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0 pointsDoreenMichele1y ago0 comments

So, without taking a position on whether fires are getting worse, how would that matter for the insurance markets?

I'm not arguing with you nor rebutting your claim. I haven't studied the situation in California and have no opinion about what is going on there.

But I did work in insurance for a few years and insurance began as a form of betting or gambling. If the possibility of X happening is too high, it's no longer a gamble.

So as the odds of being required to payout approaches 100 percent, they stop covering it because that's not what they do.

This is why flood insurance in the US is provided by the federal government, not private insurers: Because most land with residential development floods. It's not a question of if but when, how often and how badly.

Hurricane Andrew also significantly impacted the homeowners insurance industry. I don't recall the details at the moment, but this is not without precedent.

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infecto1y ago

I don't think your example is completely logical and is pretty biased sounding opinion from "someone who did work in insurance".

"Because most land with residential development floods" - no i don't think its exactly that. Most land with residential development floods is not true. Now what is true is that most land in a flood zone does indeed have a high chance of flooding. Flood zones are a fairly known and accurate data set that anyone can look at. Heck most of the online realtor sites will show you a flood map with the property. This is the same problem for individuals that live in CA in known fire zones. These type of properties are impossible to underwrite because everyone in pool is high risk. You either need to build a home that is fireproof or accept the risk and potential for total loss. The fed's flood insurance and the state levels fire program are just allowing people to continue to live in unsustainable areas or with properties that have not taken the precautions to prevent loss.

rufus_foreman1y ago

>> Because most land with residential development floods

Every year?

Not every year. It's a math problem. Insurance will cover it if they are free to set the premiums.

DoreenMicheleOP1y ago

It tends to be something the market won't bear though. If people can't afford it, pricing it as high as you want tends to cause the market to collapse anyway, just from a different mechanism.

Some things simply don't work well when handled as a business model.

Fire departments that only show up for people paying their fire dues don't work at all. In practice, places that require you to pay for fire department help have the fire department show up anyway and they watch your house burn down while standing around to be on hand just in case it threatens to spread beyond the uncovered property.

Places where there is no police department and rich people all hire private security are also pretty dysfunctional socially.

Some things get provided as a public good by sane societies because other formats for addressing it simply don't work.

infecto1y ago

Some things simply don't work as a government model either. The logic in this entire thread is flawed. Just because someone decided to buy a home in a known flood zone or in a known high-risk fire zone, does not mean other individuals should have to compensate them for taking on that risk. Lets not dilute this with public services such a police or fire. This is about insuring homes that individuals bought, often/majority of the time with known data that it is at some risk. We cannot just eliminate risk for risk-takers.

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0 pointsDoreenMichele1y ago0 comments

So, without taking a position on whether fires are getting worse, how would that matter for the insurance markets?

I'm not arguing with you nor rebutting your claim. I haven't studied the situation in California and have no opinion about what is going on there.

But I did work in insurance for a few years and insurance began as a form of betting or gambling. If the possibility of X happening is too high, it's no longer a gamble.

So as the odds of being required to payout approaches 100 percent, they stop covering it because that's not what they do.

Hurricane Andrew also significantly impacted the homeowners insurance industry. I don't recall the details at the moment, but this is not without precedent.

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infecto1y ago

I don't think your example is completely logical and is pretty biased sounding opinion from "someone who did work in insurance".

rufus_foreman1y ago

>> Because most land with residential development floods

Every year?

Not every year. It's a math problem. Insurance will cover it if they are free to set the premiums.

DoreenMicheleOP1y ago

It tends to be something the market won't bear though. If people can't afford it, pricing it as high as you want tends to cause the market to collapse anyway, just from a different mechanism.

Some things simply don't work well when handled as a business model.

Places where there is no police department and rich people all hire private security are also pretty dysfunctional socially.

Some things get provided as a public good by sane societies because other formats for addressing it simply don't work.

infecto1y ago

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