Here in Florda, there are thousands of huge 2-3 story mansions on the keys and beach... including right where we are, on the left side of Ian's landfall. These places should be empty public beaches or hardened hotels, but alas they are just banks of big houses that will get flooded and torn up by the next hurricane.
And there are tons of developments built in low, swampy areas next to big rivers.
And did Ian scare anyone? Did it affect zoning? Nope. Real estate is as crazy hot as ever here, with prices shooting up and low lying swamps being mowed down for new neighborhoods. Newcomers here know nothing about hurricanes, and tons of them view increasing flood risk as hysterical "climate alarmism" when I talk to them about it, just like before Ian and Irma.
I am no fan of insurers, but they are smart to get out. Homebuilding in SW/SE Florida is nuts.
How does the flood insurance program work? I thought it was basically government subsidy for getting insurance where it would not make for an insurer to insure. Is the cost with that included just too high now?
The government produces floodmaps that dictate your "flood zones" and affect your rate, and you can either buy public or government approved private insurance.
We are in a lower risk flood zone, but insurance is really expensive now, yeah, and getting much worse. Also it doesn't really cover all the possessions in your home, at least for us.
The insurance scheme doesn't matter. The fundamental problem is that too much stuff is built in flood prone areas, and someone has to foot that bill when all that stuff gets trashed. Its like building neighboorhoods on the lip of volcano. The cost is unpredictable and potentially huge, but inevitable in the near term, which must be a nightmare for insurers.
> But if the mansions are getting built, which they appear to be, the workers must be getting there somehow...
I did geothermal for mansions a long while back and it's mostly specialized contractors bringing in a small crew. It's not a ton of employed people and not locals.
Where I've seen high numbers of local employees making good wages are in areas constructing a lot of dense housing, particularly townhomes.
North of Tampa, there is some dense housing construction but most housing starts are supersized, detached offerings. That cheers up the NIMBYs (a robust homeless community testifies to NIMBY successes).
There was heavy apartment building along SR54 until the county commission's moratorium. It was just for that corridor but apartment building died instead of moving north.
After Ian, many workers' homes got trashed, and there was a massive worker vacuum. Contractors poured in from all over the country to fix stuff at inflated prices, with priority pretty much dictated by wealth.
For instance, we had tree choppers and stump grinders from Georgia. They drove heavy equipment all the way down here.
Honestly I dunno what happened to mega mansions that really got hit. I don't go down to Port Charlotte much.
Indeed. I think it is one of the biggest issues in society. Prevention is seen as wastefulness and often de-prioritized. Meanwhile heroics after a disaster capture media attention and praise. This has been observed in fields as diverse as business & management, construction & maintenance, government, and of course economics. It is a fallacy so common, we can even find it here on HN! Wish I knew of a solution, any ideas?
Miami-Dade and Broward requires buildings to be built to modern hurricane standards ("best in the world") but the rest of the state has resisted adopting the same standards.
I am not worried about wind, the houses here are still built like bunkers. Oak trees, cages, signs all got ripped up by Ian, but our neighborhood's houses were fine.
But the only thing that protects against flooding is building elevated, with an empty 1st floor or stilts or whatever.
I guess people might flock to Florida because it's warm there and it doesn't have an income tax? I can see out of state buyers get what looks like a house they can afford, only to find out they are on the hook for a huge insurance bill every month.
If insurance companies exit from an area, what happens to mortgages then in that area? Banks like to protect their mortgage properties and force people to buy insurance, even escrow the insurance to make sure it's always paid.
The state of Florida is likely going to end up as the insurer of last resort, which causes some interesting political tensions because it means that a lot of working-class people are going to be subsidizing the well-connected people who are wealthy enough to own the waterfront property which is most at risk from flooding.
This is the beauty of “forever” cultural wedge issues: if you can get people to vote you into office based on transgender rights or abortion, then they won’t ever vote you out of office, even if your decisions cost them tons of money.
Yes - I’m expecting it to get brutal after the next major storm or two. We had family in Miami and before they moved they were looking at some hefty increases just due to the last few rounds of flooding. More frequent, more widespread is really going to reset actuarial models.
> I can see out of state buyers get what looks like a house they can afford, only to find out they are on the hook for a huge insurance bill every month.
While true, the influx of move-ins also played a meaningful part in raising insurance costs.
The sudden spike of buyers with NY & CA sized dollars massively inflated FL home prices. This further stretched tight JIT construction inventories which further drove up home replacement/repair costs.
What eases the above? More building. Where's the building happening? All over but with little regard to historical risk - whether an area sees 30 landfalls in 150 years or maybe one.
In other words, it goes to show that if you don’t have competition in a place where claims will absolutely be filed, you will go broke. Smart move, but makes me feel insurance owes more to humanity than leaving people to fend for themselves.
There isn't competition because insurers' odds against hurricanes and floods are bad.
They can't collect enough premium before a payout occurs, so there will not be insurers that will take the FL home insurance bets without higher premiums.
The problem is of the “fuck around and find out” variety. Florida is creating a lot of new, hard to price risks. Risk managers hate unknown probability, high impact events.
How many oceanfront high rises built of reinforced concrete are potential at risk of catastrophic failure due to poor regulatory environment?
How will climate change and various environmental risks in Florida impact risk?
On the car side, how many uninsured accidents will take place due to the crackdown on undocumented or under documented drivers?
On the liability side, what kind of crazy torts will result from the weird crackdowns on teachers and doctors?
They can't price that risk. That's the whole problem of why they are "pulling out". To be able to do that in the future as there are regulations.
Nation-wide insurance companies use risk pooling. They create funds for things like hurricanes that come every 3 years. And they have reinsurance for catastrophic losses. While it is a simplification, seems like greed to me and serving shareholders, not people who actually need it in a time of need.
“In a place where claims will absolutely be filed”
Insurance isn’t supposed to work like that - there isn’t a way these houses can be covered at a reasonable rate without forcing other customers to subsidize them.
BTW, it's not just home insurance. Auto insurance is spiking. We're seeing 30% you-suck-for-living-in-FL surcharges - this is above/beyond the existing hikes from ever-increasing vehicle repair costs.
That 30% surcharge especially sucks for people who can't even afford collision/replacement coverage.
Hurricane-driven floods wreck cars too. You don't suck for living in Florida, but actuarily speaking, your most expensive assets are at significant risk.
I get that and it's reasonable for that risk to be shared among people who are insured for repair/replacement.
I don't think it's reasonable to put that risk burden on people who aren't opting into that coverage. Their vehicles don't carry that coverage, the insurance companies bear no risk.
For people who don't get the benefit of coverage, why should they be penalized and have to pay for others that do?
I searched around a little and couldn't find anything about this. But from what you're saying, it sounds like your insurance company may have mispriced their risk and they're recouperating recent losses on your dime? Florida's politicians don't seem keen on regulations; I'm unsure how one should address the perceived unfairness in this situation.
> But from what you're saying, it sounds like your insurance company may have mispriced their risk and they're recouperating recent losses on your dime?
The insurers aren't saying. Some news stories list generic price factors (but not any sources). So those seem to be speculation.
All that said, Florida has one type of recurring, definitive vehicle loss event. Hurricanes.
Everyone thinks of flooding in Florida, but the real risk is wind. When a hurricane hits, a relatively small area is subject to flooding. But huge swaths of the state are hit with high sustained winds. If the winds compromise the roof and rain gets into the house, you're looking at a huge amount of damage to the home.
For that reason, insurers are very strict about roof age. Roofs are very expensive to replace ($15-$20k+), so it becomes a fight between homeowners trying to save money with a roof that works just fine (in their mind at least) and an insurance company that keeps raising rates or threatening to drop if they don't replace it.
Enter roofing contractors. In Florida you can assign your benefits to them and they gain the ability to sue on your behalf. So they go to desperate homeowners and offer to find a reason for roof replacement that homeowners insurance will cover, and sue the insurance company if they refuse. To give you an idea of the scope of this, 79% of insurance lawsuits come from Florida.
Although other factors do exist, this is a large part of the reason insurance is so expensive here even for those not in a flood-prone area.
And this might be obvious, but the failure mode is the wind dislodging/damaging a sufficient number of shingles and rainwater soaking/flooding the house.
Money might be better spent on replacing the pitched roof entirely in that case. Roof angle and asphalt shingles don't make a lot of sense in hurricane winds.
Ian's flooding zone was pretty populated. And it was tracking for a direct hit on Tampa for awhile (except for the Euro model, which was right all along), which would have been quite a flooding disaster.
You are right about the roofing issue though, like said below even a damaged roof can destroy your house. Honestly I forgot about this because flooding was such a thing for some acquaintances.
> In Florida you can assign your benefits to them and they gain the ability to sue on your behalf.
Not anymore. The legislature took this away at their last special session. They also took away attorneys fees when an insured sues and wins against his insurer.
As mentioned in the article, Farmers just announced they are exiting the state as well. And not just for home owners. They are winding down auto and umbrella products as well. They are no longer writing new policies and won’t renew existing ones. My understanding is that they were forced to withdraw the others in order to pull out of the home owners market. Pretty dire issue. It sucks for the people who built in safe areas to code…
I've read that a decent driver here has been home insurance lawsuits. Florida accounts for 79% of all home insurance lawsuits, my eyes bulged when I read that.
51 comments
[ 2.7 ms ] story [ 135 ms ] threadHere in Florda, there are thousands of huge 2-3 story mansions on the keys and beach... including right where we are, on the left side of Ian's landfall. These places should be empty public beaches or hardened hotels, but alas they are just banks of big houses that will get flooded and torn up by the next hurricane.
And there are tons of developments built in low, swampy areas next to big rivers.
And did Ian scare anyone? Did it affect zoning? Nope. Real estate is as crazy hot as ever here, with prices shooting up and low lying swamps being mowed down for new neighborhoods. Newcomers here know nothing about hurricanes, and tons of them view increasing flood risk as hysterical "climate alarmism" when I talk to them about it, just like before Ian and Irma.
I am no fan of insurers, but they are smart to get out. Homebuilding in SW/SE Florida is nuts.
We are in a lower risk flood zone, but insurance is really expensive now, yeah, and getting much worse. Also it doesn't really cover all the possessions in your home, at least for us.
The insurance scheme doesn't matter. The fundamental problem is that too much stuff is built in flood prone areas, and someone has to foot that bill when all that stuff gets trashed. Its like building neighboorhoods on the lip of volcano. The cost is unpredictable and potentially huge, but inevitable in the near term, which must be a nightmare for insurers.
An additional problem is that flood risk is based on area elevation rather than dwelling elevation.
In a zone where houses range from 2' to 40' elevation, those dwellings are all rated the same for surge risk.
Build a big house, weather knocks it down, build a bigger house, weather knocks it down...
No because the people who most need the wages can't afford to live where the work is.
I did geothermal for mansions a long while back and it's mostly specialized contractors bringing in a small crew. It's not a ton of employed people and not locals.
Where I've seen high numbers of local employees making good wages are in areas constructing a lot of dense housing, particularly townhomes.
There was heavy apartment building along SR54 until the county commission's moratorium. It was just for that corridor but apartment building died instead of moving north.
Florida is similar. It gets pretty poor and gritty within 30 minutes of most fancy places.
For instance, we had tree choppers and stump grinders from Georgia. They drove heavy equipment all the way down here.
Honestly I dunno what happened to mega mansions that really got hit. I don't go down to Port Charlotte much.
https://www.wunderground.com/cat6/South-Floridas-Hurricane-B...
But the only thing that protects against flooding is building elevated, with an empty 1st floor or stilts or whatever.
If insurance companies exit from an area, what happens to mortgages then in that area? Banks like to protect their mortgage properties and force people to buy insurance, even escrow the insurance to make sure it's always paid.
While true, the influx of move-ins also played a meaningful part in raising insurance costs.
The sudden spike of buyers with NY & CA sized dollars massively inflated FL home prices. This further stretched tight JIT construction inventories which further drove up home replacement/repair costs.
What eases the above? More building. Where's the building happening? All over but with little regard to historical risk - whether an area sees 30 landfalls in 150 years or maybe one.
There isn't competition because insurers' odds against hurricanes and floods are bad.
They can't collect enough premium before a payout occurs, so there will not be insurers that will take the FL home insurance bets without higher premiums.
The problem is of the “fuck around and find out” variety. Florida is creating a lot of new, hard to price risks. Risk managers hate unknown probability, high impact events.
How many oceanfront high rises built of reinforced concrete are potential at risk of catastrophic failure due to poor regulatory environment?
How will climate change and various environmental risks in Florida impact risk?
On the car side, how many uninsured accidents will take place due to the crackdown on undocumented or under documented drivers?
On the liability side, what kind of crazy torts will result from the weird crackdowns on teachers and doctors?
Nation-wide insurance companies use risk pooling. They create funds for things like hurricanes that come every 3 years. And they have reinsurance for catastrophic losses. While it is a simplification, seems like greed to me and serving shareholders, not people who actually need it in a time of need.
Insurance isn’t supposed to work like that - there isn’t a way these houses can be covered at a reasonable rate without forcing other customers to subsidize them.
That 30% surcharge especially sucks for people who can't even afford collision/replacement coverage.
I don't think it's reasonable to put that risk burden on people who aren't opting into that coverage. Their vehicles don't carry that coverage, the insurance companies bear no risk.
For people who don't get the benefit of coverage, why should they be penalized and have to pay for others that do?
A few links on DDG. It didn't get a lot of coverage. https://duckduckgo.com/?hps=1&q=auto+insurance+rate+hikes+fl... Bang that to Google to get a better list of stories.
> But from what you're saying, it sounds like your insurance company may have mispriced their risk and they're recouperating recent losses on your dime?
The insurers aren't saying. Some news stories list generic price factors (but not any sources). So those seem to be speculation.
All that said, Florida has one type of recurring, definitive vehicle loss event. Hurricanes.
For that reason, insurers are very strict about roof age. Roofs are very expensive to replace ($15-$20k+), so it becomes a fight between homeowners trying to save money with a roof that works just fine (in their mind at least) and an insurance company that keeps raising rates or threatening to drop if they don't replace it.
Enter roofing contractors. In Florida you can assign your benefits to them and they gain the ability to sue on your behalf. So they go to desperate homeowners and offer to find a reason for roof replacement that homeowners insurance will cover, and sue the insurance company if they refuse. To give you an idea of the scope of this, 79% of insurance lawsuits come from Florida.
Although other factors do exist, this is a large part of the reason insurance is so expensive here even for those not in a flood-prone area.
Very destructive.
Especially for a lot of folks living on fixed incomes.
You are right about the roofing issue though, like said below even a damaged roof can destroy your house. Honestly I forgot about this because flooding was such a thing for some acquaintances.
Not anymore. The legislature took this away at their last special session. They also took away attorneys fees when an insured sues and wins against his insurer.
https://news.fiu.edu/2022/the-big-reason-florida-insurance-c...