Natural Disaster Insurance

[Rexedgar]

What happens when there is a disaster where the insurance companies cannot make their policy holders whole again?

The fire in California and the recent hurricane in the southeast must strain the resources of the insurers. Is the government expected to make up the difference?

 

[ttwtt78640]

What happens when there is a disaster where the insurance companies cannot make their policy holders whole again?

The fire in California and the recent hurricane in the southeast must strain the resources of the insurers. Is the government expected to make up the difference?

Which government? IIRC, California has many governments.

 

[gdgyva]

What happens when there is a disaster where the insurance companies cannot make their policy holders whole again?

The fire in California and the recent hurricane in the southeast must strain the resources of the insurers. Is the government expected to make up the difference?

There is the regular insurance company....and then there is another layer where those insurance companies pay for such incidents

Warren Buffett owns one of the more famous reinsurers (General Insurance) and it has helped him gain a lot of wealth over the years....

But when they have to pay....they usually pay out LARGE....Katrina was one of those cases....been others of course

 

[jmotivator]

An interesting thread on X about the California home/fire insurance fiasco.

Thread by @kimmaicutler on Thread Reader App

@kimmaicutler: Guys. We — as in Californian voters who voted in 1988 — voted for a system where every time an insurance company wants to raise rates for automobiles or homes, they have to have a...

threadreaderapp.com

 

[Helix]

No surprise here. I support affordable public sector insurance that won't happen because Republicans.

 

[jmotivator]

No surprise here. I support affordable public sector insurance that won't happen because Republicans.

Insurance cost is tied to liability which is tied to housing prices. There is no such thin as "affordable public insurance" when housing prices are so badly inflated.

FAIR in California was supposed to be that "affordable public insurance" but it doesn't have the cash to cover exposure due to housing prices, and it's overages get dumped back onto the insurance companies, which is why so many insurance companies are leaving California. The state limits what they can charge in insurance but saddle them with the costs anyway.

The insurance problem in California is all down stream from Democrat policies.

The median home price in Los Angeles is $981,000 ... there is no such thing as cheap insurance for that market.

 

[Ishm]

The reinsurance market at this level is a global thing IIRC. Means that the local insurers are themselves insured with another layer of global insurers to cover large events like this. Net result will be that insurance costs will likely rise around the world to some extent to pay for all these expensive disasters in the US. I assume though that the cost of reinsuring the US market against natural disasters will be rising on the back of so many costly events, and hence push up insurance rates across the US more than the rises in other countries not experiencing the same levels of natural disasters. Of course if you live in one of the very high risk disaster zones like some parts of the southern coast, you end up paying more for your particular location as well as more for the increased cost of reinsuring the US market in general. Ignoring climate change has a cost, and this is really just a small part of that cost, but one that is most visible to the average home owner.

 

[ttwtt78640]

Insurance cost is tied to liability which is tied to housing prices. There is no such thin as "affordable public insurance" when housing prices are so badly inflated.

FAIR in California was supposed to be that "affordable public insurance" but it doesn't have the cash to cover exposure due to housing prices, and it's overages get dumped back onto the insurance companies, which is why so many insurance companies are leaving California. The state limits what they can charge in insurance but saddle them with the costs anyway.

The insurance problem in California is all down stream from Democrat policies.

The median home price in Los Angeles is $981,000 ... there is no such thing as cheap insurance for that market.

OK, but you are ignoring the building(s) and personal belongings being insured (up to their full replacement cost) excludes the cost of the land they sit on which is the bulk of the deeded property’s value.

 

[jmotivator]

OK, but you are ignoring the building(s) and personal belongings being insured (up to their full replacement cost) excludes the cost of the land they sit on which is the bulk of the deeded property’s value.

No, I'm not. When the neighborhood burns down the land value declines. You can't recoup that loss usually from insurance, but still, try selling that plot with a pile of smoking rubble surrounded by plots filled with smoking rubble to a prospective buyer for the value of the land before the fire... good luck.

And the actual exposure of FAIR is close to $1 trillion, and it has a fraction of that in reserve. In cases like the Palisades fire the vast majority of the cost is dumped on the insurers who have to get approval from state controllers to recoup that loss from the insured. There are a quickly declining list of insurers who are dumb enough to do business in California as a result.

 

[ttwtt78640]

No, I'm not. When the neighborhood burns down the land value declines. You can't recoup that loss usually from insurance, but still, try selling that plot with a pile of smoking rubble surrounded by plots filled with smoking rubble to a prospective buyer for the value of the land before the fire... good luck.

And the actual exposure of FAIR is close to $1 trillion, and it has a fraction of that in reserve. In cases like the Palisades fire the vast majority of the cost is dumped on the insurers who have to get approval from state controllers to recoup that loss from the insured. There are a quickly declining list of insurers who are dumb enough to do business in California as a result.

That (bolded above) is my point.

 

[jmotivator]

That (bolded above) is my point.

Which had nothing to do with my point. the ACTUAL exposure, that which could be recouped, is close to $1 trillion and FAIR only has, if I recall, $24 billion is reserve. Insurers by law have to collectively shoulder the burden of what FAIR can't pay for, which is why insurers are leaving California.

 

[Helix]

Insurance cost is tied to liability which is tied to housing prices. There is no such thin as "affordable public insurance" when housing prices are so badly inflated.

FAIR in California was supposed to be that "affordable public insurance" but it doesn't have the cash to cover exposure due to housing prices, and it's overages get dumped back onto the insurance companies, which is why so many insurance companies are leaving California. The state limits what they can charge in insurance but saddle them with the costs anyway.

The insurance problem in California is all down stream from Democrat policies.

The median home price in Los Angeles is $981,000 ... there is no such thing as cheap insurance for that market.

I hope that you never experience a situation like what's happening in California. I expect that your opinion might change if you do.

 

[jmotivator]

I hope that you never experience a situation like what's happening in California. I expect that your opinion might change if you do.

What is my opinion? Believe me that I understand pain. But when you want to talk in terms like "affordable public insurance" you should probably know that such phrases sound good, but don't actually work. California has "affordable public insurance" with FAIR and what it has done is reduce insurance availability and coverage across the state.

 

[Helix]

What is my opinion? Believe me that I understand pain. But when you want to talk in terms like "affordable public insurance" you should probably know that such phrases sound good, but don't actually work. California has "affordable public insurance" with FAIR and what it has done is reduce insurance availability and coverage across the state.

It could work, but Republicans will prevent it from happening during our lifetimes. The upside is that the rich will always be ok if they are rich enough.

 

[ttwtt78640]

What is my opinion? Believe me that I understand pain. But when you want to talk in terms like "affordable public insurance" you should probably know that such phrases sound good, but don't actually work. California has "affordable public insurance" with FAIR and what it has done is reduce insurance availability and coverage across the state.

The ‘affordability’ plan seems to be the state government getting the federal government to pick up the tab, which seems to be how California will ‘handle’ funding recovery from this massive expense.

 

[jmotivator]

It could work, but Republicans will prevent it from happening during our lifetimes. The upside is that the rich will always be ok if they are rich enough.

It's not Republicans. That is just partisan nonsense that you throw out there. California is a one party state. California has tried collective public insurance and it doesn't work.

 

[Helix]

It's not Republicans. That is just partisan nonsense that you throw out there. California is a one party state. California has tried collective public insurance and it doesn't work.

It is. That's also the reason that we can't have single payer.

 

[jmotivator]

It is. That's also the reason that we can't have single payer.

You can have single payer. Go to Canada.

 

[Helix]

You can have single payer. Go to Canada.

I can play that dishonest intellectual game, too. Go to Sudan if you don't like society. You first, though.

 

[ttwtt78640]

It's not Republicans. That is just partisan nonsense that you throw out there. California is a one party state. California has tried collective public insurance and it doesn't work.

It works, in this case, if the federal government will pick up the tab.

 

[Lord Tammerlain]

You can have single payer. Go to Canada.

Home insurance, life insurance is pretty much private

Auto insurance across Canada is mixed. Some provinces have full private, others a government run company provides the insurance. Typically much cheaper than the private insurance companies