Mainly because home insurance companies are playing the same shitty games as health insurance. Instead of someone like Farmers taking policies and spreading the risk across the country, they are creating smaller "boxes" where if a hurricane hits Florida, there aren't enough Florida policies to cover. Nationally, they have the money, but from a business standpoint, they boxed Florida by itself. Then they declare bankruptcy in Florida leaving policy holders with the bag.
this post was submitted on 12 Jun 2023
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I'm on the fence about this. If the actuaries have done the work and determined that massive chunks of the state have a very high risk of expensive hurricane-related claims, shouldn't either the rapidly rising rates, or the refusal to do business in the state altogether, reflect that this isn't a place people should be flocking to in large numbers?
As someone who intentionally chose to make my home a state where we're relatively sheltered from the most destructive extreme weather events, I'm happy that I'm in a separate insurance pool from these extremely risky properties. Keeping things somewhat localized keeps costs cheaper for those making smart decisions, incentivizing others to do the same.
I think it's quite shortsighted that we're incentivizing new development and migration to areas that are going to regularly underwater in a few decades. I understand where you're going with health insurance comparison, but at least with that - there's near universal agreement that we should be investing resources in early detection and interventions to prevent new folks from developing costly pre-existing conditions. I see very little acknowledgement of this when looking at risky land use decisions.
No, just like the people that complain about the fat people in their same insurance pool, you're facing less risk in the larger pool with everyone kicking in premiums. That's what the actuaries say time and time again. Making the pool smaller is far riskier than excluding the "bad" bets. Our workplace insurance did that, separating everyone into the "healthy" and "unhealthy" pools. As I predicted, EVERYONE's rates went up. It is a similar principle on why countries with socialized medicine have far, far cheaper costs than the US.
The Gulf facing states have always had issues with hurricanes. Insurance bailing at the scale we're seeing in Florida is new.
Sure, the Gulf (most warm coastal areas, really) has always had hurricanes - but they are increasingly severe, destructive, and expensive to recover from with each year.
It seems like a false equivalency to compare it to health insurance, healthy people suffer plenty of surprise illnesses and costly medical expenses as a normal part of life, whereas the odds of my home in MN, 1,200 miles from the Gulf, being destroyed by regularly occurring hurricanes are incalculably small. Other risks, like tornado and flooding, can be more easily managed with regular tree maintenance and a battery backup sump pump. A blizzard might keep me snowed in for a day or two, but won't ever result in the insurance company footing the bill to rebuild my house.
The housing insurance market is one of the only powerful forces actively disincentivizing living in disaster prone areas. By contrast, the housing market has largely been ignoring climate science, instead trying to squeeze every last penny out before leaving regular folks with a inflated debt and land they can't sell.
It'd be politically toxic for the government to say that we shouldn't build a FIMA subsidized suburban McMansion on every last vulnerable acre of land - but something needs to shift to permanently migrate people out of harms way before SHTF if we are to survive this climate emergency.
Texas at least has wind storm insurance which is by the state and for hurricanes. So insurance companies don't have to worry about that at all. Also flood is similar in that it's handled by the national flood insurance program.
AKA insurance companies don't have to worry about climate related risks in TX.. Thus they are not leaving Texas.
Florida needs to consider these things.
offering insurance in FL, and any of the gulf coast regions really, seems to be a losing game. that area is just one Cat 5 storm away from total devastation (and then bankruptcy of the insurance firm)