from Hacker News

Insurers Are Deserting Homeowners as Climate Shocks Worsen

by Townley on 12/18/24, 12:58 PM with 85 comments

by idbehold on 12/18/24, 1:57 PM
The climate is changing and is affecting regions we knew would be impacted by climate change 30+ years ago. The insurance companies cannot make a profit (and thus would not choose to operate) in these areas now that they're being impacted by climate change. On one hand this seems like the market working exactly as it should be. People should've moved out of these regions in the last 30 years given the information about climate change, but they didn't.
On the other hand many of the people living in these regions don't really have the means to move away and they're the ones disproportionately affected by all of this.
by jmyeet on 12/18/24, 2:17 PM
This isn't because of climate change. It's because of bad laws combined with the housing chickens coming home to roost.
On the legislation front, a series of court cases and legislation combined with weak oversight meant that something like 70% of the nation's roof insurance claims were in Florida. There was clear fraud in many cases. Because of this legislation was introduced that made it difficult for any homeowner to file a legitimate claim. Combine this with under-capitalization by insurers and weak oversight and it's just a mess.
But the big one is housing. It's too expensive. And this is another inevitable consequence. It used to be that housing depreciated. That no longer seems to be the case. The replacement value is only going up. This is the foreseeable outcome of years of government policy designed to increase home values.
Ultimately we need to stop treating housing as an investment, as your retirement nest egg. All this does is steal from the next generation. That's it. Withholding shelter (ie housing) either by limiting supply through regulation and legislation or simply by pricing people out is state violence.
Housing prices need to come down. Hoarding housing needs to be massively disincentivized. We need to stop giving massive tax breaks to homeowners. None of this is popular but without major reform we're headed down a bad road.
Canada is heading towards crisis at the moment and many of its problems can be tied directly back to soaring house prices.
The consequences of high house prices are everywhere too. More expensive commercial real estate means businesses need to recoup that cost through higher prices.
by tlogan on 12/18/24, 2:34 PM
The issue here has less to do with climate change itself and more to do with a combination of regulatory and economic factors. While left-leaning outlets might point to climate change as the primary cause, the reality is more nuanced—similar issues are visible in other sectors, such as health insurance. Here are a few key points to consider:
- Insurance Company Consolidation: As the industry consolidates, large insurers gain the ability to strategically drop unprofitable market segments. This allows them to improve profitability, but it often leaves consumers in those markets with fewer or no options.
- Regulations: Some states, like California, have introduced stringent requirements that compel insurers to continue providing coverage, even in high-risk areas. In response, many insurers have opted to exit these markets entirely. Consolidation has made this easier for them to implement at scale.
- Lack of Investment in Disaster Prevention: Across both Democrat- and Republican-led states, we’ve seen a decline in state and federal spending on preventive measures for natural disasters. This shortfall exacerbates the risks insurers face, further disincentivizing them from operating in high-risk areas.
by ksynwa on 12/18/24, 2:14 PM
The cool thing is that private insurers invest heavily in fossil fuel.
https://consumerwatchdog.org/insurance/top-10-us-insurance-c...
by iandanforth on 12/18/24, 2:25 PM
As it's only tangentially mentioned in the article people should know that in many (most?) places insurers can't raise prices commensurate with risk making "nonrenewal" their only option.
These regulations have reasonable origins because as a mandated product it's pretty tempting to price gouge, but there's no exception for circumstances where the price really should be 3x the historical cost.
by prmoustache on 12/18/24, 1:47 PM
So if property price drops completely because insurance do not want to insure, it should make buying houses in cash and avoid mortgage easier right? House becomes a cheap commodity, everybody can then buy a house again, insurers can insure them again because they are cheap. The market correct itself.
Problem solved?
by georgeburdell on 12/18/24, 2:12 PM
One of my relatives has a single level house directly on a coastal waterway in Florida. Never had any problems since it was built in the 60s, then in 2 of the last 8 years the inside has gotten inundated with storm surge from a major hurricane, requiring a complete interior gutting. Their neighbors houses both got destroyed and now one is on stilts and the other is on a six foot mound.
He keeps repairing because he is a general contractor and the house has history to him.
by jmclnx on 12/18/24, 2:09 PM
>Communities that are deemed too dangerous to insure face the risk of falling property values, which means less tax revenue
Now that is the funnest quote I have seen in 2024. I would love to know what government will lower your property tax if your house value falls ?
I have never seen that happen ever nor do I know anyone who has seen that happen over the past 40 years.
by ttyprintk on 12/18/24, 1:54 PM
https://archive.ph/KZXmI
by kittikitti on 12/18/24, 2:07 PM
The climate firms are also faking data to protect their clients home values in places like Florida. The models are so wrong it's ridiculous. The amount of fraud going on from home insurance is astronomical.
by robocat on 12/19/24, 8:09 AM
I have a flood-prone coastal property (value a bit above median price for my city).
Anyone have ideas on how to invest in other securities/properties to self-insure?
by mensetmanusman on 12/18/24, 2:06 PM
Home prices are too high to insure. This is for many many reasons.
Homes should be an expense, not an asset.
by myflash13 on 12/18/24, 2:19 PM
Insurance is such a scam. Pay me money to cover your loss, except when I decide not to.
by nojvek on 12/18/24, 10:04 PM
Meanwhile Desantis in Florida is spending $15M of taxpayer money to ensure books don’t say gay.
That 100 or so trans folks in prison can’t access the bathroom of their choice or get healthcare they need.
Millions spent on supposed woke war to show the Dems they are “anti-woke”.
Senator Rick Scott who was caught with pants down embezzling billions in insurance fraud was voted again.
Florida did this to themselves.
by A_D_E_P_T on 12/18/24, 1:42 PM
I hate the insurance industry so much, bros.
What I hate, most of all, is that it's so often mandated -- and, yet, at the same time, so complex and annoying to attain. Half the time I need to buy some BS insurance for my business, I can't even purchase it online, I need to fill out a 20-part form and then "Speak with an Agent," who will resist giving me all of my options and make purchasing a personal ordeal.
I had considered, in a half-serious way, setting up an "insurance" company (probably incorporated in Sealand) that sells "basic packages" for very low prices -- and when you "speak with an agent," explicitly tells its customers that it will never pay out any claims. It would be nothing more than a fig-leaf, so that you can tell third parties, "yeah, I have insurance, don't bother me about it."
It would probably be illegal, which is sad. I just don't want to be annoyed and don't like being forced to deal with grifters.
by freen on 12/18/24, 2:02 PM
Ahh, yes, the insurance industry, clearly in the thrall of the woke left.
by InDubioProRubio on 12/18/24, 2:04 PM
If you draw all those events, the insurrance withdrawl, the perma-wars, the coups and djihadist groups on a globe, do they form a equatorial ring and can you measure the expansion rate of the red zone?
by a3w on 12/18/24, 2:09 PM
To save the climate, it is best to live on 20 to 30 square meters per person. So I always like it when people do not build new houses. Currently, the living space per person is still expanding. Seems to be running into a wall or resources or deficit of clean energy.