vast majority of co2 absorbed by plants remains in the carbon cycle. The share that leaves it is in fact ridiculously small.
There's absolutely no reasonable scenario where we wait for plants to deal with the output of the fossil fuels pumped up.
Most emitted CO2 also remains in the carbon cycle.
What matters is accumulation at a particular point in the cycle because CO₂ is added to the atmosphere faster than it is removed. If it is removed faster then it ceases to be a problem.
I'm not sure what you're trying to say here. It seems to me the first and last line don't really add anything and I don't see why the middle sentence is necessarily true.
I think the counting errors were "we expected these sinks to fill up slower. They are already full, and not contribute instead of being a sink".
I don't understand this reasoning. How does the presence of a single recent post on HN say anything about if the errors go in one direction or in both directions?
The errors on direct influences to warming have been overwhelming on the "too optimistic" direction. We are above the most pessimistic predictions from decades ago.
The errors on consequences of the warming... I'm not sure one can even talk about them without citing specific studies, because those things tend to have undefined timeframes and way into the future contexts (like this 4°C one... is this even possible to achieve by burning fossil fuels?)
+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.
There are 2b+ people living in "inadequate housing", don't have sewers, don't have running water right now, we can't even fix the problem now, we're not going to fix it better when 2b more need AC to survive every summer
https://unhabitat.org/news/13-jul-2023/the-world-is-failing-...
It's not just expensive. Steel and concrete are some of the largest drivers of CO2 emissions and toxic waste, in the ballpark of 15%! So really the only sane choice is to avoid building new homes whenever possible and try to keep old houses in use as long as possible.
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.
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.
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.)
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.
Do you own higher end vehicles or possibly an EV? Or you're seeing those sorts of rates with something like a Honda Accord?
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.
I'm asking naively and honestly: is there a solution to brine? Believe it's pumped directly back into ocean at the moment.
Desal plants use static mixers to mix the brine with a bunch of ocean water and pump it back out. The specifics depend on the local ecology and ocean currents but it’s a matter of making the outfall pipes long enough (they’re kilometers long usually).
brine can be used for mineral extraction.
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.
Wildfires can also be avoided by letting forest management people dictate forest management policies instead of environmental activists, and by prioritizing the people that live there over the animals.
Forestry management seems like a suitable state level activity that should have civilian/legislative oversight but also a fair bit of freedom for experts to do their jobs.
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 have a very visceral response to people who say things like "tough choices must be made" when it's notable that they will not be making those tough choices, nor will have those tough choices impact them, and will instead be apparently playing musical homes for the best personal outcome.
Like I'm glad your personal wealth is going to let you skate out of the worst effects of climate change (so you think/for now). That is far from a universal experience and "tough choices need to be made" in this context sounds a hell of a lot like euphemistic language for "a lot of poor people are going to die, at least if they're too poor to afford to rent my spare homes."
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.
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.
???
Technology has been around for hundreds of thousands of years. What are you defining as "technology"? Software as a service chatbots? Because those aren't saving anyone.
And 227000 people died 20 years ago in a tsunami in Indonesia. They had cell phones and the internet. Is that pre-technology? 50 million died in famines in China in the 1950s. They had TV, radio, and computers. Is that pre-technology?
Technology is just tools that humans make to solve a problem.[1] It's not magic. And in the case of the Japanese tsunami, the most basic technology that humans have had for tens of thousands of years saved countless lives: just building a wall, and making it tall enough to block rising water. [2] But wrapping an entire country in walls is kind of unfeasible. And you can't protect the entire world. We never know what kind of disaster will strike next, and technology to protect us only develops after we suffer the consequences at least once.
[1] https://en.wikipedia.org/wiki/Technology#Prehistoric
[2] https://www.japantimes.co.jp/photo-essay-the-seawalls-of-toh...
> Daz1: Conveniently you selected pre-technology examples. How curious.
> forgotoldacc: Technology has been around for hundreds of thousands of years. What are you defining as "technology"?
I think he meant "industrial".
> Technology has been around for hundreds of thousands of years
Vernacular methods of doing things have been around - without science or rapid innovation. Key point in time was invention of printing press combined with lutheran zeal to read and the western alphabet that allowed unprecedented platform for knowledge transfer. After that it's been pure acceleration.
Before literacy was a major thing (which it has not been historically) knowledge transfer and preservation was based on human to human contact. You could not literally just crank the machine to print out out going edges in a knowledge graph.
I'm not meaning just a few literate people. I mean an entire society capable of reading and eager to create and learn new information.
> Technology is just tools that humans make to solve a problem.
According to a dictionary it's "the branch of knowledge dealing with engineering or applied sciences" / "the application of scientific knowledge for practical purposes, especially in industry" and I would argue it's this sort of technology that enables novel, rapid adaptation.
Applied sciences need science before application. Now - knowledge seeking that sure looks likes science even though it was not called that has been around few millenia - Thales of Miletus, Ibn al-Haytham etc etc.
What is novel in our time is application of science to every goddamn problem on an industrial scale. And the understanding that things can improve. This requires a literate society (imo but arguable maybe), eager to adapt, and pragmatic recognition of what works and what does not.
There are areas that are lacking in literacy and capital. While people in those areas sure enough are able as anybody else to individually use technology developed and manufactured elsewhere, the societies in which they live simply lack the means to apply industrial level technological innovations.
With industrial level technology adaptation it's a whole different ballgame.
Many places in US would be uninhabitable without technology and are thus testaments to the idea that MODERN technology allows survival in unprecedented places. For example Colorado. The place was so arid and unhospitable no one could or would want to live there. But then there came railroads, industrial engineering to implement water reservoirs etc etc and visit Denver today and it's very hard for an outsider to realize they are visiting a modern goddamn miracle.
I'm fairly sure if people can live in Colorado they can live anywhere given sufficient capital is applied (capital being the enabler of applied science and technology).
A lot of ancient societies rapidly adapted to problems. In my previously mentioned tsunami example, ancient societies would build their towns above a certain point to be safe from them. Some cultures used to (and some poorer people still do) build houses on stilts near flood areas to stay safe from rising water.
But in modern, literate society, people think "nah it'll be fine bro" and build houses right up on and flat against the coastline. Then entire towns get washed away.
The biggest mistake modern people make is assuming ancient societies were stupid. They didn't have people sitting in offices thinking up solutions to problems. But the reality is those societies learned just as quickly as anyone else did, and a lot of them probably had a much stronger fear of nature and didn't sit around thinking "nah bro we'll totally survive. we have technology". They knew a tiny mistake meant death. Death to modern first worlders seems like a very out of reach thing. We operate on the assumption we'll live long lives and die in a retirement home.
And Colorado isn't by any means inhospitable. There were plenty of tribes in Colorado before literate enlightened megagenius westerners came along to save the day. It has some of the oldest known towns on the North American continent.[1] Westerners may have at first struggled to survive there with their modern technology, but natives lived just fine in Colorado for thousands of years.
Tibet is a far more inhospitable place. So is Saudi Arabia. But those also have thousands of years of history all without a printing press. Arabian culture even managed to spread across the world out from the inhospitable desert and even dominate part of Europe before the printing press existed. Spain and Indonesia became Islamic before enlightened Europeans went out to save the world and make it "habitable".
I agree humans as individuals regadless where they came from or when they lived have always been equally precious in potential, and all traditions are valuable, but it’s simply false narrative to claim modern technology & capital would not make a difference.
My point was it’s false narrative to compare any historical society to a modern industrial one.
Printing press, latin alphabet and market economy were suberb for knowledge transfer. There was no historically comparable system to commodotize and scale literacy.
It’s false narrative to claim european developments were not unique and transformative. That’s just how the history goes. Literacy, capital, binding contract law and science created a heady mix that created a system that now is global standard how societies try to operate.
Large parts of the system came from other parts of the world. The point is not where this happened or by whom, but the point is it happened.
Modern technological societies are able to adapt in unprecedented scale. Regardless of culture or ethnicity.
It would be pretty weird to think this would be a narrative of european supremacy - cultural, racial or otherwise. Europe was an inconsequential periphery and it’s once again an iconsequential periphery.
Japan had literacy rates equal to the west during the age of exploration. [1] And when you go back to historical records, Egypt and Mesopotamia had insane good record keeping and were stabler, longer lasting societies than anything else earth has yet seen. They're also in some notably harsh environments compared to the easy living of Europe.
Latin characters really had nothing to do with it. Western society was built off the lessons learned from those two societies. What separates post-printing press western civilization has been the incredibly rapid expansion (which Mongols also achieved with nothing but horses and bows and arrows). But whether this post-printing press civilization will last as long as Ancient Egypt did (3000 years) is yet to be seen. We've got about 2600 years to go.
I would argue that Egypt apart from temperature was lot less harsh than Europe. Nile offers water all through the year. And the flooding brought fertilizer each year. Also lot less risk of any type of weather causing famine.
In reality that is lot less harsh than Europe before industrial agriculture. Just looking at list of famines shows that Europe was a harsh place to live for stable society.
It's also very hard to compare pharaonic Egypt to a modern society since most people were agricultural labourers. You did have not that many people (lets say 3M which was a lot by ancient standards), and of the elite who actually could use capital and talent were really, really scarce. Literacy rates were maybe 1%-15%?
Think what a modern country would look like with 3M people of which 150K can read. It would not be pretty and Egypt was probably worse. Of course if you can control thousands of people you always have some capabilities which is the reason why we adore their art to this day. But I think one should think "North Korea" what pharaonic egypt likely was like rather than "pinnacle of imaginable civilization". This is not to put down the achievements of the egyptian civilization, but like pointed out, they had lots of time.
Most people anywhere (except the pastoralists ofc) were agricultural labourers before modern farming kicked in.
Exactly.
What makes the capabilities of the current civilization different is a combination of things, some of which are unique this time around.
The major differentiators are 1. Global scale monoculture in knowledge (take engineers from US midwest, Ethiopia, China, Brazil, France, Japan, Finland, Chennai - we all basically can mesh instantly to a product team since tehcnological education is so homogenous). This monoculture was enabled by the printing press and later digital technologies. 2. Insane amount of energy per capita available 3. Amount of capital available including finance
2. and 3. simply were not available before. We can argue all day about merits of education systems of old but you simply did not have this global talent mass on hand. This talent mass is prerequisite so that you can scale capital and technology rapidly on a global scale.
Energy&Capital then feed the machine to give it energy. This machine simply did not exist before. The energy per person in any society was tiny fraction what we can utilize. Similarly for capital.
Japan is excellent example.
a) It demonstrates how long it takes for a society, if it's educated and all around excellent but pre-modern to reach parity with modern societies. I would argue based on facts it's about two generations or 50 years (for Japan) from Perry expedition 1850's to Japan wiping a western industrial nation state fleet to the bottom of the Tsushima straits (1905).
b) It demonstrates this society, when in it's pre-modern configuration lacked things, that it felt necesary to acquire to be able to go head-to-head with societies that had these implemented.
It's this difference between pre-modern,pre-capitalist pre-industrial and modern I'm talking about, why it's false narrative to state "people througout history have been smart and able" as a contradiction why modern societies would be more capable. Because they are. It's not a statement about why some people with different upbringing or genes would be different. That's irrelevant (except up to a point where their upbringing relates to prevalent institutions i.e Acemoglu, "Why nations fail" etc).
I agree we know nothing of how long the current system can last, or will it evolve or devolve. But it's very hard for me to imagine the system going away unless we go full mad max. Because it's not about cultural identity anymore. Who is your king or god. While we live in tumultuous times, Fukuyama was still more or less correct IMO, even though clearly it's not a "end of history" as much as "beginning of new history".
It's about capital, energy, education and markets.
The Green Revolution has so far just postponed famines. We are farming in an unsustainable way. We're running out of fertile topsoil and are depleting fossil aquifers in many regions of the world. Inorganic fertilizers might become scarce in the foreseeable future too.
Technology can't save you from famines when there isn't enough sunlight to grow crops for a season or two. One good supervolcano and civilization might collapse or at least take such a hit as to be utterly transformed. Billions dead, etc.
Literally grow lights and nuclear reactors? (Or plain old gas turbine generators)
Technology is the only thing that can save anyone from that type of situation. Prayer sure wouldn’t help!
You think it's possible to put any decent percentage of our GLOBAL food production in greenhouses (remember with less light global temperatures go down) within ~6 months?
Billions would perish. If the luckier rich countries did not get nuked or invaded by armies or waves of endless starving refugees then they would be able to save a good amount of their population. At best world development goes back ~50-100 years. At worst, modern civilization basically ends from the combination of conflict and famine.
that doesn’t address the context of the response at all.
is technology helping, or hurting in that situation?
near as i can tell, it is the only thing that could help.
we aso have significant food stores and buffers, and if it was the situation you described it would literally be a ‘drop everything and get working’ emergency. we’d likely do better than you expect.
what else could possibly help besides technology?
But yes, a lot of people would die.
You don't have the _slightest_ idea of how much energy and materials you would need to provide sufficient grow lights to feed humanity right?
Sure I do. Do you have anything else you can propose that would help at all?
And if a couple billion people (minimum) would be dead if we didn’t do it ASAP, do you think that energy or material wouldn’t be expended at the drop of a hat?
Hell, look at how much energy we expend just to serve cat videos.
People generally respond to sudden, external, visible risks pretty well.
It’s when risks are hidden, build slowly, or are caused by behaviors they consider ‘unsolvable’ and they’ve learned to adapt to that they suck.
Serving cat videos is about at least three orders of magnitude less energy than required to grow food. How much energy do you think you need to light half a hectare with 1 kWh LED lamps?
Depending on a bunch of factors
[https://www.sciencedirect.com/science/article/abs/pii/S09601....]
[https://spectrum.ieee.org/amp/how-much-energy-does-it-take-t...]
But let’s say we take the upper end of energy consumption multiples between input energy and output energy (kcal), say 120 times. So to feed 1 person 2000 kcal per day, would require 240,000 kcal worth of ‘production’ energy, which at that multiple would add up to 278 kWh per day per person. Signifiant!
Multiply that by the population of the US (345 million), and that is a lot of kWh for sure - 95910000000 kWh. But it looks like national energy usage is measured in ‘quads’. And that is .3 quads per day.
Current US energy production is approximately 100 quads per year, and consumption a bit less than that at around 90 something.
[https://www.eia.gov/energyexplained/us-energy-facts/]
So if we picked the absolute least efficient most energy consuming plants, and grew them in the least efficient type of growing environment, we’d need to drop everything and devote all our energy production to it.
Assuming no rationing, no efficiency improvements (LED lights are quite efficient now, and if we really had this issue we’d of course devote 100% of available production to them!), and no bulk commercial production of simpler foodstuffs (we can make bulk sugars and proteins via bioreactors right now, for instance), it would be terrible but possible. At least for the US.
Countries with more solar production, or colder, would be harder hit of course.
China would be well positioned probably to pivot, and I’d be surprised if they didn’t use it to their advantage. Especially with turning up their nukes and pivoting all their solar plants to making LEDs instead.
India and Bangladesh would be really screwed though.
Everyone would finally think farming was cool again though, so that’s a plus.
One thing worth noting about these agriscience improvements you're touting would be they require a combination of non-renewable inputs and unsustainable amounts of water. There is also the minor issue of unrecoverable topsoil depletion and the steady decline of nutrients in agricultural products tracked over decades. Kicking the can down the road isn't the same as solving the problem.
You selected pre-climate change examples. How curious.
> "we are quite good at adaptation in the face of adversity."
So we can have 1 trillion people, 2 trillion, there's no upper limit?
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.
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.
Another example: Japan has many quakes per year and has a strangely high percentage of the world's active volcanos. People have lived there for a very long time, built to accommodate it (both traditionally, using timber and expecting to rebuild often, or with modern earthquake-hardened architecture), and is now a top five economy by GDP.
And, well, most of the US is just a hanger-on to California's economy.
> In 2023, California's gross domestic product (GDP) was about $3.9 trillion, comprising 14% of national GDP ($27.7 trillion). Texas and New York are the next largest state economies, at 9% and 8%, respectively.[1]
CA is a huge economy but by no means is the US just CA + 49 other states. Might be fairer to say it’s CA+NY+TX+FL but at that point you’re just aggregating the population.
The cost of labor is extremely high in the US compared to Bangladesh, and that along with building standards, minimum lot size, minimum floor space requirements and required low density zoning (lmao) make these two case very different
What does it mean when a whole country has expensive labour? The highly-paid people of said country can afford each others' services. It basically means "low cost of materials" from a human perspective.
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.
So is living on the sea bed. It's irrationally expensive and inconvenient, which is why we don't do it.
Living in areas in constant danger of flooding and/or burning and/or storm wind damage and/or drought seems like quite an eccentrically inconvenient lifestyle flex.
Unless you like disaster movies.
Where are you suggesting we live then? Most all of the US is at "constant" risk for at least one kind of disaster in your list or another.
Far enough inland that the rising sea levels will keep you 50 miles away from the coast for the next century anywhere east of a north-south line that runs through the middle of Kansas. These are places where it rains so you have local water supply and you don’t have a yearly wildfire season and the risk of hurricane destruction is far lower. Also just not in the floodplain of a local river.
This is like half of the country.
I can tell you home insurance is climbing in the Midwest from storms (roofs are apparently expensive to replace/service). I pay more in Nebraska than I did in California (although to be fair, I did not buy earthquake insurance in CA).
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.
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?
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...
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
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 title should be: Are some parts of the United States becoming uninsurable.
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).
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.
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]?"
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.
The rules are that you have to maintain casualty insurance in your property in order to keep the mortgage. If you don’t want to do that, the lender will try to obtain insurance on its own and bill you for it.
The bank is actually the loser here. Property becomes uninsurable, they still hold the collateral, and the borrower can simply walk away on a non-recourse state like California.
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.
> 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.
It's a pretty astounding mix of "being the most expensive insurer that exists for a particular parcel" and "completely unable to fulfill its obligations in the event of any medium- or large-scale disaster." Hence my use of the term bailout.
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"
In Australia, this is handled at the building code level, as well.
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.
But isn't the issue that I may have been living in an area for decades and because the government didn't correctly price/deter externalities, now I can't afford to live somewhere? The companies lobbying for the abilities to pollute and otherwise add risk to the world can afford to pay the higher insurance rates. The folks who live in the areas they put at risk often can't.
Insurance costs rising are a good signal, but they're essentially a way to tax normal people for the faults of governments and major companies. It does reflect the real risk, but it's not like the fact of people living in most of these areas is the reason the area is risky.
>they're essentially a way to tax normal people for the faults of governments and major companies
But it's a great way to deliver the signal that '(Climate) RISK IS INCREASING' directly to the voters. If the government socialises the losses, society won't learn the harsh lessons about our changing world quickly enough.
Maybe, but these subsidies to insurance are the result of voters complaining! The folks they complained to just took the easy way out and instead of annoying powerful entities and forcing them to treat the climate better, they just messed up the insurance market and spread the risk around.
The same people who have the power to fix it always have and they've almost always taken the easy way out. The few times anyone's tried to do real changes on these issues, the other externalities of the changes has usually led to voters rejecting them.
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.
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.
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
> 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.
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 don't blame some people
You should. Just because something is imperfect doesn't make it bad. Should the truck loophole be closed? Yes. Has CAFE improved every other class of vehicle? Yes.
>I don't blame some people for wanting to scrap the whole regulatory system after encountering enough of these.
Regulation can used to save lives and improve outcomes, but it can also be used to suppress competitors or favor a particular business practice and stifle innovation.
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.
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.
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).
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.
I meant that at some point, with ever more costly and numerous disasters, the premium insurance companies would have to charge to be able to properly insure their clients would be too much for said clients to stomach, which would prevent anyone from getting anything insured. This has nothing to do with government interference. At some point the equation simply doesn't work anymore.
It still won't cause that. People will own less expensive things if the all in cost of owning them goes up. This is econ 101. People buy cheaper houses when interest rates go up and vice versa.
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.
> "The government needs to just stay out of it."
0) Elect people who claim they can make the voters' existing lifestyle affordable.
I agree that sometimes nothing or not very much is the best thing for the government to do, but a crisis is a very bad time to say that, because the other side will just claim they will fix things.
After all, deflation is not good, but claiming that you will bring down grocery prices does seem effective.
Sure - "politics is a tough game" is absolutely true.
People don't build wood houses in an area that gets wild fires
Probably they will, at one point maybe that banks wills stop financing it.
But only when you can't get mortgages, people will begin to stop, and even then some will continue.
It'll take a long time for these changes to trickle out. Especially, when real estate prices in LA are so high.
It might be faster to fix this with zoning. Or if the area is so desirable, find a way to engineer your way out of it.
We don't want fast fixes. Things change, building materials could change, fire fighting methods could improve etc. If we can send the right signal via the right price for the risk, people can react accordingly to either reduce or avoid the problem.
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.
> 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.
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.
> 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.)
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.
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.
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"?
Countries like Japan use the same construction techniques as the western US. Few countries have earthquakes as strong as the Pacific Rim, where M8-9+ are regular occurrences. Properly designed wood-framed houses will survive that.
I’ve never seen a house in Europe that was engineered to the M8.5 earthquake standard that is mandatory where I live in the US. They used to construct houses like in Europe but they kept getting destroyed in earthquakes and were made illegal for safety reasons.
They do not have their houses standing. Look at the recent earthquake in Turkey and Syria. 60k dead and 150 billion in damage.
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!"
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.
> 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'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 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.
There are different stategies for risk mitigation and delegation is only one of them.
Risks are only uninsurable if the government puts a ceiling on the premiums.
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...
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.
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.
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.
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).
> They bank it as any insurance company should do. Invest it cautiously.
I hope they aren't investing that capital. AFAIK, insurance capital needs to be liquid, for it to be ready for a payout.
You still didn't address my point is that $25m/yr is a drop in the ocean. "investing $25m properly" will have zero impact on the business.
It will have atleast be > than zero, and doing it every year instead of giving it away to some overpriced CEO will it will accumulate.
I don't think you quite get how little money it is for these types of operations, 25m is essentially missing 2-3 zeros before it becomes anywhere near usable and even worth it to bother.
State Farm’s revenue was $104.2 billion for 2023. His payment was 0.02% of the revenue. That’s basically a rounding error.
Oh look, climate change does economic damage, but not at the source.
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.
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.
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-...
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.
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.
I live right next to a flood plain and the government doesn’t allow building in 100 year flood plains. This means you can’t get a mortgage for it, and the land is also very cheap - which can be used for grazing animals, growing crops, hunting preserves, or perhaps camping. The land is dry much of the year.
I have observed new owners do things like build open sided barns (which legally aren’t a building). Other owners live in camper trailers on the property. One just finished building an (illegal, obviously didn’t get a building permit) property up on stilts (which will get washed away if any serious flooding happens).
On the plus side, this is all not insurance and not mortgageable, and also won’t survive being sold to someone else, as no title insurance would cover these structures and a mortgage lender would require they be torn down first.
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.
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.
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.
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.
USA != World.
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
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..
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.
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.
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.
> 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.
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.
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.
Does it make any sense to talk about the foundations and the upper structures as being separately insurable ? Can foundations be reused ?
Maybe? I think its highly dependent on the age of the home and the willingness to reuse the outer plan to rebuild the home.
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?
Drywall is two sheets of paper/cardboard cladding (increasingly) low density gypsum.
Soundproofing material is also often made of cardboard (though we do have alternatives for that, unlike drywall).
Right, so the house is not constructed out of cardboard. Soundproofing in my part of the US is often rockwool and not cardboard.
Well it contains cardboard and wood, so it's made of cardboard and wood, among other non-flammables. If I say the house I live in is made of stone, brick, cement and rocks, obviously you know it has windows and insulation, and whatnot. It's still made of stone.
Yes of course you are right, we describe homes based on the component that makes up 1% of total volume. Get out of here with your silly statement. Drywall may have a layer of paper/cardboard but that does not make it a cardboard home. Modern exteriors often use cement board, with a plastic vapor barrier. We don't say the home is made out of plastic and wood. Saying so is just to create a reaction.
This is an existential problem for the insurance industry and they should fight the oil industry as such.
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.
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. :)
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.
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 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.
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.
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.
Apparently climate change causes reductions in fire department funding, amirite?
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
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.
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.
Porch pirates are a huge problem in America and shop lifting has gotten so bad that many products are locked behind glass doors...
It's wild how people here have blinders and think that these things only apply to "lesser" countries.
“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:
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.
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.
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.
In some parts of California, fires recur with some regularity. In Oakland, for example, fires of various size and ignition occurred in 1923, 1931, 1933, 1937, 1946, 1955, 1960, 1961, 1968, 1970, 1980, 1990, 1991, 1995, 2002, and 2008. Orange County, Riverside County, San Bernardino County, and Los Angeles County are other examples. Orange and San Bernardino counties share a border that runs north to south through the Chino Hills State Park, with the park's landscape ranging from large green coastal sage scrub, grassland, and woodland, to areas of brown sparsely dense vegetation made drier by droughts or hot summers. The valley's grass and barren land can become easily susceptible to dry spells and drought, therefore making it a prime spot for brush fires and conflagrations, many of which have occurred since 1914. Hills and canyons have seen brush or wildfires in 1914, the 1920s, 1930s, 1940s, 1950s, 1960s, 1970s, 1980s, 1990s, 2000s, and into today.
Stop trying to muddy the waters, we already agree that wildfires do happen. Nobody disputes that. The frequency and intensity of what we are seeing in recent years is what is not normal. That is due to climate change because of the increased frequency and duration of droughts as well as increased winds.
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.
[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.
That is a red herring. The frequency and intensity of the wildfires has increased. Stop repeating fossil fuel talking points meant to distract from climate change.
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.
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.
There is an issue with price caps in some regions. Some of those have been addressed.
I think this is a subset of larger shift in the economics of insurance. While coverage focuses most on the climate change aspect, the majority of the change is driven by building costs. If you cant rebuild economically, then you cant insure economically.
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.
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.
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.
The problem with "people should aim lower" type arguments is eventually everyone is living in a tent.
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.
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.