Last month — before the current fire disaster, note — the Senate Budget Committee put out a report titled Next to Fall: The Climate-Driven Insurance Crisis Is Here — and Getting Worse. Here’s just a bit —
In communities across the United States, homeowners are already facing a climate-driven insurance affordability crisis. As climate-related risks have increased, so, too, have climate losses. Some estimates suggest that “[i]nsured losses from natural disasters in the U.S. now routinely approach $100 billion a year, compared to $4.6 billion in 2000.” This has, in turn, translated to an accompanying increase in insurance premiums. Between 2020 and 2023, insurance premiums in the top 20 percent of counties for climate risk increased by 22 percent, and studies have found that insurance premiums have increased 40 percent faster than inflation. Homeowners have, on average, “seen their premiums spike 21 percent since 2015. . . . That
means ever more people are forgoing coverage, leaving them vulnerable and driving prices even higher as the number of people paying premiums and sharing risk shrinks.” Staggeringly, around 67 percent of homes in the United States are now underinsured.
In other words, this isn’t just a Florida or California problem. It’s a national problem, and it needs a national solution, which isn’t going to happen in the next four years.
I believe this is the Bloomberg article that was linked in Senator Whitehouse’s “x.” I can’t read it behind the subscriber paywall. Here’s one I could read, Climate change tests the insurance industry and could lead to the ‘next big economic shock’ for the U.S. at Yahoo News. The MAGAts are still pretending climate change is a joke, but you can’t fool bean-counters.
Meanwhile, House GOP puts Medicaid, ACA, climate measures on chopping block, says Politico. House Republicans are the new flying monkeys, I tell you.
See also As a Climate Scientist, I Knew It Was Time to Leave Los Angeles at the New York Times.
Oh good, more incoming, and more graveyard humor after the big funeral. Let me see, they want big down payments, loan rates are the highest in years, insurance (which borrowers must have) is high and getting higher, and property taxes show no signs of cost reduction. You might as well get a Home-Owner's Association bill while you are at it. Thanatos will get a big chuckle out of all of that dark stuff. Oh, and personal debt is at an all- time high. None of this sounds good to me, but I am not an economist. I am not a climate scientist either, but I sure enjoyed reading from the wise one who bailed on Southern California before the inevitable climate chaos he wisely saw coming set in. He is right. Climate Chaos risks are everywhere, and most are even a surprise for the experts. Risk management is called insurance, and the security that comes from risk management is getting more expensive fast. Even life insurance for men costs more as life expectancy for males is decreasing. Does anyone want to guess why?
It is a bad time for the party in power, that is all I know. It is a good thing they have that new Department called DOGE, because they are going to have a lot of incoming to dodge. That's a homophone they need to be homophobic about. They might want to warm up for it with a visit to the primate pavilion at the zoo. A bit of practice never hurts.
…nice wordplay in your closing paragraph
We have a few industries that need to be regulated – that's not the right word – they need to be watched like a prison watches Hannibal Lechter. Because they have the same kind of motivations, Health insurance tops the list – they can and do kill people.
Home insurance is right up there because it's not optional. If you can't fork offer $300,000 cash for the average home, you have to get a mortgage and the bank requires insurance. Anybody who says it's a 'choice' is kidding you. You get around it if you rent, but not. Your landlord has a mortgage (almost certainly) so your rent is covering the insurance. But if the place burns down even though you paid the insurance indirectly, your loss in belongings isn't covered.
Nursing home 'care' is up there for the same reason as the other two. The profit motive stands in direct opposition to actually providing care. And one other – child care. Yep, the fewer supervisors and the less food they provide, the more they make.
Frankly, these industries should be prohibited from excessive profit. Take homeowners insurance – the government should cap rates based on what they take in through premiums, minus what they pay out in claims and expenses. And the windfall of a good year should be retained to offset the kind of disaster that a hurricane or firestorm can wreak. I think the insurance companies are trying for record profits every quarter, which means they are not retaining a surplus for the inevitable bad year.
Oh.. and about car insurance… Never mind – you get the picture.
YES to all, and more.
I trust Whitehouse (D-RI) more than most Senators, and I trust Dem-run Sen Committees *way* more than the GOP-run circuses we'll see in the next session, but I'm a little worried that this report ignores what Dave rightly identifies as a huge problem driving insurance rates: relentless drive for *higher* profits every year & quarter. The report gets around this by focusing on "non-renewal rates", not the more general problem of *increasing* rates (see Para 4 of the Exec Summary).
A few months ago, I got a call from State Farm (house+car ins since I moved here in 2007), saying that my rates would go up. Their excuses were BS, and I replied with my usual attempt at subversion – being nice to the person but nasty about Corporate profit-taking. Ultimately I accepted the inevitable because my only option would be switching to some other Corp which would give me slightly lower rates at first, then raise them, and I don't like to waste my time with that game.
That's bad enough for us puny Humans, but the Big Picture is far worse. Big Finance has been increasing its strangle-hold on the USA for decades (thanks, Reagan), and the GFC in 2008 kicked that into high gear. At the time, I agreed that Obama had to do the "responsible" thing & bail out the Banking system, but in hindsight, I sure wish he had thrown a bunch of those Banksters in jail. It's kinda funny – only *kinda* – that the only person jailed over all that was some low-level guy from a Swiss bank who was busted for a bad $300K deal, while the Feds gave TRILLIONS of dollars to the big banks.
Anyway, propping up the Banks created a huge asset bubble; essentially, Inflation for the Rich (Stocks, Art, Real Estate, etc, went way up, while food, gas, etc stayed relatively stable). Only rich people care that Stocks & Art are still sky-high, but the RE inflation trickled down to the rest of us as unaffordable housing costs.
Of course, that drives up insurance, which is bound to be somewhat proportional to house prices.
Maybe I'm being harsh on the Insurance Corps – maybe they're forced to raise rates because the cost of Lobbying has gone up…
There are news stories from many sources saying that home and car insurers are losing money. Here’s one —State Farm reports monster loss for 2023State Farm reports monster loss for 2023. See also this. All kinds of things are happening that is messing with the insurance business model.
Here's a gift link: https://www.bloomberg.com/features/2024-home-insurance-real-estate-crisis/?accessToken=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzb3VyY2UiOiJTdWJzY3JpYmVyR2lmdGVkQXJ0aWNsZSIsImlhdCI6MTczNjc5MDQ4MSwiZXhwIjoxNzM3Mzk1MjgxLCJhcnRpY2xlSWQiOiJTOVdHMDNEV1JHRzAwMCIsImJjb25uZWN0SWQiOiIwNUVENzNENkQxMUQ0RDhDOTQxOENFMjk2MkQ3Qzg3MCJ9.Ke1ffy886tlurFE44bmSJfLiShh3ru83HeRkKu3dl34