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June 09, 2007

Comments

It is a problem. We (condo association) go through it once a year. Fewer and fewer options. Right now we have to carry an enormous deductible (which would be passed on to owners as an assessment if we ever had to use the policy) to get anything at all.

Note that in complaining about a huge increase recently we were told outright that premiums were going up because their profits were down - not that they had suffered a loss, but that shareholder profits were down.

The unnamed hurricane of 33 reshaped the coastline here and created the inlet that still exists today. A similar hurricane today would be an unmitigated disaster, just in terms of infrastructure damage. But every area of the country has its own flavor of risk: tornadoes, earthquakes, floods, wildfires, etc. Is Federal Flood Insurance any better? Insurers won’t write flood policies in many areas of the country and the federal government steps in and provides it. How is that different?

(BTW - Not sure what your title is - typo?)

The problem is subtler. When these houses were built, it made sense to build them. But now, hurricanes are more common, because of global warming. These houses have not been destroyed by hurricanes yet, but their market value has already been decimated by the increasing frequency of hurricanes and the probability that these houses will be destroyed soon. Those market value losses are being masked by the insurers of last resort, who are essentially propping up the value of the houses to their original levels.

So basically, what this debate is about is: do we compensate these homeowners for the lost value in their houses? Do we take into account the fact that we, as a society, directly caused that value loss? Or, do we ask them to eat the cost of our unwillingness to take action on climate change?

What's interesting here is that this is a rare case where the rich and well-to-do (ie, people who can afford beachfront property) end up eating the cost of conservative governance. Therefore, I'm willing to bet that insurance will continue to be subsidized.

"(BTW - Not sure what your title is - typo?)"

Lol-speak speak, OCSteve. (Lolcats, lolpresidents, etc.)

But now, hurricanes are more common, because of global warming.

I think people should be careful making blanket claims like this; it's clear that the Earth is warming, and it's pretty clear what the cause is. But whether, or how much, that warming will drive increases in storm frequency or intensity is still very much unknown.
We could speculate that warmer water=stronger hurricanes, but since the systems involved are actually much more complicated than that, it's entirely possible that some other dampening effect would swamp this...

This is important both for scientific accuracy & bc gcc skeptics use this sort of certainty-in-the-face-of-uncertainty to discredit the things that we are actually more sure about.

See realclimate.com here and here, for more details (and follow their links for even even more details).

Sorry, that was out of character. What I meant was:

hilzoy, you and katherine post all the time about Atlantic depressions, but never about Pacific depressions. Of course, these Atlantic storms are the ones that target America.
What I want to know is, why are you giving all these free press to storms that want to hurt America? Why are you on the other side? Why do you hate adorable kittens?

"The problem is subtler. When these houses were built, it made sense to build them. But now, hurricanes are more common, because of global warming. "

Let's stop this meme before it starts. This is false. The 1970s and 1980s were a temporary lull in hurricane activity. See for example Figure 2 here. It never made sense to build right-on-the-coast communities in many areas of the South-East United States without being ok with a hurricane every 10 years or so. (More often than that in some areas in Florida). Now it is POSSIBLE that global warming will make this even worse. But to compare devastating hurricanes to the recent historical minimum isn't good statistics or science.

"Note that in complaining about a huge increase recently we were told outright that premiums were going up because their profits were down - not that they had suffered a loss, but that shareholder profits were down."

This is a confusion about how insurance works. I think you mean that 'earnings' or 'profit from investments' were down. This is a legitimate reason to raise insurance rates. Insurance companies have to keep enough in investments to cover a certain percentage of their paid losses. If their losses go up or down over a long period of time, that will be reflected in their rates. Likewise if their investments go up or down in the long term, it will be reflected in their rates because they are required to have enough in investments or they can't guarantee coverage of losses (which is the whole point of bothering with an insurance company.)

"In the health insurance market, which I know more about, there are people to whom insurers won't sell insurance at all, regulation or no regulation."

This is also a confusion. The people to whom insurers won't sell insurance at all are people who already have a pre-existing condition with projected costs more than insurance. If you already have an expensive problem, you aren't insuring against it.

Sorry, that was out of character. What I meant was:

hilzoy, you and katherine post all the time about Atlantic depressions, but never about Pacific depressions. Of course, these Atlantic storms are the ones that target America.
What I want to know is, why are you giving all these free press to storms that want to hurt America? Why are you on the other side? Why do you hate adorable kittens?

Coastal insurance is a problem, but it is also different in every state, depending on the state regulations. States each have differing ways of regulating, from Florida's decision to become the catastrophe reinsurer for all homeowners without paying for it, to regulations about where you can write and what prices you can charge. Even the most lucrative markets can drive insurers out if the regulation is bad enough.

Florida is betting that it will not have a big storm this year or next year because the new program it set up is completely underfunded. If it does, every homeowner and taxpayer in the state will pay for it. If it doesn't, the politicians will be congratulating themselves on the good job they did of saving money. Maybe they could really save voters money and provide insurance coverage for all homes and businesses at no charge.

Insurers have had a great 3-year run with record profits. Those profits have come from improved underwriting results, but when they are pricing, they look at varying markets. Even a very good year for a company as a whole can be bad news for a particular segment that they choose to change pricing on. Historically, premiums tend to rise until new competition comes in, starts a price war, make everyone lose money, get some to leave the market and then start raising prices again.

I think part of the issue for insurers is the lack of diversification of the risk of insuring a lot of coastal property. An increase in expected (in the sense of average) payouts can be handle by increasing rates, but the problem is that the company can easily face catastrophic losses.

If you insure houses against fire, for example, one house burning down does not much change the probability that other houses will burn. But when one house is hit by a hurricane it's certain that many near it will also be hit. So if you insure a lot of houses on the Gulf Coast you are in effect writing a single massive policy that may exceed the level of risk it is sensible to take on. It is also likely that the level of reserves the company must hold to be able to pay claims goes up disproportionately.

I don't have a good idea as to what the best policy is here. While I don't think government in general ought to be subsidizing building in risky areas, it's not clear that the private insurance industry can deal with the problems. I would be more comfortable with government insurance programs if they were actuarially sound, which I think the flood insurance program is not. I also would like to see not just a hurricane/flood policy, but a general "natural disaster" policy that covers earthquakes and the like also.

As hilzoy says, we need somehow to decide what we are going to about these events. Scurrying around like crazy when something happens, and producing ad hoc programs dictated by urgency and politics makes no sense.

This is also a confusion. The people to whom insurers won't sell insurance at all are people who already have a pre-existing condition with projected costs more than insurance. If you already have an expensive problem, you aren't insuring against it.

Not necessarily. A few large insurance companies can act like a quasi-monopoly (ie oligarchical competition), using a common set of criteria for raising premiums even if those criteria don't match up well with cost prediction.

For example, when I first got my life insurance policy my cholesterol was 190. I had the policy increased a few years ago, and my cholesterol was 210 (statistically not a big deal)- but my premiums doubled.
Turns out, all of the insurers I found used 200 as their dividing line between 'low risk' and 'moderate risk'. Because it's a nice, round number, not because of any innate medical significance.
In a classic free market, a company might offer a group in-between those groups, or have a slightly different scale, and thus gain an advantage. But with big players, it can make more sense to co-ordinate.

Another example- I know someone who had 2 melanomas over 5 years ago. She is not at a significant risk of future cancers (other than melanomas), but she can't get coverage for any kind of cancer without a huge jump in fees. The medical facts are relevant in these cases as interpreted by the insurance industry, not as they actually apply to future medical outcomes.

Seb: insurers don't just not write policies because of preexisting conditions, they refuse to write them to people they think might turn out to be expensive for some other reason. I'm trying to find the cite, but: during the late 80s and early 90s, members of various occupations thought to have a greater number of gay people, and thus a greater likelihood of having someone who would get AIDS, were redlined. Examples included "dancers, florists, and hairstylists." (cite, p. 129.)

Insurers aren't too concerned about taking on too much risk on the coasts, as long as they can write the insurance for a price that allows them to cede the insurance to reinsurers who will be assuming a mixture of coverage. The problem comes when government offers a product for a price that is below an actuarially valid price, as the Feds have done with flood insurance and Florida is doing with storm coverage.

We have a few problems with flood insurance right now. First, it is underpriced, so people get false market signals about where to build. Second, many people are willing to bet that it is economically wise to refuse to buy flood insurance because they expect a disaster bailout from the Feds anyway. Third, the Feds aren't very consistent in handling new construction or reconstruction in flood plains. It looks as if Florida's new program will be emulating two of these mistakes and the Feds will continue to bail out cheapskates.

I mean: the point is that insurers base their decisions on perceived risk. In theory, if risks were perfectly calculable, it might make sense to say that everyone would be able to get insurance, it's just that some people's would be very, very expensive. In practice, the risk of insuring someone who turns out to be one of the small number of people with very, very high costs is serious enough to deter insurers from insuring people who they think are a bit more likely than average to turn out to be one of those people.

I once did a post on this --ah, here it is! -- citing a list (from the LA Times) of conditions used to rule people out for insurance:

"AIDS, allergies, arthritis, asthma, attention deficit disorder, autism, bed-wetting, breast implants, cancer, cerebral palsy, chronic bronchitis, chronic fatigue syndrome, chronic sinusitis, cirrhosis, cystitis, diabetes, ear infections, epilepsy, gender reassignment, heart disease and hemochromatosis (a common genetic disorder that causes the body to absorb too much iron) (...) hepatitis, herpes, high blood pressure, impotence, infertility, irritable bowel syndrome, joint sprain, kidney infections, lupus, mild depression, muscular dystrophy, migraines, miscarriage, pregnancy, "expectant fatherhood," planned adoption, psoriasis, recurrent tonsillitis, renal failure, ringworm, severe mental disorders, sleep apnea, stroke, ulcers and varicose veins."

Joint sprain? psoriasis? I ask you.

Fun fact: one of the reasons why Medicare was passed was because a significant chunk of the elderly population of the US had become unable to get insurance at any cost. Which, of course, makes perfect sense.

(N)FL,

You may be right about reinsurance, but I'd like to see some harder information. It does seem to me that the large variance of the payouts might play a role here, over and above their size. It may be that reinsurance companies are big enough to do it, but it won't be free in any case.

I agree with much of your second paragraph. Note that in the case of Katrina, the (incredibly mismanaged) aid programs take insurance into account in making grants, bearing out your second point.

I tend to agree with Bernard on the diversification issue. The value of property within potentially affected areas has grown far faster than the value of US real estate as a whole, as areas along the shore have become massively built-up in the last few decades. As a result, if the private insurers and reinsurers maintained the same portion of the insurance in these areas, they would be exposing themselves to more risk in such policies.

I also agree that a solution is less than obvious, other than more intelligently designing the public insurance programs to create less distortion in the markets.

On the other hand, I can testify (by personal experience) to the mispricing of federal flood insurance. As a condition of my FEMA loan following our flood in 2004, we need to maintain flood insurance, even though we are not within the 100 year floodplain. I don't think a 500 year floodplain map exists where we are, but I would be less than surprised to see us on it, as a very small stream runs in a culvert under our neighborhood, and we are on the low ground. However, the annual premium is roughly 1/300th of the value of the insurance, which seems low given the above.

Gary: Thanks for the link, I still feel out of touch ;)

Josh : But now, hurricanes are more common, because of global warming

What Sebastian and Carleton said. Carleton – I am for once in 100% agreement with you.

Anyone – I’d still like to hear what is different with flood insurance…

OCSteve: I don't think flood insurance is different, so I can't help you there ;(

OCSteve,

Essentially, flood insurance has become a federal program. It isn't really insurance in that it isn't priced to meet actuarially justified prices, nor does it appear to price risk as well as it needs to, but it doesn't need to because Congress is intentionally subsidizing the risk of being on a flood plain (though I doubt that they would say it that directly). Because of that, pricing of flood insurance is a purely political decision about how much the subsidy should be and how it applies.

Hilzoy: Really, at least one time I wish you would be totally unreasonable so I could disagree with you. It scares me that I can’t have any substantial disagreement with you. It just ain’t right…

;)

Well, I think Seb was wrong about health insurance above -- there are people who do not have preexisting conditions, but who cannot get health insurance. (See above, reference to florists.) And it makes perfect sense for insurance companies to behave this way: if you were considering assuming liability for someone's health care costs, you'd probably prefer that they not be HIV+. If excluding florists will do that for you, you might well end up excluding florists.

More commonly, though, people get excluded for preexisting conditions that are not themselves uninsurable at all, but that might be thought to have some correlation with a risk factor. (I don't know why joint sprains is on the list I gave above, but it might be because it might be thought to indicate the sort of active, rough-and-tumble lifestyle that leads to more than the usual number of injuries. People who rock-climb and parasail and so on.)

In any case, though, that's not germane to the question of insuring houses, since houses are not nearly as unpredictable.

Also, for OCSteve's benefit, I hereby authorize any of my exes who might be reading this (and there are several who check in from time to time) to tell him that I can be unreasonable ;)

Earlier, I asserted that "hurricanes are more common, because of global warming," and that this climate change had reduced the value of these homes. Sebastian cited a study arguing that no, hurricane activity wasn't rising above historical norms.

In fact, that's not quite true. If you look ahead to figure 3, you can see a spike that exceeds anything since 1900.

However, there's a more telling point. The study also shows that in the 1980's, there was a spike in US hurricane activity that exceeds what we're seeing now. (We can tell by comparing the black and blue lines in figure 2 that the lull you refer to occurred in other countries, not in the US). So anyhow, during this spike, insurers were still insuring.

Why would an insurance balk at insuring hurricanes now, but not in the late eighties, even though hurricane activity was (albeit locally) higher then?

One plausible explanation is that they perceive the risk to be higher than they did in the 1980's. Note that there is no reason to assume that their risk assessments are based solely on extrapolating from historical data. In fact, we can be pretty sure that insurance companies use sophisticated risk models. Perhaps something in those models is leading them to believe that even though the numbers have only slightly exceeded historical maximums, that the worst is yet to come.

Note that it isn't necessary for insurance companies to be absolutely certain that there is going to be an explosion of hurricane activity for them to balk. It only has to seem sufficiently likely for them to decide to just not take the chance.

I’d still like to hear what is different with flood insurance…

Different than ???

Joint sprain? psoriasis? I ask you.

Psoriasis can actually be pretty expensive to treat. The medication I use (which isn't in any insurance company's formulary) would cost upwards of $200/month if I paid for it out-of-pocket. Plus, one of the most common forms of treatment requires going to a doctor's office two or three times a week, with the attendant costs. My assumption at this point is that if I ever lose my health insurance, I'm screwed.

The new biologic psoriasis medicines are terribly expensive---I have a friend who at one point faced out of pocket costs of $1500 a month---and are not likely to get cheaper any time soon. My psoriatic friend found getting health insurance coverage for this "pre-existing" condition almost impossible as a result. (The good news is they work---she has tried two different biologics, and both resulted in total remission. Of course, you have to take it every month forever.)

The hurricane time series Sebastian links to is very interesting, but I can't see why one would argue from the cited figures that the abnormally high levels of the mid-twentieth century were the norm. Then again, the pre-1946 data are acknowledged to be incomplete, so who knows what the long-run average or behavior of this series it. I don't see how these data rule out the possibility of a global warming induced rise in storms, especially strong ones.

Psoriasis is nasty. I had a bout of it on my stomach in high school that didn't respond to much of anything, it just went away on its own one day (after about a year of having it around). I still get it on my scalp and sometimes on elbows and eyebrows.

For any of you with it, I don't scar easily--at all. I should have a huge scar on my leg from major surgery but I can only find it because I know right where it is. I've looked in the literature and haven't found a psoriasis-lack-of-scarring link but it is intuitively appealing since psoriasis is an auto-immune overreaction which over produces skin cells. Any of the other psoriasis sufferers have a mysterious lack of scarring?

What this isn't the psoriasis open thread?

RE: the hurricane series, I'm not claiming that it definitively shows that the the mid-century was the norm but it certainly shows that you don't have to have global warming to have the intensity of storms that we've seen in the past three years.

Any of the other psoriasis sufferers have a mysterious lack of scarring?

More or less, yeah. One huge scar from when I was a kid, nothing since.

...okay, let's make this simple: do any of us not have psoriasis?

From what I read the hurricane activity looks quite impossible to predict due to several opposing effects that are all increased by the current climate tendency. The least risky bet seems to be on similar number of storms but higher risk of high intensity of developing storms. My uninformed guess is that a single killer storm does more damage than a number of lighter ones.

From a previous comment: "Note that in complaining about a huge increase recently we were told outright that premiums were going up because their profits were down - not that they had suffered a loss, but that shareholder profits were down."

Catastrophe or no, the one thing that must *never happen* is that an investor suffer a decrease in their return on an investment. That is the true cause for alarm in all this.

Nobody can has cheeseburger unless investor can has more big cheeseburger. LOL!!!

Regarding hurricanes, the process of hurricane formation is apparently quite complicated, and not completely understood. But what seems to be the case is that, regardless of the frequency with which hurricanes are formed, their severity is increased with increasing sea surface temperature (SST). SST in the Atlantic and the Gulf of Mexico has been rising, leading to the expectation that there will be an increase in the severity of those hurricanes that are formed.

Alternatively, it increases wind shear, which reduces the number and intensity of storms. Or at least that is the theory they came up with when last season’s dire predictions failed to come true.

Meanwhile, I’m left to wonder how all those SUVs got to Mars, Triton, Jupiter, and even Pluto. More importantly, who is driving them, and what do they pay for a gallon of high octane?

I just wanted to point out that insurers of last resort, while they typically don't build up large reserves on their own, most can assess ALL the property insurers in the state based on market share to pay claims that exceed the premiums that have been taken in by the insurers of last resort. Although Florida has a state-run insurer and a hurricane catastrophe fund, most insurers of last resort are not run and/or funded by the states. They were just created through legislation and governed by it. The WSJ article was a little bit wrong in a couple places (Just a little, they do better than most with this issue).

So, insurers of last resort taking on more risk doesn't solve the problem for private companies because they are still exposed to the same, could-be underpriced risk through assessments.

Of course, as others have pointed out, it's not just an insurance issue, it's land-use planning, misguided price caps and a general outcry from property owners about rising costs.

Alternatively, it increases wind shear, which reduces the number and intensity of storms.

It's not as clear cut as your Reuters article might lead you to believe. I am not a climatologist, but these people are and the cited page discusses the wind shear issue. Regardless of whether the wind shear argument is correct, Figure 1 on that page is somewhat disturbing.

Regarding the other issue, "insurers of last resort," it is quite clear that states and the federal government are increasingly using taxpayers as "insurers of last resort," thereby allowing property values to remain at unrealistically high levels.

The reason that the past few years of hurricanes have been so striking to both climatologists and insurers has been the astonishing *strength* of the storms. Over the 60 years we've had airplane (gold standard) measurements of storm intensity, 5 of the 10 strongest have occured in the past three years - and #11 was in 2003. The last peak of hurricane activity in the 50's produced only 1, Hurricane Janet.

While the predicted increase in wind shear makes the effect of global warming on hurricane frequency unclear, the effect on hurricane strength is unambiguously to strengthen them. The temperature differential between ocean and upper atmosphere is predicted to go up (and it has), the water content of the middle and upper troposphere is predicted to go up (and it has), and the ocean temperature is predicted to go up (and it has). So when hurricanes occur, they have a lot more oomph behind them.

"...okay, let's make this simple: do any of us not have psoriasis?"

Oh, good, something I don't have. (Saying this will not make it appear next week. Saying this will not make it appear next week. Saying this will not make it appear next week. What I say three times is true.)

It is true that investors want to make money, but not all insurers are investor-owned. The mutuals are every bit as concerned about what is going on. State Farm, which was the largest insurer in Florida until Citizens (the state's insurer of last resort) became the largest last year, has set up a separate company for Florida so the risks don't hurt the rest of the company.

The Sun-Sentinel has a good article from last month about some of the problems:

Floridians already are paying extra charges on their property insurance policies to bail out the company's 2004 and 2005 deficits -- $516 million and $1.7 billion, respectively. If Citizens isn't charging homeowners enough for coverage, that means there's a bigger chance residents statewide will have to dig into their pockets, Sink said.

"At the end of the day Floridians are going to be paying, not private insurance companies," Sink said. "That's to me the scary thing about an environment in which Citizens has so much big market share."

Members of the House of Representatives spent part of the last day of the two-month annual session debating whether those who aren't insured by Citizens should have to bear the nonprofit company's burden if it runs out of money.

State Rep. Don Brown, the House Insurance Committee chairman, said people can live wherever they like in the state, but "they simply do not have a right to expect that everyone else would fund their choices."

I have no idea how anyone can run an insurance company in that environment. Still, I don't really wish a hurricane on Florida, just because they're being most stupid sort of populists.

Essentially, flood insurance has become a federal program. It isn't really insurance in that it isn't priced to meet actuarially justified prices, nor does it appear to price risk as well as it needs to, but it doesn't need to because Congress is intentionally subsidizing the risk of being on a flood plain (though I doubt that they would say it that directly).

The flood insurance program is misunderstood, and unfairly maligned. It is far from perfect, subject to undue interference from developers (who undermine its goals by insisting on building in flood-prone areas), but it does things that no private insurance, or private insurer could.

First of all, it is simply incorrect to say that you can carry a mortgage if you live in a 1% floodplain (the term 100 year is being phased out), you simply can't, the law requires it (and many mortgage companies require it in Zone B flood plains).

The flood insurance program is also part of a comprehensive federal flood management program that includes building and density restrictions (e.g., raising building above base flood elevation and not building in the flow areas of floods). For instance all new residential construction in the New Orleans area must be raised three feet above grade.

Of course developers are constantly challenging the restrictions of the program and trying to build or have restrictions loosened in areas where the flood management program would otherwise limit their options.

Personally, I'd be in favor of taking some governmental action to make this process a gradual one: to let the effects occur over ten or fifteen years, rather than all at once. (That's because I'm a liberal; if I were a pure free-marketeer, I'd presumably be in favor of just pulling the plug on uninsurable coastal communities.)

Removing an unwanted regulation through a means that minimizes the secondary harms associated with the removing seems eminently sensible, and one that most "free-marketeers" would favor. Including this one.

Meanwhile, I’m left to wonder how all those SUVs got to Mars, Triton, Jupiter, and even Pluto. More importantly, who is driving them, and what do they pay for a gallon of high octane?

I think a good rule of thumb is to take any theories you hear on global climate change and google on them at realclimate.org. Here is realclimate on Mars 'global warming'. (Summary: Why would GCC skeptics accept a verdict of 'global warming' for an analysis of one region of a planet over a 3 orbit (ie Martian year) period? And how can they blame it on the solar variation when we can measure the sun's output directly now?)

Remember, there are dozens of significant objects in the solar system (moons, asteroids, planets, etc). Some of them will be in the midst of warming or cooling trends, depending on their orbits, weather patterns, etc. Even if someone were able to point out several of these with short-term object-wide warming trends (which afaict hasn't been done yet), this wouldn't indicative of anything other than cherry-picking.

"let's make this simple: do any of us not have psoriasis?"

I guess that makes this a site for psoriasis. :-P

"I think a good rule of thumb is to take any theories you hear on global climate change and google on them at realclimate.org."

Man, I just posted links about this here last week. Okay, ten days ago.

"I guess that makes this a site for psoriasis. :-P"

I thought that was here.

I guess that makes this a site for psoriasis.

I suggest DTM be banned.

By the way, I do know someone with psoriasis and as mss and Sebastian say, it can be quite nasty.

Insurers have had a great 3-year run with record profits. Those profits have come from improved underwriting results, but when they are pricing, they look at varying markets.

Insurance companies are the stingiest bunch of SOBs on the planet. I often use car insurance as an example. There is no value in comprensive insurance. Because you make one claim and the jack the rates up and earn their money back, and if you try to go somehwere else that place will hold the claim against you.

The insurance markets in this country are all broken.

I do not have psoriasis!

Moi, non plus.

But I do wonder why we can send a man to the moon, but we can't cure a man's psoriasis.

Sourcing realclimate.org does not help. I do not accept it as an unbiased source, sorry. Again, my money is where my mouth is. If I am wrong, well, I’ll pay the price directly.

That's because I'm a liberal; if I were a pure free-marketeer, I'd presumably be in favor of just pulling the plug on uninsurable coastal communities.

Actually, if you were more of a free marketeer, you would start by looking at what restrictions the state places on insurance company reserves. Few states that are subject to regular natural disasters are willing to allow the insurance industry to accumulate the volume of reserves necessary to cover the bad years. I can understand that, somewhat -- it would be difficult for a state legislator trying to fit their programs into a, eg, $60B state budget to sit by while the insurance companies accumulated $30B or more in reserves to handle a bad year.

The coastal communities are not uninsurable -- they are uninsurable under the conditions that the state has imposed on the industry.

The problem is, so will everyone else.

[to OCSteve]

Michael Cain,

Could you elaborate please?

In what way do the states prevent the accumulation of reserves? What reason do you have for thinking the insurance companies actually want to build up the kinds of reserves needed to cover coastal communities?

I ask these questions seriously.

Because it's behind a subscription wall I'll steal way beyond fair use so there's absolutely no doubt? Is that supposed to make sense?

Stealing leads to psoriasis - I have it in good authority.

On topic, because the medicine costs more I should have a greater right to steal it. I mean sometimes the newspaper medicine costs a whole $1, though usually 50 cents, $2 on Sundays.

- Temple

"Because it's behind a subscription wall I'll steal way beyond fair use...."

Please; there's no court decision that you could point to that would affirm any such thing. Your opinion in this will have meaning at such time as the WSJ, or any newspaper, starts to sue people and make such claims; unsurprisingly, no newspaper has yet made any such claims regarding excerpting of their articles on the web in this matter.

It also may have escaped your attention that excerpting in this way is commonplace practice by pretty much every blog in creation. I would suggest getting back to us when your cri de coeur is accepted as legitimate by more or less anyone.

"in this matter"

s/b "in this manner"

I had no idea the "heartbreak of psoriasis," as the commercials used to put it, was that unpleasant.
As a Florida resident, I agree the insurance system is insane: The more we work to keep it artificially affordable, the more the coast is developed and the more property is at risk. After Hurricane Andrew in 1992, the state froze rates (no cancellations, no increases) for several years.
Meanwhile, restrictions on coastal development are waived and rules about how close you can build to the water are whittled back.
Unfortunately, the billion invested in coastal real estate make me very dubious that anyone is going to yank the insurance carpet out and let everyone pay more (though Hilzoy's idea is the best approach I've heard to that).

Sourcing realclimate.org does not help. I do not accept it as an unbiased source, sorry.

Im curious about what they've done that discredited them in your eyes- I don't recall seeing anything there that wasn't vigorously backed up with cites, links, etc.

Even if they have an established position, that doesn't discredit the facts that they cite (eg we've been carefully measuring solar output since the 70s & haven't noticed any significant change- so if the sun is warming Mars and the Earth, it's doing so by a method unmeasured by modern science).

Not sure if this is a debate you actually wanted to have or if you were just tossing off a bon mot...

Hurricane insurance raises the same issues as flood insurance; health insurance is rather different. The basic problem is that the actual cost of insuring a home on the coast is high (probably pure premiums are at least 10% of replacement value), and for priocing to catch up to reality would be painful.

Here">http://www.actuarialoutpost.com/actuarial_discussion_forum/forumdisplay.php?f=14">Here is a good place to start for detailed, informed discussion on coastal-zone insurance and insurers-of-last-resort; just look for anything about Florida. This thread is particularly good.

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