The answer is obviously "no" since there are other parts of the world that don't live on a hurricane highway nor build houses made from firewood in an area prone to wildfires.

It's happened before. Chicago's reaction to the Great Fire was simple - no more building wooden houses. Chicago went all brick. Still is, mostly.

The trouble is, brick isn't earthquake resistant. Not without steel reinforcement.

I live in a house built of cinder block filled with concrete reinforced with steel. A commercial builder built this as his personal residence in 1950. The walls look like a commercial building. The outside is just painted cinder block. Works fine, survived the 1989 earthquake without damage, low maintenance. It's not what most people want today in the US.

That was 10 years ago.

It's true that most predictions about climate are wrong - most of the time, they're optimistic. (Not always, fortunately [2])

[1] https://www.leparisien.fr/economie/business/special-cop21-un...

[2] https://www.theclimatebrink.com/p/emissions-are-no-longer-fo...

Here is a list of all new solutions we need: 1) not insure places at higher risk 2) mass desalinification 3) fix US hot climate grids sparkles and/or place them underground 4) Street corridors to isolate fires in neighborhood 5) Build with more fire-resistant materials 6) Install automated hydrant towers with cameras able to spray water on fire remotely (it's done in Spain on the edge of forests and urban areas) 7) Pass on the costs of maintaining of living in expensive risky areas to the people living there and/or give them benefits to move to unpopulated areas with no risk

1) Not all the world will suffer equally from climate change. The parts that are at higher risk should not be insurable so that new housing will not be built there but somewhere else.

2) The idea there won't be water because it doesn't rain it's ridiculous. We live on a planet literally made of water. We'll develop mass production de-salinification plants and have enough water. We need to keep investing and improving that technology. I think having water artifically priced at a low price won't help the development of the desalinification industry. So water should cost more NOW that we can afford it to reflect the R&D cost of it that we must make to have water later.

5) Hot countries don't tend to have plenty of wood to build with. Forests grow with more rain. Building with wood in Spain and Italy is very rare. LA got his wood shipped from somewhere further out. Let's build with other materials in arid fire-prone zones. Yes it's perfectly possible to have houses that are both more-fire-resistant and more-earthquake resistant.

The issue in California is not the price of insurance, it's availability because of extremely myopic ballot initiatives that are entirely political in nature. Should insurance be fairly priced, then the market can force people out of uninsurable areas and into areas with far less chance to burn.

If things aren't priced correctly, mayhem ensues. Frustratingly the political solutions to high prices often just put off the problem. Government mandated price fixing, of insurance, rentals, etc never fixes the core problem, only allows it to fester.

Sometimes it's taxpayers losing money, sometimes it's the few unlucky ones being forced by the government - and arguably the latter is worse for everyone as private investment and services dry up because of regulatory risks.

A similar argument works if insurance is just based on reconstruction cost, but construction costs inflate faster than incomes.

If properties become unaffordable, then to restore equilibrium, property prices must fall, incomes must rise, or lower-income residents will sell to higher-income purchasers. If there are few higher-income purchasers, property prices will fall.

Property taxes could be cut, or decoupled from property values (e.g. poll tax), but that never happens.

If the risk really is high, there is no practical insurance available, and all purchasers are rational, then the price may go to zero.

An example of an irrational purchaser would be one who assigned high status to a beach house, even in the face of threats from coastal erosion, hurricane floods or tsunamis.

it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.

rather than price controls a slightly better solution would be just to nationalize insurance and force everyone to use it, but even that is not really a solution since highly correlated events are the antithesis of insurance.

The government needs to just stay out of it.

When you put a minimum on the price of wages the true minimum is zero. When you put a maximum on the price of insurance the true maximum is 1/0.

California is not very hospitable on its own but with human intervention it was made liveable. But that is now running out, because e.g. the water supply is no longer adequate for what is used.

But this is the difficult situation we find ourselves in; due to climate change, hospitable areas are no longer hospitable, and while you can throw money at the problem, it becomes exponentially more expensive to continue to live there. If this continues, it will trigger a (mass) migration. This can be applied everywhere, and the phrase "climate change will trigger mass migrations" has been uttered many times already. It however feels like people only considered this to be a problem in e.g. the global south, affecting poor people because they don't have the financial means to shape the earth and their living conditions by throwing money at the problem.

I live in the Netherlands that for hundreds of years has thrown money and resources at the problem that it's below sea level and prone to flooding. We're still managing, but still get flooding in some places due to e.g. heavy rains deeper in Europe. But if the sea level goes up enough, either we'll have to spend billions in building higher sea walls... or abandon regions entirely. The worst case predictions mention a 2.5 meter sea level rise by 2100, that'll definitely test our infrastructure to put it mildly.

(this comment was a reply first but moved it to a top level one because I added my main article comment as well).

The business insurances are in is a business of statistics. As long as you can model things giving you an expected value and a standard deviation, you can offer an insurance policy which gives you X amount of profit with Y amount of risk, and the insurance premiums are adjusted such that the insurance's risk for negative profit is negligible, according to the model.

What does it mean for climate change? Current insurance models apparently don't work well, so they don't dare to offer policies in certain areas. But just like city planners need to adjust (build further away from shore, higher up, build in flooding protections) and home owners do (AC, think twice if you want a basement) and farmers (choice of crops, irrigation systems), so do insurances by finding better models that allow them to have better statistics.

My expectation in the long run is that insurances will be offered again, but with so high premiums for certain areas (of high risk) that it will just be too expensive to live there. Which is fine. Nobody lives on the moon either. And the public shouldn't be paying for somebody's privilege to have a nice waterfront property in a hurricane area.

TL;DR: The current public discourse about this topic conflates predictability with cost when talking about "insurability". They are very different things.

Does/Why would the insurance assume the subsidy is for people rebuilding in the same place? Money is fungible and so it doesn't need to be in the same place, at all. What I'd expect is that insurance for those hard-to-insure places would skyrocket and thus a new balance would be achieved.

In health insurance they don’t cover the elderly, and until Obama they did not cover people with prior conditions.

For home insurance they don’t cover flood get your are mandated to carry one if you have a mortgage.

In life insurance they do not cover you if you have a disease.

It’s more like a lottery rather than insurance.

(1) The author tried to get homeowner's insurance, but was denied because their home was a significant hurricane risk

(2) The author (maybe?) got insurance through a state-run FAIR program, but then cites news reports that these programs are close to insolvency (As are a significant amount of non-state-run homeowner insurance programs).

(3) The author is like, "well, if it's so hard to insure my house, maybe I should think about living somewhere else." And then generalizes to "a lot of places should be uninsurable and uninhabited - apocalypse here we come"

This hits hard and close to home. While my heart goes out to everyone that’s shouldering misfortunes, I’m wary of the “private profits, public risks” phenomenon getting even more out of control.

Obviously we can’t afford to disappoint all the people that were forced to jump into an outrageous housing market all at once, they need affordable insurance, and also still expect to 10x their property investment, particularly in coastal areas. If we don’t do this, it will be another huge blow to the shrinking middle class.

Meanwhile, the flyover states with fewer hurricanes and wildfires will subsidize coastal insurance basically due to strength of Californias market clout, and yet flyover states won’t ever see a windfall from their own rising property values. Since remote employees in flyover states often get less salary for the same work, they are already subsidizing rent for higher density areas. Regardless of where you live, everyone should recognize that this is unsustainable and divisive.

If something is worth doing, it's worth doing whether you have insurance or not.

In my opinion, the amount of resources spent on buying insurance would, in almost every case, be better spent on prevention rather than after the fact mitigation.

1. The state who sets insurance price caps for political expediency, basically to increase house prices (because they'd go down if insurance prices could float freely). BTW we have examples of areas that are uninsurable like the Florida Keys;

2. The homeowners who want their house prices to go up and want to pay as little as possible for home insurance; and

3. Insurance companies who can't write too many policies so they remain solvent. Price caps ultimately lead to insurers leaving the market.

LA in particular has competing problems: wildfires and earthquakes. If you want to avoid total loss due to wildfires, first you wouldn't build in Pacific Palisades at all. It's a vegetation rich area between hills with potentially high winds. If you want to avoid fire loss, you would build out of concrete not timber-framed buildings.

But the problem is that earthquakes have the opposite building priorities. Lumber is actually quite good in earthquake zones because you tend to get less loss of life from the collapse of timber houses.

Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.

Ultimately all of this comes down to a malaise brought on by high house prices. Voters consistently vote for policies that increase their house prices with absolutely no concern for the externalities.

If it now costs $1 million to build an "average" house, then you're going to be spending $20,000+ a year on insurance. If your house only cost $100,000, you wouldn't have that problem.

It's even worse in California because a lot of property taxes are capped so the state government can't even recoupe taxes from a lot of high-priced property but they suffer the costs of it (eg by being the insurer of last resort).

[1]: https://www.tiktok.com/t/ZT2Jek6a6/

A friend owns a Land Rover with such a notoriously bad engine that insurers refuse to insure it. Land Rover had to make their own car insurance [1].

Another friend owns an electric car that is becoming increasingly uninsurable. I'm told that due to the battery, any significant collision defaults to a complete destruction of the vehicle and not a repair. The second-hand market for electric cars is also terrible, almost no car dealer will touch them in the UK.

Another friend had a car that was insured for £5k, but it was actually worth more. An accident occurred that completely destroyed the car in a fire, and they offered £1.5k. They approached the insurer and said if £1.5k is adequate to replace the vehicle, then they could simply drop a vehicle off instead. Eventually they increased the amount to £2.5k, half of their own estimate, and far less than the vehicles actual worth.

Another friend got into an accident and was permanently injured. They got an initial offer from the other insurance company, which their insurance said to decline as they believed they should expect more. Several years of slow progress, with the original insurer shutting down and passing their work to several other insurers, they were told too much time had elapsed and they should have gone for the original amount. They offered a £50 "good will gesture" and then closed the case. In the UK we have the Financial Ombudsman for insurance disputes [2], which after review decided that £50 was perfectly adequate.

Another friend had their vehicle temporarily ceased by the police (the police were wrong to do so in this case, but you have zero right to appeal). They lost one of the sets of keys for the vehicle and scratched the car. The police told the person there was nothing they could do, and to claim on the insurance. They instead paid for the damage themselves, because the insurance premiums on such a claim would not be worth it. Just tonight I saw something similar where somebody's mirror was damaged in a hit & run, choosing to fix it themselves to avoid insurance premiums increase.

I used to send out parcels and insure them, but several parcels arrived damaged (admitted by the couriers) and they said they needed proof of packaging the items correctly. From therein I would video the packaging of all items and something occurred again, but they made it impossible to actually use their insurance.

My point is this: Getting insurance is becoming increasingly difficult, but also getting the insurer to honour their agreement is becoming increasingly difficult. In the UK you are legally required to have car insurance, but they are clearly robbing people with no recourse to justice. The system is already broken and not fit for purpose.

[1] https://insurance.landrover.co.uk/

[2] https://www.financial-ombudsman.org.uk/consumers/complaints-...

Nothing will change, houses will be rebuilt the same way in the same place.

Punks feelin lucky are advised to Google (or ask any GPT about) "insurance paradox".

Haha

They would spread leaflets/internal publications on "Risk Profile for the Year 20##" every year. And they would issue updates every Q or H.

Insurance companies monitor every-little-thing. If it hasn't rained for X days in Z country, they KNOW IT, monitor it, and accordingly change policies, premiums, etc.

I always tell people that the most lucrative job (imho) is "Actuary" (https://en.wikipedia.org/wiki/Actuary) so for anyone who is young enough to make a career change or have kids on the verge of picking directions/professions, "Actuary" for-the-win!!

Losses are very much in line with asset price inflation. If a house rises in value for no good reason other than loose monetary policy, so does the compensation. At the same time, insurers struggle to find safe yields to match these cost increases when that same monetary policy keeps interest rates low.

Looking at the chart pictured, one would expect that extreme weather events have increased dramatically after 2000, but that is not the case:

https://ourworldindata.org/natural-disasters

I think it is easy for people to "dump" on some of these higher priced real estate incidents seen recently but this is also affecting people on social security. What are we going to do just let their house burn down and then just have a bunch of homeless senior citizens in the mix. Why even have government? Seems like a terrible country to live in if a 30 year old needs to plan their house situation out into their 80s.

Also seems a bit ironic to me that you get insurance to cover unexpected future expenses but when insurance takes losses then they can just drop you because .. the losses were unexpected. They've known for 20++ years and I'm sure some... money was made... Did they put some away for this situation? Also if you personally experience a loss they also drop you almost immediately.

This idea that we'd just let insurance companies do whatever is *nuts*. Has that ever worked? Honestly pure capitalism seems like the real behind the scenes American dream or fantasy. This same climate change most likely was created by companies making buckets of money with no plan to deal with the side-effects we experience now. Just let the market take care of it....

These companies aren't about making "some profit" they want to make as much profit as possible. Is some 75 year widow living in her and her dead husband's house in Eureka, CA going to convince them to keep insuring her house at a reasonable price? Even if she paid the same insurance company for 30 years?

I think the solution is going to require some government intervention because insurance companies just don't care and it will be hard for new players to innovate quickly enough to tackle such a large crisis. Ie. legislating the inspections, legislating the fire-resistant building guidelines + insurance scale, subsidizing certain low income locations, working with communities to improve fire safety and resources. Some work has happened but clearly it is not happening fast enough.

This is the exact scenario every single scientist I studied under openly discussed: probably not an extinction level event, but very, very expensive… Expensive to the point of it being cheaper in the long run to switch to renewables asap and hope for the best.

It’s like a 150M conservatives are all at once are saying “Wait a minute! We should do something about this!”

Uh… yea, no shit.

Many dogs (pitbulls, akitas..) are uninsurable, yet we see them everywhere. People just accept damages, and pay it out of their own pocket (or run away and do not pay).

IMHO we should be seizing the fossil fuel companies' assets and using them for disaster relief around the world due to the catastrophe they have deliberately caused.

The talk about insurance rates is a deliberate distraction.

https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...

At the end of the day if your house burns down you can go and get some wood / stone / whatever and build one somewhere else and this will basically always be possible to do to some degree.

The question is just about what the chance of having to do that per year is and what that represents in dollar value. It can’t not be possible.