Is the world becoming uninsurable?
Overall framing
- Most commenters reject the idea that “the world” is becoming uninsurable; they argue specific regions and risks are becoming uneconomic to insure at past prices.
- “Uninsurable” in practice usually means: the actuarially fair premium is either illegal (due to caps) or politically impossible for most customers to pay.
Insurance economics and correlated catastrophes
- Insurers must cover expected losses plus a modest margin; for highly correlated events (wildfire, hurricanes, floods) they need years of profit to fund rare, very bad years.
- When risk rises (more frequent fires, higher rebuild costs, denser development), required premiums rise sharply; people accustomed to low premiums perceive this as “gouging.”
- Some note that many P&C and health insurers run on low single-digit net margins; the big dollars flow more to providers, pharma, and occasionally to integrated conglomerates.
Regulation, price caps, and market exit
- In California and Florida, commenters point to:
- Rate caps and slow approval processes.
- Restrictions on using catastrophe models or reinsurance costs in pricing.
- Litigation-friendly environments (especially FL).
- Result: insurers limit exposure or leave; “insurer of last resort” pools (e.g., FAIR) grow, often underpriced, implicitly socializing future losses onto taxpayers or other policyholders.
- Several argue price controls are politically popular but ultimately force shortages and hidden subsidies.
Climate change vs. development and building standards
- One camp stresses climate change: warmer seas, more extreme heat/drought, and more billion‑dollar events are raising physical risk.
- Skeptics counter with data suggesting no clear long‑term trend in hurricane frequency/intensity, attributing rising losses to:
- More and pricier assets in harm’s way.
- Suppression of controlled burns and poor forest management.
- Building sprawling, flammable suburbs in wildland–urban interfaces and floodplains.
- Broad agreement that:
- Fire‑ and wind‑resistant construction (concrete/ICF, stucco or fiber‑cement siding, Class A roofs, ember‑proof vents, defensible space) works but is underused.
- Legacy housing stock and zoning make rapid retrofits difficult.
Fairness, subsidies, and “managed retreat”
- One side: living on coasts, in canyons, or in floodplains is a choice; others inland shouldn’t subsidize repeated rebuilds of high-end homes.
- The other side highlights:
- Long‑standing communities (often poorer or redlined) now facing climate‑amplified risks with little ability to move.
- Transaction and financing costs (high rates, sunk mortgages) that trap owners.
- Proposed responses include: risk‑based premiums with no caps, stricter building codes, buyouts with no‑rebuild clauses, and ultimately “managed retreat” from some areas.