My homeowner's insurance through Citizens in Florida is approaching $5k/year. It will likely go up at least $1k/year, if not more, next year. Citizens is requiring all homes to carry flood insurance eventually, even if there is no flood risk. I will likely have to pay a surcharge after Hurricane Milton due to Citizens having insufficient reserves for the amount of climate related claim loss they are experiencing (such is the peril of socialized, insurer of last resort systems). This will likely push me to sell my primary residence, my last property in Florida I have not liquidated, and move somewhere with much lower climate risk. This is the system working as intended, telling people to leave places too expensive to insure.
We are collectively internalizing the previously ignored and/or externalized costs. It should be expected that this process will be painful and messy as risk pricing snaps to reality.
(folks not of means who live where climate risk has accelerated ahead of what they can afford should be bought out and provided assistance to relocate to where the risk is lower, and their property acquired by an entity that will hold it in perpetuity to prevent further development or occupancy, for the record; FEMA does this, but this must be done at a much larger scale imho)
Yes, but there are already people who own cybertrucks or live in these places.
I thought I sufficiently covered my position on places people live in my top comment, but to reiterate: we should help folks move who need help moving, and very aggressively, through policy and financial signals, inhibit folks from moving to where the climate risk is beyond an agreed upon collective risk appetite (which sets policy, financial signal, etc). This will make folks sad, but to not will make them more sad when the risk exposure is realized.
https://www.redfin.com/news/hurricane-helene-impacting-reloc... ("Redfin: Nearly One-Third of Young Adults Say Hurricane Helene Has Made Them Reconsider Where They Want to Live in the Future: Survey")
Obviously the finances work such that net-net the insurance companies make more money in the end, but insurance is about individual level risk. Most likely (even hopefully) my insurance payments will be a net-loser, but IF I need it then they can prevent catastrophic financial loss.
> but insurance is about individual level risk
Insurance is about pooled risk, avoiding adverse selection, and balancing the risk of loss with whatever the pool criteria and objectives are. We can insure what should be insurance, and we can cut checks to what should just be aid, support, etc. Knowing which is which is important though if we operate under the assumption that resources are finite.
https://www.actuary.org/sites/default/files/pdf/health/pool_...
> Life insurance high, then what, stop living?
You seem to confuse what life insurance is for - it's not for the person being insured, it's for their dependents (at least with respect to term life). And it already happens all the time that life insurance gets too expensive, so people forego it. It's one reason that financial planners recommend getting life insurance when you're young, when you're healthier and it's cheaper. Also, as you age it becomes less likely that you'll have dependents that need you to have life insurance.
As others have pointed out, the debate over health insurance shouldn't confuse the debate over other types of insurance. Many societies have accepted the viewpoint that everyone should have health insurance as a fundamental right, even if they have a horrible risk profile and it's uneconomic. I don't think anyone can make that argument about someone's "right" to drive a car that is inherently dangerous to other road users and horribly expensive to repair.
For mortgage insurance, my understanding is if you don't carry property insurance, the lender can obtain lender placed insurance at your cost. That comes from a different, more expensive, market than direct homeowner insurance, but I believe it includes guaranteed issuance. But, if that falls through, I expect the lenders will stop lending, because they can't sell to fannie mae if it has no property coverage.
So when insurance companies are dropping coverage for things, it's a strong signal that you should too(unless you have a high appetite for risk.)
I'm not familiar with the termite threat, but water damage issues with EIFS (the technical name for synthetic stucco is Exterior Insulation and Finish System) is a big and famous deal: https://en.wikipedia.org/wiki/Leaky_condo_crisis
The basic issue is that you can't really check what's going inside the EIFS so if water (or termites, I suppose) does get inside it can't get out and you can't really know until it collapses because the wood framing is gone. Even if you check every year, if the probe missed the bad spot then you've no way of knowing.
I assume this isn't actually a huge financial risk since mortgage companies don't care if you have it? In other words you'd self insure for it.
If I were in the market for a CyberTruck (I'm not) I'd be thinking long and hard about what I'm getting myself into.
$30k is an absurdly small bond to post for self-insurance, though I'd believe that the regulations have not kept pace with reality.
That is entirely the point. If you build a house or vehicle that is horrible from a risk perspective, don't expect someone else to take in that risk.
But California's homeowners insurance market is screwed up for legal reasons, and it isn't even the legislature's fault or something they can easily fix. It's the fault of Proposition 103, where a whole bunch of massive changes were made to how homeowners insurance worked, in 1988, by a 51-49 vote of the electorate. And the way that prop's work is that the legislature can't amend or change these regulations. The only way to fix it is another proposition to roll back those rules, where the electorate realizes that they did something dumb and agrees to fix it.
Among many other changes, this proposition specifically enumerates what kinds of models an insurance company can use to justify their rates (1). In 1988 global climate change models weren't a thing, so they're not on the list. And while with legislative regulations it would be easy to add an extra model type in as a side-amendment into a much larger bill (that sort of stuff happens all the time!) the California initiative system means that the state legislature can't change any of it. So they are really struggling with the rise of wildfires in particular, the insurance companies run their real models of what the risks will be, and then when they run the approved models they have to try and figure out how to get the approved models to capture that risk and it's really hard to do. The approved models basically force the companies to use the previous seven years of costs only, but if you believe that the risk of wildfires is steadily growing that underlying bias will destroy your company. So the only alternative is to withdraw from the market. Which is why major insurers who can are withdrawing (or threatening to withdraw as part of negotiations to try and force the IC to approve even larger rate hikes!) and smaller, less well capitalized insurers are taking a greater share, but will probably need to be bailed out if there is another bad fire season.
I live- and own a home!- in a nearby state where the real estate market is buoyed largely by people who are leaving California because of their dysfunctional real estate market (Prop 13 is the famous one but these are all pretty bad). So it's actually against my financial interest for California to fix their problems, but I want them to anyway because it's so intensely frustrating for me and I don't even live there.
1: To the directly elected Insurance Commission- another change in Prop 103- who has to approve all rate changes, which is now an ~18 month process, because of a third thing created in this proposition. The Consumer Intervenor's Process means that basically anyone can challenge a rate hike and if they convince the Commission that the hikes were too high then they get their costs and time paid for by the company that lost the rate hike. So there are people in California who make their living as private citizens reviewing and challenging all insurance company rate hikes.
Reinsurers have an even more accurate model for this that they've shared with NOAA but that information is subject to NDA for now.
So the insurers absolutely know that this is just getting worse.
AFAIK in Europe car insurance is obligatory and insurance companies can't refuse to sell it to you (if they did it would be mind blowing, catch 22)
Perhaps these become undrivable and get their own stage in some art hall.
But insurers have started just refusing to insure some cars, or homes in some locations (and we're not just talking about building in a flood plane). We're going to have piles of cars and homes that no one can use because the risk profile is too high for insurers.