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Is the world becoming uninsurable?

(charleshughsmith.substack.com)
478 points spking | 1 comments | 17 Jan 25 00:32 UTC | HN request time: 0.236s | source
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teeray ◴[17 Jan 25 15:16 UTC] No.42738381[source]▶
The problem is that in American home-buying, insurance is often compulsory for a purchase with a mortgage. This makes sense from the bank's perspective--they want to insure their collateral. However, the system doesn't really have an answer for "what happens when their collateral becomes uninsurable?" Even though lenders have force-placed insurance, even those insurers can deny coverage in certain circumstances (e.g. flood plain). This puts insurers in a position to de-facto foreclose on not just one person's house, but swaths of houses in regions they (as an industry) deem risky.

I'm not sure what the answer is here other than forcing insurers to insure (which would raise premiums for everyone), or creating meta-insurance of some kind (insurance against becoming uninsured).

replies(3): >>42738467 #>>42738543 #>>42738641 #
1. cormorant ◴[17 Jan 25 15:35 UTC] No.42738641[source]▶
There's always some price at which an insurer would willingly insure. The only case where it is "impossible" is when there's a government price cap. The other issue that you implicitly refer to, though, is that the price of insurance can be altered annually, while the mortgage term is much longer. This mismatch creates "what happens when their collateral becomes [so expensive to insure that the homeowner would never have agreed to this mortgage deal on these terms upfront]?"