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Is the world becoming uninsurable?

(charleshughsmith.substack.com)
478 points spking | 2 comments | 17 Jan 25 00:32 UTC | HN request time: 0s | source
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Animats ◴[17 Jan 25 04:28 UTC] No.42734092[source]▶
Not uninsurable, but buildings are going to have to become tougher.

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.

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Sabinus ◴[17 Jan 25 04:31 UTC] No.42734105[source]▶
If the market is allowed to price insurance correctly then we can motivate building designs to be more disaster resist. If the McMansion can't get insurance but disaster resistant, modest homes do, then people will adapt.
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iandanforth ◴[17 Jan 25 04:48 UTC] No.42734200[source]▶
"Correctly" is doing a lot of work here. Some readers might miss that this is double edged. Insurance is a mandated product. You don't have a choice if you want a mortgage, or want to run a business. So while it is true that the sustainable price for insurance in many areas is higher than what current regulations allow, let's not forget what happens in an unregulated insurance market; price gouging.
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1. ahupp ◴[17 Jan 25 06:09 UTC] No.42734568[source]▶
The big risk that we need regulation for is not that insurance charges too much, but too little. There will always be the temptation to charge less than the other guy, get lots of customers and hope nothing really bad happens.
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2. cloverich ◴[17 Jan 25 06:22 UTC] No.42734638[source]▶
This is a great callout, although I suspect the two main things insurers need but can't get today, due to regulations:

    1. Ability to raise price based on risk. Regulation example: State won't let insurance company modify their fire risk maps. I believe this has come up in central Oregon for example. 
    2. Ability to drop people out right. i.e. if they think risk of home insurance is 50/50 next 10 years, they won't insure at all.
1 can accommodate for 2, but then its basically insurer charging the actual price of the home, year one. Maybe they can work out a deal though, like you get the money back if it doesn't burn down. (Mostly parroting things I've heard that seems to make sense).