Sure, but state governments (in the US) also set what prices are allowed (disclaimer: I don't work in the industry but have friends that do so I might misunderstand). And that means that if the state says "you can only charge X for insurance", and it's still unprofitable, those customers are effectively uninsurable.
I see that as a regulatory issue, but of course, the end result is the same. I'm familiar with services being effectively unavailable as a result of regulation from living in Canada. (Health insurance / not being allowed to buy healthcare).
There is an issue with price caps in some regions. Some of those have been addressed.
I think this is a subset of larger shift in the economics of insurance. While coverage focuses most on the climate change aspect, the majority of the change is driven by building costs. If you cant rebuild economically, then you cant insure economically.
> Like virtually all problems, it's been approached as a problem with a political solution: the state or federal government can force insurers to continue offering policies that put them on the hook for additional catastrophic losses, and / or become "insurers of last resort."
When you put a minimum on the price of wages the true minimum is zero. When you put a maximum on the price of insurance the true maximum is 1/0.
The problem with slippery slope fallacies is, well, they are a fallacy.
I also see you coupled it with the strawman fallacy, since I didn't claim anything as wide ranging as "people should aim lower."
Pretty impressive to pack so much poor reasoning into one sentence.
Spending within what one can afford is a long running method of resource allocation which has served mankind for millennia, and mankind is now living at a higher standard of living than any point in history.
Like we see in California, when the government sets a price ceiling, insurance companies just leave. Same in Florida. If the free market truly was allowed run normally, the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there. Is that a bad thing? If someone was living in a house near where they tested missiles, we'd call them crazy. At what point can we say the same about people building and rebuilding over and over in these disaster areas.
Or some forms of housing in high-risk areas, like sprawling single-family houses, might get too expensive, and the only way for people to live in those places would be a smaller number of denser, more easily defended structures. Also a good thing.
How about profit caps? I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders.
To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.
their september 2024 earnings put them at 6% margin. that’s not very good. for reference apple is 15%, mcdonalds is 32% and costco is about 3%. that being said compared to a competitor, elevance at 2.5%, they’re doing well. a little worse than allstate (car and home insurance), which is about 7%.
To be fair, they play a shell game by steering people towards their subsidiary owned medical providers (avoiding loss ratio limits of 15% to 20% by putting the money into providers, which have no profit cap).[0]
Health insurance does have profit caps, so like the sibling commenter said their margins are small (6%) but also decently under the cap (20%) in the first place.
> To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.
This has baffled me ever since Obamacare was first passed - it seems that each year the insurance companies have an incentive to drive up the cost of healthcare, since that’s how they earn more money in absolute terms. Is it not so?
That is so, to an extent. But it's balanced against employer demands to hold down medical costs because they pay most of the bills. If your HR department can save 5% on employee medical costs by switching from Blue Cross to Cigna next year they'll absolutely do it.
First of all there isn’t one “European model”, every country in Europe has its own system.
To answer the substantive point, it’s extremely difficult to pass substantial laws in the US due to the structure of its political system. The mandatory coalition of the president + 60% of the senate + 50% of the House of Representatives is a much higher bar than any other democracy. So laws aren’t written to be optimal policy, they are written to satisfy this extremely high coalition requirement — Obamacare in particular was very fundamentally weakened from some of the more expansive initial proposals to address the concerns of one or two senators and get them on board.
but people always talk about how insurance is guaranteed in europe something must be working if gunning down a CEO is pro the people wouldn't copying one of the European countries be even more pro the people?
what makes senators hate something that is pro the people? wouldn't that give them better ratings? I come from a dictatorship so sorry if this is a dumb question
There is an unlimited amount of potential financial gain from American politics, both in lobbying and campaign financing. It is also widely true that the candidate with the most money spent in a campaign is heavily favored to win the election, with the exception of the presidency which is more contested. Now consider that in the 2020s the richest people now have more money than God.
The short of it is that you can get anyone you want in office, to do anything you want even if it directly opposes their constituency, as long as you spend enough money on them to get them in office, buy their vote, and keep their PR afloat.
The answer was already given: it was politically infeasible to pass a single payer variant in the US. And it’s not clear it would have been good even if it had been feasible.
Sentiments on Luigi seem to put him on the same level as Rosa Parks or Jesus Christ if not higher both on HN and Reddit but that is ancedotal
Could you say a bit more about the politics? this is very fascinating idk much about insurance or politics
This may be super simplistic but Europe, if you look at it at a high level, is as diverse as US states if not more because a lot of places have multi party systems instead of a two party system with comparable diverse interest groups and comparable GDP etc
What did they figure out to have insurance that the US can't? Or doesn't want to?
> What did they figure out to have insurance that the US can't?
Not sure how I can say it more clearly. Most European countries have a functioning political system where it is easy (or at least possible) to pass necessary laws. The US doesn’t.
Simply put, a lot of people in US are genuinely convinced that European-style universal health insurance means that they'll be worse off than they are today. This myth is maintained by agitprop from right-wing sources that tells them about "death panels" and multi-year waiting queues (while conveniently forgetting to mention that all these things also exist in US, with the only difference that you can avoid it if you have enough money).
What period do you put it over for property insurance? Profit caps work for health insurance because claims are typically not correlated. The percentage of your customers with cancer won’t 5x one year and go back to baseline the next. New drugs or treatments (or a drug going off patent) can cause correlated swings, but generally costs to health insurers don’t change a lot year to year.
For property insurance, you need to bring in profits most years to fund the year when there are multiple category V hurricanes or large fires.
The book of business has to be large and the pockets deep. Which describes our current insurance market and the government. The way we handle this now is with reinsurance.
Sure. Because the response of a failure in governance is more government? What you are proposing is "unfair". You are essentially suggesting that the rest of the country subsidize a subset who wants to live near high-risk areas. Me too want to live in a dense forest and also have my house by the edge of the river.
You could make the argument for this for healthcare, since no one can choose which illness he is born with. But choosing your housing location is a "choice". And you can/should move somewhere else where it is less risky.
People choose to smoke, overeat, engage in risky activities that can cause injury near and long term (Rock climbing, riding motorcycles, football, MMA). Why should society pay for these choices?
Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage.
Do a search for "ACA three legged stool":
> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.
> So insurance regulation has to be accompanied by the individual mandate, a requirement that people sign up for insurance, even if they’re currently healthy. And the insurance must meet minimum standards: Buying a cheap policy that barely covers anything is functionally the same as not buying insurance at all.
> But what if people can’t afford insurance? The third leg of the stool is subsidies that limit the cost for those with lower incomes. For those with the lowest incomes, the subsidy is 100 percent, and takes the form of an expansion of Medicaid.
> Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage.
The alternative that is always there is to repeal EMTALA.
> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.
> The alternative that is always there is to repeal EMTALA.
I suspect you think it's not great having homeless people on the street.
Wait till you see what it looks like when they actually start dying in the street because emergency health care is no longer available to them, nor to many of their housed neighbors, family and friends.
I don't see what EMTALA has to deal with homelessness in this context. It largely comes down to uninsured, even post-ACA. If we can't afford the current system, it's not a matter of if, but when, either hospitals or providers leave medicare. To put it in perspective, the AMA reports (https://www.ama-assn.org/practice-management/medicare-medica...) that physician medicare compensation has declined 29% since 2001. At a certain point, it will simply be financially unsustainable. Whataboutism to distract from the fact that medicare alone is 3.7% of gdp and is forecast to grow to 5.1% by 2033 (https://www.cato.org/blog/fast-facts-about-medicare-social-s...) doesn't fix anything.
The U.S. Bureau of Economic Analysis puts the 2022 GDP at $25.46 trillion ($25,460 billion). Congress puts 2022 spending on private health insurance at $1,290 billion (5%) and Medicare at $944 billion (3.7% of GDP).
So your argument is that Medicare spending might potentially approach the same proportion of the GDP as a European country that doesn't spend a lot on its healthcare?
Pretty much. And that's just one program that services a small portion of the population. The issue is we can't make this level of spending work, why should we believe spending more money will be successful?
After a society brings in universal healthcare coverage, more rules discouraging smoking, overeating, and engaging in risky activities often follow. Which is either a nice way to get the people of the country caring about each other's health, or an awful government overreach depending on your political bent.
Cigarettes can be taxed with proceeds going to care with those with lung cancer. Dangerous activities can have a separate insurance. For a popular sport, it means most people are engaging in this activity. Houses on the top of a mountain are for a very tiny minority (and a very rich one too). They should finance their lifestyles themselves.
Because from a moral standpoint most people agree that we shouldn't allow people to go without treatment, regardless of their poor choices. From a national standpoint it also doesn't make sense to allow people to become cripples for lack of money, reducing their economic value.
Injuries also hurt, so it's not like people don't have other disincentives to avoid injury aside from the price. This isn't the case in other areas, where it's purely a monetary penalty and thus removing that penalty results in way more of that thing taking place.
> Because the response of a failure in governance is more government?
Are you this incredulous when the response to a failure in "the market" is more "market" ? Or when companies fail, and the response is "more companies", do you question that in the same way?
I'm not taking a position on the meat of your point, but this particular angle strikes me as very strange.
I'm not saying everyone pays the same, I'm saying you take away the for excessive profit nature of insurance. If you live in a tinderbox you are going to have more risk and more costs. Yeah somebody has to model the risk and set a price, but I'm saying it shouldn't be someone who has an incentive to make as much profit as possible.
Your seem to be under the misapprehension the problem is insurers charging usurious prices. The reality is Paul in the forest got used to paying whatever 5kpa to insure against a 100 year fire, not 50kpa to insure against a 10 year fire.
It sounds like a lot, but if the risk is actually that high then the prices will be too. Houses aren't cheap. Insurance is a very competitive market, it's easy to comparison shop. The root problem is the high risk, not "unfair" private profit.
Yes, I'm advocating people pay appropriately for risk. The issue is with high risk, insurers pad profits to compensate for excessive risk or leave the market with no option other than some last resort insurers. Having government step in with regulation around profits over time keeps the rates in check. You can have a Lloyd's of London, but they need to have open audited books. Otherwise you can have a not for profit, ie government entity run the book.
Profit caps presumably create perverse consequences. If the profit I'm allowed to make is proportional to X, then I'm incentivized to maximize X. If X is my costs, then... Maybe that's where these unbelievably high line items on medical bills come from.
I think that's a great metaphor for the situation, when you get a patient running a 105 fever you put them in an ice bath and then consider what underlying problem is ailing them.
You do the first part so they don't die before the long-term treatment kicks in.
> I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders.
Youre about 20-30 years late to the game, but arrive in time to see the conclusion does not match your assumption. See california for fire, florida for fstorm damage, and everywhere in the us for federal flood coverage. It doesnt work. CA FAIR has higher rates to account for increasing the coverage pool, but it doesnt look like premiums will cover the current or future loses. Which is the universal story when your policy attracts all the high risk/payout buyers. And FAIR, roughly, is setup to go recoup losses from all the _other_ insurance providers in the state. Even ones not insuring those policy holders _or that type of insurance_. Its just a layer of indirection to subsidize fire risk against all poly holders.
In all of those examples you have the for profit private insurance leaving the market because it's not profitable enough. When you take away excessive profits and allow the governmental pool to compete with for profit insurance, risk is leveled across the pool and consumers pay less. If the big private insurance companies can't be more efficient or have better risk models than the government, well they should stop trying to sell policies.
The people are risk pay less, all of the other people forced to participate in your general insurance pay more.
If I live in the middle of a city in an apartment block should I pay the same rates to insure against wildfire as someone in the middle of a dry forest? Probably not, but govenrment-mandated insurance programs force me to.
Premiums should be based on risk, not flat. I don't know where you are drawing that line of reasoning from. Just because the government is providing coverage doesn't mean it's all the same rate. Every insurance product has a risk model to set prices. I was just advocating that we have a non profit minded entity with deep pockets do it vs private companies motivated by maximizing profit.
Public benefit corps fit this model as do regulated utilities.
Edit: i think were talking past each other until agreeing that risk/cost/rates are being intentionally suppressed by or on behalf of the public. Kind if like this other housing related mortgage thing Ive heard if that may be mispriced/misstructured in favor of many at the expense of all.
I dont get it. Your argument is that if everything was priced accurately and aggregated "fairly" insurance would work. Ok, totally true statement. Very much the case that's not what is happening now for any of the example markets or gov programs.
You appear to believe "profit" is the problem, which is true in that negative profit is known as "loss" which is what has and will be occurring even with the public "last resort" rates. The private insurers are not withdrawing because their "fantastic" 6-15% margin on disaster insurance isnt enough. Using CA as an example they withdrew because 1) the state required they dont use risk based modeling for individual rates and 2) they dont include reinsurance costs as a rate signal. Shockingly their CA insurance pool turned upside down on costs/losses in a decade or two and they bailed.
FAIR is exactly the sort of or youre talking about; non profit government mandated insurance pool, open to all residents, with proportional policy/loss assignment, rates set based on regulated-interpretation-of-risk-exposure + costs, regulated by the CA Dept of Insurance. And yes, their policies are risk adjusted, but theyre not _accurate_. And yes, insurance should accurate according to risk and (payout) costs but basically none of the public last resort issuers can!
See again florida, national flood, etc. In every case 1) risk & cost modeling (accurate pricing) is suppressed on behalf of the public 2) risk prices/costs soon exceed private risk markets 3) private insurers withdraw 4) public "last resort" insurers emerge 5) risks/costs continue to grow, private insurers withdraw, the "last resort" insurer becomes the risk aggregating insurer 6) last resort insurer shockingly cant meet its commitments 7) public funds and/or backdoor insurance taxes socialize losses due to unprices disk.
There should be a way to build fire resistant buildings to reduce the cost of insuring them, likely this would be the solution in California without price caps.
You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof. These buildings would be realistically insurable in both California or Florida. They would cost more to build, not THAT much more though especially if land costs many millions, an extra 50k - 100k to build out of concrete is a very reasonable expense.
Yes absolutely, and as another poster pointed out, earthquake codes exist. Metal framing is probably a bit easier to adapt to the same earthquake codes that timber framing has.
IARC No component of this product present at levels greater than or equal to 0.1% is identified as probable, possible or confirmed human carcinogen by IARC.
ACGIH No component of this product present at levels greater than or equal to 0.1% is identified as a carcinogen or potential carcinogen by ACGIH.
OSHA No component of this product present at levels greater than or equal to 0.1% is identified as a carcinogen or potential carcinogen by OSHA
> warning for formaldehyde.
Trace amounts can possibly sweat out in specific conditions .. which is why you might choose to install with a vapor barrier.
Trace amounts can possibly sweat out in specific conditions
Nah, it's pretty well documented heat and humidity will release formaldehyde. In paperwork filed with the EPA arguing against new limits, an insulation manufacturer trade group cited California's (OEHHA) exposure limits on formaldehyde as reasonable.
Those limits are:
recently manufactured products contribute no more than 9 µg/m3 of
formaldehyde into the indoor air
So the Prop 65 warning certainly seems reasonable from here.
> You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof
Just like exactly the rest of the world? We, the non-USA folks, are looking yearly at either fires or hurricanes destroying these wooden houses there and people keep rebuilding them. Insanity.
Earthquakes make this a much more expensive option. To give you some idea, the design seismic acceleration for my house is like 3g. That's more sideways than down. The forces involved are the weight of the structure times this value. Concrete ways a LOT more. It absolutely can be done, but it's not clearly a superior material compared to wood.
A stucco, brick, or fibre cement siding, have 2m/6' clear around the base of your house, tempered windows, and either a metal roof or shingles with a Class A fire rating.
Place a piece of wood inside the hot environment of a fire and it will burn down releasing more heat than it absorbs, adding to the fire. It doesn't matter what stuff you add to it.
You can make wood not burn on the kind of environment where it would be the only or main object releasing heat. That is still a completely different category from non-flammable materials.
The US has a practically limitless amount of wood. Europe doesn’t. Wood also holds up well to earthquakes and can be treated to hold up to fire. And if there’s a catastrophic failure, it hurts a lot less than concrete does when it falls on your head. It’s a great material that the US is right to use.
The rest of the world has mudslides, floods, earthquakes, volcano eruptions, etc. Or they have no natural disasters, just like so many parts of the US.
I've been collecting a bunch of links on what things a homeowner can do. Probably the simplest thing is the clear a 5 foot ember resistant zone around the home. So remove greenery and replace wood chips with stone for example. Use fire resistant vents so ember does enter attic or crawlspace. Use Class A fire rated roof (which you can also get for asphalt shingles). If you have wood siding, replace with fiber cement siding...
Since you mentioned FL, we have mostly solved hurricane level wind resistant building codes. Hurricane ties are cheap and they work. Anything built post hurricane Andrew has these. There's also materials like Hardi Plank siding, which does add a bit more cost, but effectively surrounds the house in a thin layer of concrete. Flooding is a mixed bag. My house is built substantially up and off the ground above the '100 year flood line'. Even if a flood didn't enter the dwelling proper, it would still be devastating.
The problem is storms are getting bigger and more frequent from climate change and hitting areas they normally don't.
Great article, scientifically written. I wish it was as confident as you are in your conclusion.
> No, we cannot confidently detect a trend today in observed Atlantic hurricane activity due to man-made (greenhouse gas-driven) climate change. Some human influence may be present
> The importance of this distinction between potential causes of AMV for future hurricane projections is clear: if strong man-made aerosol forcing and volcanic forcing were responsible for most of the “quiet period” of Atlantic major hurricane activity from the 1970s through the early 1990s, then a return to this more “quiet” regime in the coming decades may not occur. But if the “quiet period” of the 1970s through early 1990s (as well as the earlier quiet period of the early 20th Century) was caused mainly by internal climate variability, one would expect to return to relatively “quiet” conditions in the coming decades as the climate swings back and forth between more active and inactive Atlantic hurricane periods. This is an important research question that does not yet have a clear answer.
Meanwhile we continue to see stronger storms.
> Another hurricane metric, the fraction of rapidly intensifying Atlantic hurricanes, was reported to have increased since around 1980 (Bhatia et al. 2019), and they found that this change was highly unusual compared with simulated natural variability from a climate model, while being consistent in sign with the expected change from human-caused forcing. Even so, however, their confidence was limited by uncertainty in how well the single climate model used was representing real-world natural variability in the Atlantic region.
We do know for a fact that the ocean temperatures are rising. Also from your article,
> Global surface temperatures and tropical Atlantic sea surface temperatures have increased since 1900 (by around +1.3 ˚C [+2.3 ˚F] and +1.0 ˚C [+1.8 ˚F], respectively), unlike the reconstructed hurricane counts or U.S. landfalling hurricanes. Finally, a number of studies have found that several Atlantic hurricane metrics, including hurricane maximum intensities, hurricane numbers, major hurricane numbers, and Accumulated Cyclone Energy have all increased since around 1980.
But climate science is about studying a complex system, and finding direct causations is hard.
> However, in a 2019 tropical cyclone-climate change assessment, the majority of authors concluded that the recent hurricane activity increases mentioned above did not qualify as a detectable man-made influences (meaning clearly distinguishable from natural variability).
>[R]ecent studies in attribution science show that climate change is causing an increase in the frequency and/or severity of tropical storms, heavy rainfall, and extreme temperatures.
So at the end of the day, it's fine to say there is no smoking gun, but it is absolutely not 'obviously false'. I think your biases are showing.
No one can truly afford to live there, if you price in the cost of insurance. The only reason people live there is because they haven't hit the 1/100 chance yet.
Afford doesn't mean you can technically throw money out the window. At some point, you are going to give up if the risk is high enough to have >2 events in your lifetime - time is also a cost to factor in, as well as loss of possessions. It's not quite that simple.
I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks of climate change and how insurance will have to change. Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything. When in reality, insurance is one of the rare areas where risks are very well assessed, not just by the initial insurer but also by a second party when reinsurance is purchased. And often those exits from the insurance markers are due to inability to purchase reinsurance.
Of course, explaining anything in detail is likely to make people think you work in the industry (I do not) and get accused of being a shill. All of which proves to me that older generations had a much easier life because nobody so financially ignorant today is in any sort of position to be able to buy a home.
All that said, I don't think it's actually a price ceiling. It's a limitation of what factors can be taken into account to set rates, and constitutional amendment from Prop 108 prevents the legislature from changing it.
> Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything
I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies are making.
When I ask people how much cheaper they think their insurance (health, home, etc) would be if we forced insurance company profits to zero they usually have some extreme guess like 50%. When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. The discourse is so cooked that everyone who just assumes insurers are making unbelievable profits without ever checking.
Like you said, when I try to bring numbers into the discussion I get accused of being a shill (or a “bootlicker” if the other person is young).
The environment this creates has opened the door for some really bad politics to intervene in ways that aren’t helpful. I wouldn’t be surprised if the eventual outcome in a lot of these places is that politicians pass legislation putting the local government on the hook for insurance after they squeeze regular insurers so hard they have to back out to avoid losing money in those markets. The consequences won’t manifest for several years, potentially after the politicians have left office, but could be financially burdensome. Similar to how many local governments were very generous with pension plans because politicians knew the consequences would only be felt by their successors.
> When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.
Meanwhile, the health care providers:
> But if you look at the list of companies with the highest [return on equity], you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers.
Definition of "healthcare provider" really confuses me. Why is my nurse lumped together with people researching drugs? Is the CEO of the hospital a "provider"?
>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs
Do you have any source for this?
I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems
You can literally read the 10-K statement from any of several publicly traded medical insurance companies. Average industry profit margin is about 3%. There are also some non-profit insurers but their fees generally aren't any lower.
The issue in the US is that there is no price regulation for different procedures (other than Medicare), plus the providers (hospital chains) are intertwined* with insurance. The end result is everyone charges as much as they can and the premiums need to be high, even if insurance technically negotiates the rates down from the “sticker” price. Insurance companies are willing to take a small percent of profit because there is so much money being taken from customers.
Right, low profit margins are not a valid argument for why it’s invalid for consumers to suspect there is some inefficiency compared to other markets. Saying the system must be efficient because profits are low is like saying boiling water should be as cheap as 98->99 degrees C because it’s just +1 C - profit margins aren’t as good an indicator of whether there is an unusual amount of disorder in the system, compared to extremely context-sensitive resource costs for hypothetically identical systems.
I think the point is more that the insurers are not the real target for your wrath. You should not motivate your congress person to do something about the insurance necessarily. It's probably better to look at a level further up the chain for example.
These are all the publicly listed health insurers in the US, with public financials, so the numbers come from the 10-Q and 10-K reports filed with the SEC.
Note that the first one, United Health, has slightly higher profit margins than the rest because UNH has an enormous business selling healthcare itself, not just insurance (they own a lot of doctor groups and outpatient clinics and employ a lot of doctors and nurses).
Some Blue Cross Blue Shield Association members are for-profit corporations now.
As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
> As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
In this list, I couldn’t find a single for profit BCBS licensee
other than Elevance.
Keep in mind Anthem/Elevance absorbed a bunch of licensees. So, for instance, Empire BCBS was for-profit but as of 2024 is part of Elevance.
At a quick glance Highmark and Wellmark are for-profit. And I believe the South Carolina licensee is as well. Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
Wellmark is a mutual insurance company (profits go back to policyholders, seems not comparable to a for profit insurance business, and for this discussion, is not going to have a profit margin that results in higher costs to policyholders):
>Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
I see no successful lawsuits, though. Still seems like Elevance is the only for profit BCBS licensee.
>In 2014, BC/BS of Illinois (Health Care Service Corporation) was sued over its nonprofit status. The lawsuit was dismissed, with prejudice, and the dismissal ruling was upheld on appeal.[62] Similar suits occurred with similar results in other states such as Oregon.[63]
To be clear if Elevance is the only remaining for-profit BCBS licensee it's because they bought the others.
Highmark got labeled as for-profit on its Wikipedia entry likely because they own a variety of for-profit companies including e.g. Highmark BCBSD Inc. and Celtic Hospice LLC.
But Highmark, the parent organization, is still a non profit. Based on their revenue and expenses on their 990 going back a decade, the entire organization is not delivering profit to any owners, it’s just spending money earned in its for profit subsidiaries elsewhere in its org.
Specifics aside, I think it is conclusively shown that no health insurance / managed care organization earns a ton of profit margin. No one is going to become billionaire rich by starting up a managed care organization, because they will spend almost all they earn.
It’s such a low profit margin business, that Buffett, Dimon, and Bezos abandoned it:
But Highmark, the parent organization, is still a non profit.
So? The Mozilla Foundation is non-profit but Mozilla Corporation is for profit. They're delivering profit, just with an added layer of indirection. In this case the Highmark parent is technically a non-profit but e.g. Highmark BCBSD, the Delaware arm, is a for profit BCBS licensee.
To who? Are there shareholders profiting? Employees on the take?
> Unlike the non-profit Mozilla Foundation, and the Mozilla open source project, founded by the now defunct Netscape Communications Corporation, the Mozilla Corporation is a taxable entity. The Mozilla Corporation reinvests all of its profits back into the Mozilla projects.
Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc.
The shareholders take home only a fraction. But a lot of money gets spent that simply doesn't need to be. Other countries avoid the deadweight loss of the middle man.
The genius of the US way is that the politicians avoid the heat when healthcare coverage is denied. Whereas UK and Canadian politicians have to answer to their constituents.
Of course, now that getting murdered is on the table, the US health insurance executives might want to up their compensation.
no offence but that murder had nothing to do with what is right or caring for the people just a game same reason trains got graffiti on them. At most a beautiful lesson in the power that comes with controlling the narrative
> Whereas UK and Canadian politicians have to answer to their constituents.
Yeah, and "politicians have to answer to their constituents" is how we got the failed insurance markets in California and Florida. This thread has now gone full circle.
That is the problem with conflating insurance and subsidy.
To buy votes, politicians sell “insurance”, but in reality it is a subsidy to a specific group of taxpayers.
When a government directly pays for healthcare, it can’t be called insurance, and so limits to the subsidy are easily attributed to the government leaders.
Whereas, if a government has the population buy “insurance” from non governmental entities, then it can pretend (for the layperson) that it isn’t a government subsidy and so the laypeople can blame limits of the subsidy on someone else.
Obviously, health insurance in the US is far from health insurance and premiums are closer to taxes being paid rather than premiums for one’s own health risks.
That isn’t so true in property and casualty insurance, at least not until governments like California step in.
>Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc.
that's not a sophisticated analysis. it would be like saying mcdonalds is unecessarily expensive because executive pay, and cars, and dry cleaning, etc. etc. yet, if you tried to found a competitor, you'd have all those same expenses. even charities have to pay management.
insurance companies make money because their aggregate risk is less than your individual risk, and you really don't want your individual risk so you are willing to pay them extra, a premium, to get them to shore up your downside. After that it's like any other company selling any other thing.
Insurance fees are not high because the insurance companies are making huge profits.
They're high because providers are making huge profits.
Now granted, they may ultimately be the same thing, but that's a different discussion [1]
In the context of housing (fires, hurricanes etc) insurance is expensive because housing is expensive to build.
[1] insurance companies have to invest their income somewhere. It makes sense to choose companies will high returns. Which includes some health care providers. Which can basically change whatever they like because of structural reasons that have been well discussed.
> Insurance fees are not high because the insurance companies are making huge profits.
United Healthcare alone made $23,000,000,000 in profit in 2023. Health insurance companies have collectively made $371 billion in profits since the passage of the Affordable Care Act.
Property & Liability insurance (home, car, etc) have relatively modest profit margins, but health insurance companies absolutely are making huge profits.
why is this number considered huge? What measure are you using? These absolute numbers are meaningless, because you have to put it into context. That's why profit margin is what analysts use, not the absolute number.
If i changed those figures to: they made $77 per person, per year in the USA for providing healthcare services, does that still seem as big? Or is it now reasonable?
Right, but why use Apple ($800 phone every 2-4 years) compared to say, an automaker ($40k in depreciation over 10 years) or a REIT ($2000 in rent every month)? Moreover, why focus on absolute profits? If the healthcare industry split into 3 (eg. doctors, dental, drugs) but with the same margins, does that mean they're suddenly not "too profitable"?
No, UnitedHealth Group made $22B in profit in 2023. Only about half of that profit came from the UnitedHealthcare insurance business. The other half came from the Optum side which is a mix of non-insurance stuff. Optum makes huge profits on software: if the software business was spun out it would be one of the top 20 US tech companies.
The profit margin doesn't include things like CEO salary, correct? I could see a scenario where the issue is still corporate greed just not greed that's measured by profit.
One one hand true, on the other hand running all these huge corporations are not cheap. United has 440 000 employees. And who knows how many subcontractors, and so on.
The end-to-end cost society spends on paperpushing is easily hundreds of billions of dollars per year. (Including time lost while waiting on hold to call them, the actual literal work of dealing with these fucking printouts at each stakeholder, the extra effort placed on the paper industry, the postal service, and so on.)
Isn't that a bit misleading? Salaries wouldn't be included, but a lot of compensation at the very high end is based on owning stock, and dividends i assume would be part of that profit margin.
Compensation, even in the form of equity, has an equivalent cash price that is owed at the time it is awarded. The receiver has to pay income tax for this compensation, even if it is not cash, and the business has to record it as an expense.
>and dividends i assume would be part of that profit margin.
Dividends and share buybacks are not expenses. They are not money spent for the purposes of operating the business, they are awards to the shareholders. As such, they are not an expense. Dividends and share buybacks happen with the profit, so they will never be included in expenses used to calculate profit margin.
There are lots of highly qualified people at the SEC and FASB working to ensure some semblance of accountability. There is a reason why people from all over the world want to invest in a developed countries’ public equity markets, and that is a belief that most of the time, the numbers are very close to the truth.
In practice yes, but technically no. If a "non-profit" brings in 100 million dollars, and pays all 100 employees a million dollar salary, then that "non-profit" has made no profit. But when someone hears that a "non-profit" made "100 million" dollars, they think it is some kind of scam or something.
Health Insurance IS a huge racket. Insurance profits are only a small slice. Executive compensation isn't part of profits. The profits of the required sole source medical supplies company isn't part of insurance profits. The contracts, salaries, benefit packages, overpayments, and waste of healthcare systems and pharmaceutical companies aren't reflected in insurance profits. Just looking at the raw profit percentages returned to shareholders is absolutely meaningless.
You have to look at the entire healthcare picture and realize that insurance is the system driving the exorbitant costs. There is no legitimate reason for healthcare prices to be so insane.
Health insurance's issue is probably how it induces pure waste everywhere as everyone has to play this dance of ever escalating paperwork which consumes a lot of labor. It's not profit, it's waste. Same with the ever increasing amount of admin. Why is that admin increasing? I estimate insurance or requirements created by insurance is part of the cause.
There is also a lot of other smells of a lack of a competitive market. Very opaque pricing, limits to how many hospitals can be opened in a region, needing paperwork to push against that limit, limits in residency slots, the entire hazing ritual of residency in the first place, limits in opening medical schools, ever escalating requirements to become a doctor, restrictions against doctor owned hospitals or clinics, the fact something like an epipen is still not out of patent and not having many clones by now, large barriers to make medical devices and medications, while simultaneously having great issues with generic drug quality, a horrible food system compared to Europe, while simultaneously having a much harder regulatory state medically compared to europe, etc.
This is spot on. It’s not that I think health insurance companies are making insane profit margins. It’s that their very existence in the system is a pure negative and in fact a moral blight. Inflicting profit into a system that is entirely dedicated to human health is by definition a conflict of interest for basically everyone involved, even if it operated at a hypothetical 100% efficiency.
Lots of things necessary for life are run by for-profit businesses — for example, food production. Do farmers have a “conflict of interest”? What about healthcare in particular makes profit immoral?
If the grocery store decides to remove the prices from everything, and require its shoppers to first call its billing department only open until 5pm to receive a set of numbers, then call their third party subscription service only open until 6pm to receive a non-binding estimate, for every item in their grocery list, then wait weeks or months for the grocery store to have its cashiers take time away from checking customers out to petition the third-party subscription service to allow its customers to buy any item deemed to require prior authorization…
You can typically endure hunger for 15 minutes for the time it takes to go to another food store.
On the other hand, if you are bleeding out in the ER, no such luxury exists.
Insurance executives have a fiduciary duty to maximize the profit of the company.
If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
If the company loses money treating patients, then it has a financial incentive to deny treatment as much as possible.
Unless a legal structure is found which scales profit with quality of care, ethical choices will be at odds with the fiduciary duty of the company officers. Having an AI say “no” and putting someone on hold is a lot less expensive than paying out for a cure that cost billions to develop.
In the case of government-run healthcare, the government at least sees the consequence of poor health outcomes in decreased productivity, competitiveness, gdp, and/or tax revenue, as well as increased use of social services.
In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
There are lots of perverse incentives at work, and vanishingly few people even try to understand them, I think because most people simply don’t believe it could possibly be as bad as it is. And by the time they learn otherwise, they care more about getting healthy again than overextending themselves trying to solve a massively complex problem.
> Insurance executives have a fiduciary duty to maximize the profit of the company.
Probably not. Many insurance companies are not "for profit" companies(not a 501c3, something else). Certainly some are, but most of the giant ones, State Farm, etc are not. Most are Mutual Insurance companies: https://en.wikipedia.org/wiki/Mutual_insurance which handily includes a list of them.
I.e. they are operated more like Vanguard, the investment firm than they are Fidelity(a private for profit company) or Schwab a public for-profit company.
Also, this fiduciary duty thing is not really true, but people think it's true. They do have a duty to work in their shareholders best interests. Lately that's been taken to mean profit above all else, but that's a recent(last few decades) interpretation.
> If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
It depends on if they share the cost(s) of keeping patients healthy or not. Incentives matter. If they are incentivized to keep people healthy, instead of just treating X disease today, it would be a different conversation.
> In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
> There are lots of perverse incentives at work
Agreed. But mostly it's just excess waste as far as I know. I'm not an expert in healthcare, so I'm at best a armchair quarterback here.
>If the grocery store decides to remove the prices from everything, and require its shoppers to first call its billing department only open until 5pm to receive a set of numbers, then call their third party subscription service only open until 6pm to receive a non-binding estimate, for every item in their grocery list,
Good point (buying food would be a nightmare if it worked like American health care!) but that's a different argument from the one made above in the thread, that a profit motive in a vital good inherently creates perverse effects.
Oh yes, these things are exactly equivalent. Problem is, nothing about the health system's incentives aligns with consumer benefit. The most profitable outcome for an insurer is that everyone pays premiums and never uses any services. The most profitable outcome for hospitals is that they charge maximum prices for every service and yet don't really fix underlying problems or prevent future problems. Hospitals profit the most off patients that need a ton of care and have deep pockets. They lose money on giving care to people who cannot afford it and won't pay. They lose money in the long run when preventive care prevents later catastrophic (and expensive) conditions later. Pretty much all of the profit-maximizing forces in the for-profit system are deeply unethical.
If you're going to tell us that because health care providers and health insurance companies are some kind of magic counterbalance against each other that benefit consumers, uh, nope.
>Pretty much all of the profit-maximizing forces in the for-profit system are deeply unethical.
Are you talking about healthcare specifically or businesses in general? AMD wants to make the best CPUs for the most amount of money. Is that "unethical"?
Yes, it is deeply unethical that someone can be bankrupted and become homeless because of a treatable condition because the "market" has decided a price for the service that is astronomical without insurance, while at the same time tying insurance to employment, dividing up insurance markets, and making coverage subject to inscrutable, unappealable decisions made by people sitting behind desks in a completely different part of the country, while the leadership of said organizations and investors make higher profits than ever. It is deeply unethical that a CEO can make tens of millions of dollars--which for most regular people is several lifetimes worth of earnings--in a single year, while dealing in a market that regularly denies coverage to people who then suffer, are financially ruined, and die.
It's not the same as making a better CPU for more money. Not. At. All.
You can also become homeless because the market has decided that rent should cost more than you can afford (in a given area). This involves real estate, equity investing, home insurance, zoning, housing regulation, and banking. Is this equally immoral? How many types of business are similarly immoral?
the question sets up a false dichotomy, unless that was your intent?
For profit fire, military, or police departments result in some very obvious issues, and they would simply be causing maximum distress.
For profit / Not for profit, are all serving the same goal - human well being. We choose for profit models where they would result in surplus, and non profit where its more applicable.
at least thats the theory. Reality is more messed up.
I don’t think health insurance is actually insurance, but I have seen little evidence that it has “insane profit margins”. From what I’ve read, ‘health insurance’ has middling profit margins relative to other insurance specialties; where are you getting that view/data?
Honestly, health insurance has a lot wrong. Things like the 80/20 rule can create some weird incentives. Normally an insururer would want to minimize the costs of what they insure, but if non-claim overheads plus profit has reached 20%, then they can't negotiate lower costs without losing profit, and are actually incentivized to either get more claims or negotiate worse prices.
This is besides all the inefficiencies, and nonsense. For example even if a patent hypothetically knew exactly how long a procedure would go, exactly what personnel would be involed and how, exactly how much anesthesia/sutures/other billable supplies were used, and that there were no complications, and even if they know that no denial of coverage would happen, it is not structurally possible for them to know the out of pocket costs, except for the handful of surgeries that get treated as package deals. It would literally take dozens of hours of phone-calls to the hospital's and each provider's billing department to get the exact codes and amounts they would submit, and then trying to get insurance to price the hypothetical bill, or provide you with sufficient information to price it yourself. And obviously a bunch of the information we are assuming the patient has are unknowable until after the fact.
Part of the problem is insurance has a huge rule engine for deciding which line items are covered by not-allowable (meaning they get written off), plus insurance contract rates are only public for hospitals (so no info for providers that bill separate), and even then the data files don't always contain sufficient data to determine which of the multiple allowable rates for this procedure with this insurance at this facility, with these caveats actually applies).
There is a lot of stuff where this is not the case and pricing is still opaque or takes way too much effort. Like if I want to get a well defined CT scan or blood test. It's not as simple as going on amazon or many other retailers.
A few examples: I wanted to get a CAC scan that my insurance wouldn't cover. My insurance website said that a CAC scan would cost this much with my insurance, along with a total price that would be charged, covered or not. It was something like $80 total. I then called the place to get a CAC scan, and they said since the insurance didn't cover it, the price was $300, and there was no cash pay direct price where I could get it at the listed $80 price, even though they could hypothetically bill the insurance, and the insurance could just bill me the full price. The same place does not have a price listing; there is no online ordering I can do for the CAC scan, I needed to go through a permission process by talking to another doctor to even get the CAC scan in the first place. The fact I even needed to call people, and there was all this bullshit, to do direct cash pay for a simple scan is emblematic of a very broken system.
Or I want to get a blood draw for a blood test ordered by a doctor at one medical. They do not list the total price, even though that should be automated and very clear since it isn't a procedure that would have any 'complications'.
Even the simple shit is not clear at all and takes way more work than it needs.
You do realize health insurers have federally mandated caps on their profits, which simply incentivizes creative accounting to make money in more oblique ways, right?
When you point out that, for example, health insurance profits are low
single digit percentage of overall healthcare costs they just don’t
believe it.
Or they see that as a cute bit of misdirection. Profits are capped as a percentage of healthcare costs, sure. Healthcare costs are not capped. Drive up the cost of care, drive up the profits.
You ever think it's curious that for-profit insurance companies pay out 2–3x what Medicare does for the same procedures?
> When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.
When you consider that single digit percentages of trillions of dollars is still an obscene amount of money it makes sense. People making tens of billions by applying formulas to spreadsheets and shuffling other people’s money around doesn’t sit right with most people.
I hear the same thing about supermarkets. Their margins are razor thin (1-3%), and yet people look at the overall profits and complain, ignoring the fact that the company had to deploy 50-100 times that capital to make that profit.
An alternative is to split these companies into smaller companies, which will each have much lower profits but also higher costs due to lost efficiencies, but people will not be happy with that either.
>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.
It's not that I don't believe it, it's that this figure is completely unrelated to the damage and waste caused by the system of healthcare and health insurance we have in the US.
I mean, in a system of chattel slavery, you see above-normal profits competed away, but that in no way means the system isn't exploiting anyone, because that's not how the harm shows up! And yet still we'd see that argument get batted around in comments like yours:
"No, your owner can't possibly be exploiting you because, when you consider your purchase cost, he doesn't actually make much profit!"
> I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks
Its not just the insurance costs either. My neighbor is an architect who now does planning/consultation with the RFS (rural fire service, australia). Its basically de rigueur for people to try and avoid or evade fire sensitive planning controls. Just the most basic concepts like defensible space, eve guards, or nonflammable finishes, let alone adequate on site water storage or site access. People are intentionally building in bushland because they want to be “in trees”, unless they block the view of course.
Even if they understand the concepts and remember black saturday, or a few years back!, it doesnt apply to them. Theres no concept of personal risk & consequences, and theyre right. They will probably get bailed out by volunteers and socialized losses. Just like new developments along riverine flood ways.
Insurance should not be for profit, and things like e.g. State Farm suddenly cancelling people's renters/fire insurance just two weeks before the fires (I am one of those people) are what people hate about insurance. No one is arguing that insurance is bad at risk assessment, but rather how they wield their proficiency with it.
Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so?
To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX?
If State Farm didn’t exist and the state ran insurance instead, and were willing to insure all comers, they’d be subsidizing people who can’t be insured profitably. That’s not crazy on its face (the state subsidizes lots of different things), but it’s at least worth asking why we should be paying for people to live in high-fire-risk areas rather than any number of other things the state could be spending those resources on.
>They don't, but they have the courtesy of giving myself and thousands of others a proper heads up. Perhaps any heads up? They quite literally just dropped me, no email, no letter, no nothing. This type of thing should be given 3 months minimum.
No way that happened, the state would not allow it.
>It’s important to note that nonrenewal is not canceling. Customers affected by the decision will retain coverage until their current contract is up. The company said those impacted will be notified between July 3 and Aug. 20.
I can assure you that I received nothing of the sort. In fact, I only found out because I called about transferring my policy to a new house. And yes, I read all email/snail mail sent by them. I was given zero heads up.
I don’t think it was moronic at all; the point is to get to the bottom of what assumptions and axioms you’re using. What is the moral framework according to which you claim State Farm has wronged you. Only then can we judge whether your claim is in fact correct.
> because they aren't in the business of insurance
So, if I understand your implicit argument correctly, it seems to be that anyone who sells a product be forced to sell it to anyone, no matter how costly it is to them.
There’s no McDonalds in Barrow, Alaska, presumably because running a McDonalds there would be prohibitively expensive. Is that immoral? Should they have an obligation to open a store there?
> So, if I understand your implicit argument correctly, it seems to be that anyone who sells a product be forced to sell it to anyone, no matter how costly it is to them.
That is clearly, clearly not my argument, but I have a feeling that you're one of those bad faith "and yet you participate in society, curious!" guys, so I'm done here.
State Farm notified its customers in August of its non-renewal (not cancelling) of policies, plenty of time for homeowners to get new policies or fall back to the state fund.
And what is fire insurance? Is that something unique to CA?
State Farm is a mutual insurance company, so it's owned by its policy holders. It's not quite non-profit, but it's in the same ballpark. I've gotten money back from State Farm one year when they (we, I guess) made too much money.
At some level, insurance is about spreading out financial risk. Insurance companies would love for every policy to be profitable, but if we let it go that far, it's merely a savings account with negative interest rates. At another level, insurance is about analyzing risk and making it more expensive to take bigger risks. Where do we want the tradeoff between these things? Whatever we choose, we have to have some ability to predict / evaluate risk.
In the face of climate change, places that have been safe for a very long time are becoming unsafe. But I don't see a reason these shifts won't happen over and over as climate change unfolds. It might be worse than mass migrations... migrations to locations which later become dangerous, turning into recurring mass migrations.
How well can we predict where it will be safe in the coming decades and where it won't. Coastal land at or below current sea level (plus storm surge) is fairly predictable, especially where there isn't the population density (and money) to support building sea walls. But with things like rivers changing course (e.g., https://en.wikipedia.org/wiki/Alsek_River), it might become very difficult to predict what's going to be safe down the road. Today we talk about things like 100-year flood plains, but how will we establish flood probabilities when the river that might flood in 10 or 20 years doesn't even exist today?
Are the people who get unlucky with predictions just screwed because their home equity is gone? Or are we going to decide to shoulder the burden together? We're going to find out a lot about humanity, the role of government, etc. as we go through all of this.
Soon, people will realize that the entire economic system that caused climate change in the first place will not save us. Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
>Soon, people will realize that the entire economic system that caused climate change in the first place will not save us.
Disagree. "the entire economic system that caused climate change in the first place" is also responsible for the green transition, including cheap electric cars and renewable energy.
>Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
Alright, what's your solution to "the entire economic system that caused climate change in the first place" that aren't just "lol just stop capitalism"?
The issue is not that people believe that insurance companies are not pricing risk correctly. It's that because there is so little competition in the market, people are aware that insurance companies can charge higher premiums because they operate as an oligopoly.
Your statements contradict each other, don't they?
In the many many complaints I have heard about the insurance industry, nobody has complained about them acting as an oligopoly or about a lack of competition.
Further, pricing is extremely regulated in terms of what can be factored in, so being an oligopoly doesn't have much impact on that.
>Like we see in California, when the government sets a price ceiling, insurance companies just leave
Does not answer the question. With no price caps, no one will be able to buy insurance even if required by law. So that means if you own a house in a risky area, you will be unable to sell it and your values will fall. The price caps are to prevent that. But to me, there should be big incentives to prevent building and re-building in risky areas.
So yes, the world in some areas are uninsurable. And other areas are becoming uninsurable.
Tangential but I have read about propaganda and social engineering but seeing human caused fires to control migration patterns is a level of diabolical I never thought I would live to see but can't blame them if the cheap rent and house prices don't do the job gotta do what you gotta do
Insurance Companies do need to make a profit and Local, State and Fed Gov is allowing building in very risky areas. Just look at Florida, that is a very risky area for weather and sea rise.
So in reality the burden is falling on Insurance Companies. High rates will in a way prevent building in those areas.
> With no price caps, no one will be able to buy insurance even if required by law
I very strongly doubt that say Elon Musk or Jeff Bezos wouldn't be able to afford market-rate insurance costs. They would just choose not to because its too expensive. Which is the point of letting the market set the rate
Change the euphemism from government to private insurance to satisfy capitalism gods and keep their giant foot from squishing us… still “on the books” as a co-mingled pool of funds to shift around to solve problems.
Aw …sad… other people exist and need resources too. Not just about your first world skin suit playing temp host to a run of the mill electromagnetic field effect.
People choose where they live, and should bear the cost relative to the amount of risk they chose to take.
Government funding is not a magical blanket that somehow makes it moral to take from someone who made good decisions and give to another who made poor ones.
The dutch aren't insured against a dike breaking (Which has its own history).
But the dikes have been collectively maintained through laws and regulation from a local semi-democratic system for 800 years (separate from government). It was a necessity as 1 delinquent could screw up everything.
The point is that the costs (to build the dikes) are fully internalized by the people who live there, rather than being cross-subsidized by people far away.
I get that we're on a tech forum but the vast, vast majority of people in this country don't have the financial ability to just move wherever they want. I'm not saying that means that Floridians shouldn't worry about this, but this bootstraps narrative is ridiculous. Everyone here makes substantially more money than the average Joe.
Agreed in general, but is it reasonable to say to people living in multi-million dollar houses on some of the world's most coveted real estate that they are should assume the risks of it? Or move?
For new buyers, yes, but there's plenty of people who already have a house but now they have no insurance for it. And sure, the terms of their mortgage say that they have to have it, but what can the lender do if nobody will insure that particular property no matter who the current owner is?
Not just the rates are managed, but also deductibles. I'd gladly have a 5 figure deductble to keep my or miums lower, but regulators think this is unfair to some.
Given over half of all households in the country have less than $20k in savings I'd say concerns over equality of access may be well founded. Edit: No? The poors can go fuck themselves? Alright then I guess.
How does just offering higher deductibles, hurt the 'poors'? Nobody said do away with lower deductibles. Are you saying they are not sophisticated enough to understand a proper deductible for their situation?
How does offering a deductible ranged well outside what the majority of households in the US can actually pay hurt anyone? If that isn't self-explanatory I'm not sure what to tell you.
Higher deductibles generally lead to a lower overall money pool raising overall prices. They allowed that here in a far more regulated market and the effect was about 4pct higher prizes across the board. Effectively the people who cannot afford the higher deductibles are subsidizing the ones who can as the end result.
Don't worry, the California government is responding to that by making it illegal to stop offering insurance in the state. That will definitely fix the problem.
Source? Many companies seem to be stopping offering insurance in the state just fine!
The most recent moves seem to be relaxing the pricing rules to allow major disaster pricing and recharging reinsurance rates in exchange for insurers offering more policies in high risk areas.
> The Bulletin was issued pursuant to California Insurance Code section 675.1(b)(1), which states that an insurer “shall not cancel or refuse to renew a policy of residential property insurance for a property located in any zip code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency . . . based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”
Which effectively means that anybody in a less risky area of California is just subsidizing those who live in the risky areas. Premia across the board will increase as a result.
Typical California redistribution...but this is from the bottom to the top.
Can’t you say that about any part of LA? Once a fire gets going, it grows and can destroy any neighborhood.
Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists). I would also make sure that the live video footage would be used only for that purpose. It would use AI at the edge to flag every fire immediately and alert nearest authorities, and otherwise delete footage. There may be other AI at the edge uses added later by the regulators but I’d work to put in place heavy bars to overcome (eg 70% in a public referendum) before they are added.
I would also invest heavily in mobile firefighting tools and materials. The firefighters using buckets is pitiful.
But then again, LA hasn’t invested in itself for decades. It’s like the opposite of NYC: rich people don’t want to live in Downtown LA, they live in the equivalent of our Brooklyn, say Manhattan Beach and Sheepshead Bay by the beach.
Because half of downtown looks increasingly more like skid row. Signage and streets are something out of the 70s literally. And there pretty much hasn’t been any new skyscrapers built since the 80s. The skyline is stuck in the Arnold Schwarzenegger movie era.
I stayed in Freehand hostel which is actually pretty nice, even though there’s abandoned buildings and homeless all around. I met a drunk Andy Dick there by the pool one evening LOL.
And you people from San Francisco — it ain’t much better over where you are. I visited Twitter HQ right when Elon took over. And let me tell you — there is a curious juxtaposition of City Hall, City Opera, The SF Philharmonic, and the fourth corner of that illustrious intersection is… a large abandoned alleyway with dumpsters. What? Imagine Lincoln Center in NYC having that.
On my show I did a lot of interviews — with regulators, technologists, sociopolitical commentators like Noam Chomsky. But one of my most down-to earth interviews was in SF of a homeless guy w his dog. See it for yourself what I’m talking about:
PS: to the silent downvoters… normally I don’t mind but this time you’re just doing it out of spite. Watch the video or say something. I bet you live there and don’t want to have these things pointed out. SF and LA were so great… so many movements started there. Lately people are fleeing and the homelessness is out of control.
OK it’s not just an alleyway but an entire half of a city block trash heap with dumpsters make one think that they neglected to build anything nice in that fourth corner. Oh and two streets away are tribes of homeless people. Watch the first 5 seconds of my video.
In fact my video literally shows trash on the street as well in SF, as well as homeless.
Seriously, other cities have city hall. There are no dumpsters around it. We have courthouses and government buildings.
Certainly none around Lincoln Center which has the Metropolitan Opera and NYC Ballet and Philharmonic. It doesn’t smell there. There are beautiful fountains etc.
I took some photos of the homeless in SF juxtaposed in front of the skyline in the background. It is very pervasive there. LA and SF seem to be magnets for homeless.
If I was mayor I’d give them all a $50 phone preloaded with gigs including ones from the city, like sweeping the streets and from businesses such as handing out flyers. Have the app unlock mini storage and showers, and help them have digital ID. This ain’t rocket science. Crowdfund the support for each homeless the way we support kids in Haiti. Give them opportunities. But instead the bureaucracy just kicks them around and denies them opportunities without an address.
There are 8k homeless in SF and 350k homeless in NYC. I was surprised at the huge difference!
Larger buildings like a city hall or Lincoln center will have better waste management than a bodega or small shop. The larger places will have a loading dock and probably a compactor. Source: I worked at a waste tech company
> Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists).
This is a terrible way to deal with fire. The issue isn’t preventing fires from starting at all, because small fires are all over the place. A dropped cigarette can light a city block on fire if the wind is just right. The issue is preventing spread, and taking precautions when conditions (like wind) are conducive to rapid spread.
That's not how these fires work. Wind and dry fuels mean they can't be put out by the time they've been identified and someone has verified they're not some dude burning trash. Drone armies can't carry enough water.
No. Forest fires should be allowed to spread to prevent fuel buildup. It’s bad when they cross into developed areas, though, so you want to prevent that.
If anyone ever implements your drone-based surveillance-state wildland fire suppression system, please let me know so I can avoid hiking in the area.
That seems incredibly dangerous. As you said the wind can pick them up and cause an inferno.
If you want to do controlled fires IN ADDITION to the fire suppression system, you can. If fires are the only way to neutralize the fuel, at least control them, and don’t allow any uncontrolled fire to spread and get out of hand. The controlled burns would be planned in advance, done on good days and isolated from spreading too far. Of course those burns would be excluded from the fire suppression system.
But it seems reckless to just “let the fires spread”. You need actual control over fires if you want to have any chance of avoiding disasters.
Imagine you did this in any other area where you're in charge of a system. For example you run a forum and refuse to implement any sort of moderation or spam control. You claim we shouldn't put anything in place to clamp down on it and need to let things run their course naturally, because sometimes risking spam is necessary to get really good updates about stuff by experts. The proper thing to do, then, is to intercept spam from spreading as much as possible but then carve out a whitelist of exceptions. Not to simply not have an anti-spam system at all.
Well, a lot of people at the Forest Service and other land management agencies used to think like you do. We focused on full suppression throughout the 20th century. Now, when a forest fire does start, it isn't controllable like it used to be. There's too much fuel lying around that we prevented from burning for over a century.
Prescribed burns make sense in certain high-risk areas, but there's no substitute for actual, natural forest fires. We can never artificially cover the same kind of area that a natural fire can cover.
> For example you run a forum and refuse to implement any sort of moderation or spam control. You claim we shouldn't put anything in place to clamp down on it and need to let things run their course naturally, because sometimes risking spam is necessary to get really good updates about stuff by experts.
That analogy has absolutely no bearing on anything we're discussing. Online forums and human behavior aren't a good analogue for forests and forces of nature.
> the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there
I'm not so sure. The Pacific Palisades have astronomical real estate prices. (actually costly property in Florida isn't cheap either). I think the insurance costs would come out of the property prices.
I say this on the basis that the prices the real estate sells for is already what the market will tolerate, if there are other costs to owning it-- then the remaining part the market will tolerate will be less.
Perhaps a result of this is that it may only be realistic to construct lower costs 'disposable' cabins in areas with higher disaster risk... if so, that wouldn't sound like an unreasonable way to allocate resources.
Is it a bad thing that we should consider most of the planet unlivable because disasters happen that aren't eternally and increasingly profitable to insure?
Is it a bad thing that literally tens of millions of Americans would no longer have insurance? That you're asking double digit percents of the entire population to leave cities and just... what? Suddenly have new homes in a region with plentiful resources and access to water and food and an economy and no disaster potential?
Is it a bad thing to compare entire states to missile testing grounds?
The Florida situation is actually markedly different. The main problem was extreme litigation-friendliness. Florida saw 80% of the nation's insurance lawsuits but only ~8% of the insurance business. They've also since passed some reforms (HB 837, 2023; SB 2-A, 2022).
I think apt comparison would be collision coverage. How much would you charge from someone that collides a car each year. Probably more than cost of those collisions on average.
Let's not forget insurance company greed. They are traded on the stock market and must provide returns to their investors. Let's not pretend they are not also part of the problem. Same with health insurance, it should never be for-profit, IMHO.
But I do agree they should be able to set the premiums, otherwise they just go bankrupt. People should not live in idiotically constructed neighborhoods in danger zones if they can't afford it. But they shouldn't be gouged.
Insurance companies are for profit. They run the analysis of how much they need to charge to break even, and aim to charge above that. If they charge too high, customers will look at the alternatives and switch to a competitor.
You can replace "insurance" with any other business, the whole of capitalism is built upon this. Every stock on the stock market is trying to "provide returns to their investors" - each one is as guilty as the next - theres nothing special about insurance companies.
If the argument is that insurance should be a federally provided service, then we must have a different conversation. Look at the FAIR plan. They are government created, and will get wiped out because of these fires, possibly because they weren't charging enough to begin with (and taxpayers will now need to bail them out). The math doesn't change whether its state backed or privately backed. If a home, on average, gets burned down every X years, then the insurance premium needs to be adjusted to be able to cover that.
And here is the crux of the problem - if you take away the free market aspect of being able to adjust prices, and get forced to sell a product/service for less than what you need to, there will be a loss somewhere, in this order of operations:
1. loss at the insurance company --> insurance company goes broke or leaves the state
2. loss at the FAIR plan --> FAIR plan reserves get wiped out
3. loss at the state level --> taxpayers need to bail the situation out.
Id argue that letting the free market work (at layer 1 above) is the proper way about it. If a house burns down every 10 years, let insurance charge 10% of that cost, because that is the actual risk involved in the system. House prices will naturally come down to reflect that reality of risk.
This logic makes absolutely zero sense. If a house is uninsurable, people will choose to live there without insurance. But if the house is insurable for a high cost people will not? They can still choose to not buy the expensive insurable and be in the same boat as inunsurable home owners.
The governments know this and yet set the insurance premium price ceilings anyways.
At some point you have to consider that as indistinguishable from having a policy to drive people out: deny them insurance, wait for natural disaster, redevelop the now-very-cheap land however the government and its developer friends wants. Whether such a policy is adopted on purpose may not be possible to tell. You'll get called a conspiracist if you even hint that you wonder about it. But you know these people know -it's hard to believe that they don't- what happens when you set price ceilings.
Its interesting because the last 5 years in the US have seen a dramatic appreciation in housing prices, and also a seeming rise of risk of catastrophic events, and insurance companies are grappling with these 2 things. Ultimately maybe different insurance products could be provided that effectively offload some or all of the risk to the home buyer(which obviously is a not a good scenario for banks giving mortgages).
But if they don't set a price ceiling, then insurance companies price gouge.
You can't get a mortgage without insurance, so if insurers were allowed to freely control the price, they'd charge an arm and a leg since buyers are forced to buy. If insurance companies are allowed to freely raise their prices, then they would certainly love to do so because any homeowner with a mortgage would be absolutely stuck and have to pay whatever they demand or risk the bank taking their home back.
I think you have an idea that the free market would naturally lead to an efficient insurance price that let's them cover disasters. But markets aren't magic, and insurance markets are anything but efficient. I don't think anyone really knows what the "right" price for homeowner's insurance is in places like Florida and California.
The right price is the market price. There are multiple insurance providers and sufficient competition. And certainly the time to raise the limits is when companies are leaving the state?
So let me try to put the author's argument in order:
(1) The author tried to get homeowner's insurance, but was denied because their home was a significant hurricane risk
(2) The author (maybe?) got insurance through a state-run FAIR program, but then cites news reports that these programs are close to insolvency (As are a significant amount of non-state-run homeowner insurance programs).
(3) The author is like, "well, if it's so hard to insure my house, maybe I should think about living somewhere else." And then generalizes to "a lot of places should be uninsurable and uninhabited - apocalypse here we come"
Every era has it's Malthusian alarmists and without fail, each has been proven wrong by exactly the same thing the author decries and says won't work this time: technological change and adaption. There's no reason to think this time will be any different. Will some places become uninsurable? Sure, plenty of places over time have become uninsurable. Will the whole world became uninsurable? Absolutely not, because we are quite good at adaptation in the face of adversity.
The issue in California is not the price of insurance, it's availability because of extremely myopic ballot initiatives that are entirely political in nature. Should insurance be fairly priced, then the market can force people out of uninsurable areas and into areas with far less chance to burn.
You can't live in places where your home is going to get destroyed every couple of decades by wildfires, floods, or hurricanes. There are more of these places now because of climate change and a lot of people are going to have to migrate over the next century, like huge global migrations. Insurance can't/won't allow a bunch of people to deny this reality any more (or at least much longer). LA is going to be pretty uninsurable unless the local governments do a lot to mitigate the fire risk.
So is living on the sea bed. It's irrationally expensive and inconvenient, which is why we don't do it.
Living in areas in constant danger of flooding and/or burning and/or storm wind damage and/or drought seems like quite an eccentrically inconvenient lifestyle flex.
Far enough inland that the rising sea levels will keep you 50 miles away from the coast for the next century anywhere east of a north-south line that runs through the middle of Kansas. These are places where it rains so you have local water supply and you don’t have a yearly wildfire season and the risk of hurricane destruction is far lower. Also just not in the floodplain of a local river.
I can tell you home insurance is climbing in the Midwest from storms (roofs are apparently expensive to replace/service). I pay more in Nebraska than I did in California (although to be fair, I did not buy earthquake insurance in CA).
As the 173 million strong population of Bangladesh can attest, they can and do live in such places.
"Each year, on average, 31,000 square kilometres (12,000 sq mi) (around 21% of the country) is flooded. During severe floods the affected area may exceed two-thirds of the country, as was seen in 1998."
Most of the world does not want to aspire to be Bangladesh, but humans have been living in extremely disaster-prone areas for millennia because the short-term benefits (rich soil etc) outweigh the occasional catastrophic losses.
Another example: Japan has many quakes per year and has a strangely high percentage of the world's active volcanos. People have lived there for a very long time, built to accommodate it (both traditionally, using timber and expecting to rebuild often, or with modern earthquake-hardened architecture), and is now a top five economy by GDP.
And, well, most of the US is just a hanger-on to California's economy.
> In 2023, California's gross domestic product (GDP) was about $3.9 trillion, comprising 14% of national GDP ($27.7 trillion). Texas and New York are the next largest state economies, at 9% and 8%, respectively.[1]
CA is a huge economy but by no means is the US just CA + 49 other states. Might be fairer to say it’s CA+NY+TX+FL but at that point you’re just aggregating the population.
The cost of labor is extremely high in the US compared to Bangladesh, and that along with building standards, minimum lot size, minimum floor space requirements and required low density zoning (lmao) make these two case very different
What does it mean when a whole country has expensive labour? The highly-paid people of said country can afford each others' services. It basically means "low cost of materials" from a human perspective.
Yes and before they migrate due to climate change, they'll sell their charred lots to some fascist with the willpower to clear the brush, fill the reservoirs, and deploy fire fighting drones. Then everything will go back to normal. God protects only the strong.
It's always amazing and disappointing to see how many people actually believe that prices can be lowered by legislative fiat, or that "price gouging" is an actual thing that happens. I guess they would prefer to have shortages instead of paying market rates, and then complain about "greedy big business" or (my favorite) "late stage capitalism".
But important, useful things will still be burning and flooding, at huge cost to the economy. Which is less nice.
At this point I think we've tipped into a world of complete delusion, where imaginary "markets" are more important than keeping the planet comfortable, stable, and inhabitable.
Also. this, from that most volatile, irrational, and least sensible of all professions - the actuaries:
Thinking technology will always save us is no different from divine or magical thinking.
Lots of societies and civilizations have collapsed. Some were straight up wiped off the earth and we don't even know what happened to them. Western civilization has had a good 500 years, and America has had a good 250 years, but that doesn't mean things can never go bad in the future.
Plenty of places have had catastrophic droughts, famines, and plagues. Nearly half of Europe died a few times from plagues. Most natives in America were absolutely wiped out from disease and other issues. Tens of millions died of famine in China last century. Tsunamis washed away and killed hundreds of thousands in Indonesia and Japan this current century.
In the past, the Krakatoa eruption messed with the climate around the world and made the sky dark. The Bronze Age Collapse is something we still don't understand but nearly wiped out everything in the western world. With population density higher than ever, disasters that match major historical ones would be far more destructive. It's really just been an unusually peaceful few decades in first world countries and people have gotten too comfortable.
>Plenty of places have had catastrophic droughts, famines, and plagues. Nearly half of Europe died a few times from plagues. Most natives in America were absolutely wiped out from disease and other issues. Tens of millions died of famine in China last century. Tsunamis washed away and killed hundreds of thousands in Indonesia and Japan this current century.
Conveniently you selected pre-technology examples. How curious.
Meanwhile the impending global famine(s) - (plural) of the 20th century never came to be because captitalism kept pumping out agriscience improvements to improve crop yields to 10 times what they were in 1900.
Technology has been around for hundreds of thousands of years. What are you defining as "technology"? Software as a service chatbots? Because those aren't saving anyone.
And 227000 people died 20 years ago in a tsunami in Indonesia. They had cell phones and the internet. Is that pre-technology? 50 million died in famines in China in the 1950s. They had TV, radio, and computers. Is that pre-technology?
Technology is just tools that humans make to solve a problem.[1] It's not magic. And in the case of the Japanese tsunami, the most basic technology that humans have had for tens of thousands of years saved countless lives: just building a wall, and making it tall enough to block rising water. [2] But wrapping an entire country in walls is kind of unfeasible. And you can't protect the entire world. We never know what kind of disaster will strike next, and technology to protect us only develops after we suffer the consequences at least once.
> Technology has been around for hundreds of thousands of years
Vernacular methods of doing things have been around - without science or rapid innovation. Key point in time was invention of printing press combined with lutheran zeal to read and the western alphabet that allowed unprecedented platform for knowledge transfer. After that it's been pure acceleration.
Before literacy was a major thing (which it has not been historically) knowledge transfer and preservation was based on human to human contact. You could not literally just crank the machine to print out out going edges in a knowledge graph.
I'm not meaning just a few literate people. I mean an entire society capable of reading and eager to create and learn new information.
> Technology is just tools that humans make to solve a problem.
According to a dictionary it's "the branch of knowledge dealing with engineering or applied sciences" / "the application of scientific knowledge for practical purposes, especially in industry" and I would argue it's this sort of technology that enables novel, rapid adaptation.
Applied sciences need science before application. Now - knowledge seeking that sure looks likes science even though it was not called that has been around few millenia - Thales of Miletus, Ibn al-Haytham etc etc.
What is novel in our time is application of science to every goddamn problem on an industrial scale. And the understanding that things can improve. This requires a literate society (imo but arguable maybe), eager to adapt, and pragmatic recognition of what works and what does not.
There are areas that are lacking in literacy and capital. While people in those areas sure enough are able as anybody else to individually use technology developed and manufactured elsewhere, the societies in which they live simply lack the means to apply industrial level technological innovations.
With industrial level technology adaptation it's a whole different ballgame.
Many places in US would be uninhabitable without technology and are thus testaments to the idea that MODERN technology allows survival in unprecedented places. For example Colorado. The place was so arid and unhospitable no one could or would want to live there. But then there came railroads, industrial engineering to implement water reservoirs etc etc and visit Denver today and it's very hard for an outsider to realize they are visiting a modern goddamn miracle.
I'm fairly sure if people can live in Colorado they can live anywhere given sufficient capital is applied (capital being the enabler of applied science and technology).
A lot of ancient societies rapidly adapted to problems. In my previously mentioned tsunami example, ancient societies would build their towns above a certain point to be safe from them. Some cultures used to (and some poorer people still do) build houses on stilts near flood areas to stay safe from rising water.
But in modern, literate society, people think "nah it'll be fine bro" and build houses right up on and flat against the coastline. Then entire towns get washed away.
The biggest mistake modern people make is assuming ancient societies were stupid. They didn't have people sitting in offices thinking up solutions to problems. But the reality is those societies learned just as quickly as anyone else did, and a lot of them probably had a much stronger fear of nature and didn't sit around thinking "nah bro we'll totally survive. we have technology". They knew a tiny mistake meant death. Death to modern first worlders seems like a very out of reach thing. We operate on the assumption we'll live long lives and die in a retirement home.
And Colorado isn't by any means inhospitable. There were plenty of tribes in Colorado before literate enlightened megagenius westerners came along to save the day. It has some of the oldest known towns on the North American continent.[1] Westerners may have at first struggled to survive there with their modern technology, but natives lived just fine in Colorado for thousands of years.
Tibet is a far more inhospitable place. So is Saudi Arabia. But those also have thousands of years of history all without a printing press. Arabian culture even managed to spread across the world out from the inhospitable desert and even dominate part of Europe before the printing press existed. Spain and Indonesia became Islamic before enlightened Europeans went out to save the world and make it "habitable".
I agree humans as individuals regadless where they came from or when they lived have always been equally precious in potential, and all traditions are valuable, but it’s simply false narrative to claim modern technology & capital would not make a difference.
My point was it’s false narrative to compare any historical society to a modern industrial one.
Printing press, latin alphabet and market economy were suberb for knowledge transfer. There was no historically comparable system to commodotize and scale literacy.
It’s false narrative to claim european developments were not unique and transformative. That’s just how the history goes. Literacy, capital, binding contract law and science created a heady mix that created a system that now is global standard how societies try to operate.
Large parts of the system came from other parts of the world. The point is not where this happened or by whom, but the point is it happened.
Modern technological societies are able to adapt in unprecedented scale. Regardless of culture or ethnicity.
It would be pretty weird to think this would be a narrative of european supremacy - cultural, racial or otherwise. Europe was an inconsequential periphery and it’s once again an iconsequential periphery.
Japan had literacy rates equal to the west during the age of exploration. [1] And when you go back to historical records, Egypt and Mesopotamia had insane good record keeping and were stabler, longer lasting societies than anything else earth has yet seen. They're also in some notably harsh environments compared to the easy living of Europe.
Latin characters really had nothing to do with it. Western society was built off the lessons learned from those two societies. What separates post-printing press western civilization has been the incredibly rapid expansion (which Mongols also achieved with nothing but horses and bows and arrows). But whether this post-printing press civilization will last as long as Ancient Egypt did (3000 years) is yet to be seen. We've got about 2600 years to go.
I would argue that Egypt apart from temperature was lot less harsh than Europe. Nile offers water all through the year. And the flooding brought fertilizer each year. Also lot less risk of any type of weather causing famine.
In reality that is lot less harsh than Europe before industrial agriculture. Just looking at list of famines shows that Europe was a harsh place to live for stable society.
It's also very hard to compare pharaonic Egypt to a modern society since most people were agricultural labourers. You did have not that many people (lets say 3M which was a lot by ancient standards), and of the elite who actually could use capital and talent were really, really scarce. Literacy rates were maybe 1%-15%?
Think what a modern country would look like with 3M people of which 150K can read. It would not be pretty and Egypt was probably worse. Of course if you can control thousands of people you always have some capabilities which is the reason why we adore their art to this day. But I think one should think "North Korea" what pharaonic egypt likely was like rather than "pinnacle of imaginable civilization". This is not to put down the achievements of the egyptian civilization, but like pointed out, they had lots of time.
Most people anywhere (except the pastoralists ofc) were agricultural labourers before modern farming kicked in.
What makes the capabilities of the current civilization different is a combination of things, some of which are unique this time around.
The major differentiators are
1. Global scale monoculture in knowledge (take engineers from US midwest, Ethiopia, China, Brazil, France, Japan, Finland, Chennai - we all basically can mesh instantly to a product team since tehcnological education is so homogenous). This monoculture was enabled by the printing press and later digital technologies.
2. Insane amount of energy per capita available
3. Amount of capital available including finance
2. and 3. simply were not available before. We can argue all day about merits of education systems of old but you simply did not have this global talent mass on hand. This talent mass is prerequisite so that you can scale capital and technology rapidly on a global scale.
Energy&Capital then feed the machine to give it energy. This machine simply did not exist before. The energy per person in any society was tiny fraction what we can utilize. Similarly for capital.
Japan is excellent example.
a) It demonstrates how long it takes for a society, if it's educated and all around excellent but pre-modern to reach parity with modern societies. I would argue based on facts it's about two generations or 50 years (for Japan) from Perry expedition 1850's to Japan wiping a western industrial nation state fleet to the bottom of the Tsushima straits (1905).
b) It demonstrates this society, when in it's pre-modern configuration lacked things, that it felt necesary to acquire to be able to go head-to-head with societies that had these implemented.
It's this difference between pre-modern,pre-capitalist pre-industrial and modern I'm talking about, why it's false narrative to state "people througout history have been smart and able" as a contradiction why modern societies would be more capable. Because they are. It's not a statement about why some people with different upbringing or genes would be different. That's irrelevant (except up to a point where their upbringing relates to prevalent institutions i.e Acemoglu, "Why nations fail" etc).
I agree we know nothing of how long the current system can last, or will it evolve or devolve. But it's very hard for me to imagine the system going away unless we go full mad max. Because it's not about cultural identity anymore. Who is your king or god. While we live in tumultuous times, Fukuyama was still more or less correct IMO, even though clearly it's not a "end of history" as much as "beginning of new history".
It's about capital, energy, education and markets.
Technology can't save you from famines when there isn't enough sunlight to grow crops for a season or two. One good supervolcano and civilization might collapse or at least take such a hit as to be utterly transformed. Billions dead, etc.
You think it's possible to put any decent percentage of our GLOBAL food production in greenhouses (remember with less light global temperatures go down) within ~6 months?
Billions would perish. If the luckier rich countries did not get nuked or invaded by armies or waves of endless starving refugees then they would be able to save a good amount of their population. At best world development goes back ~50-100 years. At worst, modern civilization basically ends from the combination of conflict and famine.
that doesn’t address the context of the response at all.
is technology helping, or hurting in that situation?
near as i can tell, it is the only thing that could help.
we aso have significant food stores and buffers, and if it was the situation you described it would literally be a ‘drop everything and get working’ emergency. we’d likely do better than you expect.
Sure I do. Do you have anything else you can propose that would help at all?
And if a couple billion people (minimum) would be dead if we didn’t do it ASAP, do you think that energy or material wouldn’t be expended at the drop of a hat?
Hell, look at how much energy we expend just to serve cat videos.
People generally respond to sudden, external, visible risks pretty well.
It’s when risks are hidden, build slowly, or are caused by behaviors they consider ‘unsolvable’ and they’ve learned to adapt to that they suck.
Serving cat videos is about at least three orders of magnitude less energy than required to grow food. How much energy do you think you need to light half a hectare with 1 kWh LED lamps?
But let’s say we take the upper end of energy consumption multiples between input energy and output energy (kcal), say 120 times. So to feed 1 person 2000 kcal per day, would require 240,000 kcal worth of ‘production’ energy, which at that multiple would add up to 278 kWh per day per person. Signifiant!
Multiply that by the population of the US (345 million), and that is a lot of kWh for sure - 95910000000 kWh. But it looks like national energy usage is measured in ‘quads’. And that is .3 quads per day.
Current US energy production is approximately 100 quads per year, and consumption a bit less than that at around 90 something.
So if we picked the absolute least efficient most energy consuming plants, and grew them in the least efficient type of growing environment, we’d need to drop everything and devote all our energy production to it.
Assuming no rationing, no efficiency improvements (LED lights are quite efficient now, and if we really had this issue we’d of course devote 100% of available production to them!), and no bulk commercial production of simpler foodstuffs (we can make bulk sugars and proteins via bioreactors right now, for instance), it would be terrible but possible. At least for the US.
Countries with more solar production, or colder, would be harder hit of course.
China would be well positioned probably to pivot, and I’d be surprised if they didn’t use it to their advantage. Especially with turning up their nukes and pivoting all their solar plants to making LEDs instead.
India and Bangladesh would be really screwed though.
Everyone would finally think farming was cool again though, so that’s a plus.
I take it you never bought LED panels for indoor grow ops right? Never considered the cost and resources required for the wiring, installation, programming, making greenhouses in the span of a year? Do you know how much copper you need per capita? The bottlenecks in manufacturing? This is pie-in-the-sky wishful thinking.
I have to say that this thread is very frustrating to read. I see @lazide is engaging with you in good faith and providing high effort, thoughtful answers. There's a lot of statistics and factors involved in a discussion like this. So I won't say @lazide's analysis is correct or flawed. But this is a good topic where a good discussion can be had and @lazide is holding up their end of the bargain.
But every response of yours is dismissive. And this makes this thread frustrating to read. You answer every reply with more questions and a tone of dismissal. If you know so much about this area, why don't you begin sharing some facts and enlighten us? Dismissing your co-commenter and answering their replies with more questions is not educating anyone of anything!
It would help if instead of answering a comment with questions, you share what you know. So how much is the cost of wiring, installation, programming and making greenhouses in the span of a year? How much copper is needed per capita? What do you know? Tell us!
> It would help if instead of answering a comment with questions, you share what you know. So how much is the cost of wiring, installation, programming and making greenhouses in the span of a year? How much copper is needed per capita? What do you know? Tell us!basic led grow lights for agriculture
[Trivial googling shows you $750K to $1.25 million Euros per hectare](https://www.floraldaily.com/article/9574650/half-fewer-order...). At 400 square meters of greenhouse to feed a single human being (a reasonable estimate, lower bound being 300 under super intensive conditions with experienced growers), that's at least $30K _per person_ under the existing constraints of the industry just for an industry-standard greenhouse. You could of course lower construction costs and do the bare minimum, at the cost of a dramatic decrease in yield.
That of course assumes materials and fabrication is abundantly available and wouldn't see an impossibly high rise in materials and service costs if suddenly the entire world were to demand greenhouse construction with the attending demands in electricity distribution, power generation, and the sudden need to turn most of society into a sort of high-tech agrarian population, something that just doesn't happen in a year.
So you’re saying that if everyone would flat out starve to death, they would not, or could not, spend that amount of time/money/energy to not starve to death?
I’m not saying it would be pretty, or that people wouldn’t die.
I’m just saying that actually doesn’t sound impossible.
Far more effort than that was expended per person in WW2, and that wasn’t nearly as severe of an existential threat.
Hell, in this case it would be an obvious/visible, sudden, external, non-human existential threat, so would be ideal for uniting humanity on somewhat common grounds.
I doubt there is any point in debating a complex topic with someone whose only responses are dismissive questions and "5 minutes of Googling"! I appreciate your thoughtful comments in this thread though!
If this is how you get your information, I doubt what you say can be taken seriously. Not to mention that the reference you quote seems like a random website nobody has ever heard of!
This was a very interesting topic and a serious discussion about this topic would at least include references to bonafide surveys or well established trustworthy sources. To find them takes much more than 5 minutes of Googling. Unfortunately I don't have the time to do that, so I requested that if you know something, you share it here with us.
Clearly you do not have the time to do your research either since all you have to present us is "5 minutes of Googling" that turns up a random source!
One thing worth noting about these agriscience improvements you're touting would be they require a combination of non-renewable inputs and unsustainable amounts of water. There is also the minor issue of unrecoverable topsoil depletion and the steady decline of nutrients in agricultural products tracked over decades. Kicking the can down the road isn't the same as solving the problem.
The Green Revolution has so far just postponed famines. We are farming in an unsustainable way. We're running out of fertile topsoil and are depleting fossil aquifers in many regions of the world. Inorganic fertilizers might become scarce in the foreseeable future too.
> "we are quite good at adaptation in the face of adversity."
Historically, much of this "adaptation" was achieved via migration. If your vision for the future includes mass migration away from the equator into the cooler north, then okay, we are on the same page as to one of the plausible outcomes.
? Have you opened a history book? The whole pre-WW2 situation was a malthusian trap. The colonial empires starved out whole continents on the periphery of their empires. Thats how japan and germany turned to hyper-imperialism in the first place.
And the solution of turning gas into fertilizer requires a free trade system to be reliable.
This is the same logic that almost destroyed the financial system in 2008. "House prices always go up, and there is no reason to think this time will be different". Fine logic that works until it doesn't.
At best your logic works because people get concerned, and work to solve the problem. Once there is a critical mass of people unconcerned, like yourself, that think we will magically adapt and solve the problem, we're screwed.
But there are currently only 8 billion people, and already a lot of articles about how people in Europe and South Korea and Japan and America aren't having children. How are we ever going to get to 1 trillion like this?
my sadly hot (no pun intended) take is that insurance needs to be let free. price controls on insurance are doubly counterproductive - not only does it result in the companies leaving, it results in those who need the insurance losing their stuff when catastrophe inevitably hits.
it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.
rather than price controls a slightly better solution would be just to nationalize insurance and force everyone to use it, but even that is not really a solution since highly correlated events are the antithesis of insurance.
Agreed. The government should ensure fair prices by ensuring healthy competition. Maybe have a (non-subsidized) public option. The government should also compensate for the power disparity by requiring policies to have reasonable coverage and making sure insurance companies actually honor them when the times comes. But directly dictating a maximum price isn’t going to go well.
Totally agree, though there should still be insurance commisions and controls to ensure that any company selling policies in a given area is solvent enough to pay out. Otherwise you'll have fly-by-night insurance companies selling sham policies for cheap then folding up shop during the next natural disaster saying "oopsies guess it's the state's responsibility now".
This is not an insurance problem, or a market problem, or an MBA econ problem.
It's a "Do we want cultural extinction or a relatively comfortable and habitable planet?" problem, which is not quite the same thing.
No amount of faith-based "We will adapt!" is going to make an impression until evidence appears that we are actually adapting in real, tangible ways.
Clearly, objectively, and empirically we are not. We are doing the opposite - pretending to ourselves the problem is going to be solved by continuing with the same mistakes which caused it.
i unironically believe the insurance is a great signal for pricing externalities. if you want, imo, a comfortable planet, you should want everyone to have to pay, out of pocket, for the risk they’re taking.
the result would be people not living in areas that a risky, engaging in behaviors or risking, or partaking in things the contribute to the world becoming more volatile.
But isn't the issue that I may have been living in an area for decades and because the government didn't correctly price/deter externalities, now I can't afford to live somewhere? The companies lobbying for the abilities to pollute and otherwise add risk to the world can afford to pay the higher insurance rates. The folks who live in the areas they put at risk often can't.
Insurance costs rising are a good signal, but they're essentially a way to tax normal people for the faults of governments and major companies. It does reflect the real risk, but it's not like the fact of people living in most of these areas is the reason the area is risky.
>they're essentially a way to tax normal people for the faults of governments and major companies
But it's a great way to deliver the signal that '(Climate) RISK IS INCREASING' directly to the voters. If the government socialises the losses, society won't learn the harsh lessons about our changing world quickly enough.
Maybe, but these subsidies to insurance are the result of voters complaining! The folks they complained to just took the easy way out and instead of annoying powerful entities and forcing them to treat the climate better, they just messed up the insurance market and spread the risk around.
The same people who have the power to fix it always have and they've almost always taken the easy way out. The few times anyone's tried to do real changes on these issues, the other externalities of the changes has usually led to voters rejecting them.
> it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.
Long term, sure. In the short term, the rapid rise of housing prices combined with the increased rates and severity of disasters means the extra monthly cost would be enough to price a number of people out of homes they purchased when rates were much lower. While it's easy to say, "They should just move," that has huge transaction costs. Aside from the obvious things, which are already substantial, consider the cost of paying off a mortgage taken out a few years ago and acquiring a new mortgage at current interest rates. That can cost you hundreds of thousands of dollars (which shows up as now only being able to afford a much worse house, probably in a much worse location, if you can continue to afford to own at all), and you are basically gifting that money to the bank by paying off your loan early.
You can understand why such people would be willing to take a chance on not having insurance rather than incur a definite loss, and why it might be tempting to try to come up with some other solution than just unleashing the unrelenting might of the free market on them.
One thing I am mostly against is nationalized property/casualty insurance. California seems to have taken every opportunity to not properly price risk.
My worry is that while extreme, their logic and priorities do not feel unique for government decision making. The last thing I'd want to do is expand it.
When you distort risk pricing, you distort the market, and if you do it hard enough for long enough, you are basically pulling back the slingshot.
While this also applies to mutual insurers, my philosophy is being serious about solvency is the best way to know if you are properly underwriting and pricing.
I feel like the government operates too much knowing that they can backstop it either themselves or by imposing an assessment on the market.
You are right that the really big disasters are very correlated events. While not a silver bullet, reinsurance and other risk transfer stuff can help smooth those kind of events out. The good-ish thing with those risks is that while they are uncertain, they are sort of identifiable, known unknowns in Rumsfeld parlance.
I agree with that sentiment, the thing that always seems crazy to me is that California's housing pricing in the face of all these things, but perhaps it's sort of pick your poison. Like I don't want to harp on it, but the only implicit or explicit thing everyone appears to agree on given the decisions that have been made is protecting housing prices above all else. But don't expose people to the ramifications of the housing appreciation (Looking at you, Prop 13).
To me this sort of thing just seems like a weird financialization brain disease of sorts.
At the end of the day if your house burns down you can go and get some wood / stone / whatever and build one somewhere else and this will basically always be possible to do to some degree.
The question is just about what the chance of having to do that per year is and what that represents in dollar value. It can’t not be possible.
An hour in and nobody in these comments is addressing climate change? The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change. Should people be forced to abandon their homes because the fossil fuel companies lied and misled the public and bought out our governments for the last 50 years?
IMHO we should be seizing the fossil fuel companies' assets and using them for disaster relief around the world due to the catastrophe they have deliberately caused.
The talk about insurance rates is a deliberate distraction.
> The risks of drought and the resulting fire or hurricanes and floods is much higher than it has been in recorded history in these areas because of climate change
I saw an article on npr [1] which basically agrees with the chart on the blogpost. I 1980, there were 3 disasters a year that cost $1B, inflation adjusted. In 2024, 24. The second chart in the npr article is pretty terrifying.
Without accounting for population growth in high risk areas this is meaningless. If the population and housing units in a floodplain doubles, a $500M 1980s disaster becomes a $1B 2024 disaster. That's not to mention the above-inflation increase in the cost of housing which probably bumps these numbers up as well.
That is a red herring. The frequency and intensity of the wildfires has increased. Stop repeating fossil fuel talking points meant to distract from climate change.
Don't agree. Well partially. I also think the privatise the profits socialise the losses story is strong, and the coal and oil interests should pony up more remediation costs.
But insurance is one of the best signals we have to true risk/consequence/likelihood, which commercial interests pay attention to
The best long term outcome here would be rebuilding safer but the downside will be "which excludes the poor" -that's where I think state and federal policy should apply the lever: require socialised housing outcomes.
Price controls on insurance forces socialised losses. Better is some middle ground: mandate insurance, demand adequate mitigations and defences. But losing the price signal is bad.
The losses were already socialized without the controls. Look at how the insurance companies always behave in these situations. They always find a way to stick the public with the bill. Don't listen to the corporate talking points. The price controls may have been stupid but they are a distraction.
If you ask Americans to vote to make gas more expensive to stop climate change (eg. the Washington carbon tax referenda), they say no. America burns lots of fossil fuels because it's what the voters want. If every private fossil fuel company shut down tomorrow, there would be riots in the streets, and then oil and gas would be imported from abroad.
Did you miss the part where I said the public has been lied to for the past 50 years?
I didn't say we shut off all the gas pumps tomorrow. It will obviously take time to transition off. I said we seize their assets and use the proceeds for climate relief. We can keep the revenue coming and using the profits for disaster relief while we transition off fossil fuels. It's not that hard to understand.
In some parts of California, fires recur with some regularity. In Oakland, for example, fires of various size and ignition occurred in 1923, 1931, 1933, 1937, 1946, 1955, 1960, 1961, 1968, 1970, 1980, 1990, 1991, 1995, 2002, and 2008.
Orange County, Riverside County, San Bernardino County, and Los Angeles County are other examples. Orange and San Bernardino counties share a border that runs north to south through the Chino Hills State Park, with the park's landscape ranging from large green coastal sage scrub, grassland, and woodland, to areas of brown sparsely dense vegetation made drier by droughts or hot summers. The valley's grass and barren land can become easily susceptible to dry spells and drought, therefore making it a prime spot for brush fires and conflagrations, many of which have occurred since 1914. Hills and canyons have seen brush or wildfires in 1914, the 1920s, 1930s, 1940s, 1950s, 1960s, 1970s, 1980s, 1990s, 2000s, and into today.
Stop trying to muddy the waters, we already agree that wildfires do happen. Nobody disputes that. The frequency and intensity of what we are seeing in recent years is what is not normal. That is due to climate change because of the increased frequency and duration of droughts as well as increased winds.
We need a high per-ton carbon tax, with all revenue dividended out per-capita to offset the inflation. This would eliminate the green premium on a great number of clean alternatives and avoid the problems of the government picking where to invest, letting the market handle that instead.
And if those companies don't find other things to do (they'd be quite good at geothermal, or durable carbon sequestration, with all their drilling and fracking expertise), then they'll go bankrupt without needing to do anything so extreme as nationalizing/seizing/whatever.
What evidence do you have that these fires have anything to do with climate change? They appear to be adequately explained by the known behavior of the region, and to the extent that they're not the radical increases in habitation and the systematic suppression of small fires is enough to cover any gap.
Ironically there is a great case that varrious environmental groups that vigorously opposed controlled burns are among the greatest proximal human causes of the current situation. If careful analysis concluded so, would you support seizing their assets for use as disaster relief?
The frequency and intensity of droughts in the area has increased due to climate change. The increased winds is due to climate change. It is obvious. It is not explained by "radical population increase".
Stop trying to distract with fossil fuel propaganda trying to distract with everthing else they can. Yes controlled burns still happen but it is also understandable that people would be jumpy about them with the problems fire has been causing in that area in recent years.
The underlying paper is the opposite of convincing.
Essentially they fit a logistic regression of climate measurements the amount of area burned by wild fires each year in the forested parts of northern California to try to express how much is burned as a function e.g. of humidity, temperature, max temp, rainfall, wind, etc. Then the took historical weather data and eliminated the trend in order to try to construct an alternative time-series without human influence then their apply their aforementioned coefficients to figure out how much fire would be had in the counterfactual climate conditions.
To their credit (or perhaps their reviewers credit) the paper does observe the most obvious flaw the wildfires don't work that way-- that fuel builds up over time then is cleared by fires and once an area is burned it can't burn again for a long time. While the structure of the model is such that that if the air gets dry enough it will tell you that will constantly be fire everywhere forever no matter how much has already burned. They constructed a number of dynamic models that attempt to account for that and the increase largely disappears, with a constant level being shown for the next decade. True that the dynamic corrections seem even more adhoc (they don't seem to have data that allows them to fit the dynamic parameters), but the model that ignores these effects is pretty obviously wrong in a meaningful sense.
Even without that correction, their model doesn't fit the last ten years of data with many times the number of acres burned than the model predicts.
Their approach also has the effect that if run on the data from the first third of the study or so, it would instead result in claiming that climate change was reducing wildfires. (because wildfire acres burned were decreasing over that period)
More fundamentally, you could instead run the same analysis using any other measurements that increased over the same period that wildfires in the region increased and the model would come back attributing significant levels of wildfire to it. E.g. plugging in metrics of internet traffic growth into it looks like it would probably work even better. (See also: https://www.tylervigen.com/spurious-correlations )
Every year, humanity grows richer, more resilient to natural disasters, and more capable of predicting natural disasters and their negative outcomes. The point of insurance is to spread the expected burden of calamities that will affect a minority of a population to the entire population, so that those affected will have a financial safety net. This principle works regardless of how disastrous or prone to calamity a population is. If there will be more fires, more hurricanes, etc, the market will favor homes built in different locations, different architectural styles, etc in response to changing premiums and probabilities of disaster. We don't live in a world like in 1905 where an earthquake would lead to a fire that burns down an entire city. Prosperity simply requires changing to circumstances where valid.
I agree with your analysis of how insurance works. But, wouldn’t the burden of calamities only spread amongst the insurance holders? I am not sure what the factors are, but if a lot more people go without insurance (because they are independently wealthy or live in an uninsurable location), doesn’t change the calculation?
People who go without insurance because they live in an uninsurable location would leave those who remain insured better off, because the insurance company would be less likely to need to make an exorbitant payout to the victims in the disaster-prone area. This is of course true as long as insurers don't manipulate the market to keep premiums high despite their total expected claim outlay lowering.
As an insurance buyer, in a hypothetically ideal market situation, you would want all those who also purchase from the same insurer to have the lowest risk of needing an expensive claim paid. The lower the expected payout * risk of disaster means lower premiums for the insurer to still make an expected profit.
I think what will happen is simply: Houses are built in places which are more insurable, existing danger-prone houses will exist until they are destroyed, until then they will increasingly be status objects for the elite who can afford the loss and have inaccurate risk appraisal. The fact that so many valuable objects are kept in Malibu/Palisades homes despite fires happening there a lot (as recent as 2018) indicates homeowners in disaster-prone areas aren't acting perfectly rationally.
>We don't live in a world like in 1905 where an earthquake would lead to a fire that burns down an entire city
I'm not convinced that that's true, and even if it is a huge chunk of population (world, US, pick your area, it applies broadly) keep fighting to regress us to these periods.
People complaining about rules they don't understand is in some sense as old as the existence of rules, but the internet has dramatically increased the number of people who consider themselves experts on politics, healthcare, construction, electrical code, and every other topic on the sun, and who are proud of ignoring the science and the rules and who go out of their way to avoid permits, inspections, etc.
At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.
So you have a huge mix of things which are old and degrading, things which were never built right, and things which people are actively modifying in dangerous ways. People have a false sense of confidence build during the years where we were enforcing these rules; I do not believe that confidence is still warranted.
> At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.
This isn't helped by actual bad rules and regulations on the books. Some minor examples are the prop 95 warnings on every damn thing or the way CAFE standards work to encourage the sale of more pickup trucks. I don't blame some people for wanting to scrap the whole regulatory system after encountering enough of these.
You should. Just because something is imperfect doesn't make it bad. Should the truck loophole be closed? Yes. Has CAFE improved every other class of vehicle? Yes.
>I don't blame some people for wanting to scrap the whole regulatory system after encountering enough of these.
Regulation can used to save lives and improve outcomes, but it can also be used to suppress competitors or favor a particular business practice and stifle innovation.
Plenty of things were built just fine or better and hold up with regular maintenance or modifications, and many are proving to have only been practical to build during a time that had a lower floor for better or worse depending on the thing.
Would some places have become what they are today had they not built their subway system when it was opportune or hilariously less expensive than it is now? The good things we can iterate on or refactor now would have way more overhead to build from scratch at todays standards, not all of which are inherently useful or justified. Sometimes a whole city burns down or all the labor was forced, which sucks and we don't want, but sometimes you're having to get shadow studies done to build anything higher than a bungalow
The California (and Florida) situation is easily explainable [1]. As this video points out you have these forces in play:
1. The state who sets insurance price caps for political expediency, basically to increase house prices (because they'd go down if insurance prices could float freely). BTW we have examples of areas that are uninsurable like the Florida Keys;
2. The homeowners who want their house prices to go up and want to pay as little as possible for home insurance; and
3. Insurance companies who can't write too many policies so they remain solvent. Price caps ultimately lead to insurers leaving the market.
LA in particular has competing problems: wildfires and earthquakes. If you want to avoid total loss due to wildfires, first you wouldn't build in Pacific Palisades at all. It's a vegetation rich area between hills with potentially high winds. If you want to avoid fire loss, you would build out of concrete not timber-framed buildings.
But the problem is that earthquakes have the opposite building priorities. Lumber is actually quite good in earthquake zones because you tend to get less loss of life from the collapse of timber houses.
Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.
Ultimately all of this comes down to a malaise brought on by high house prices. Voters consistently vote for policies that increase their house prices with absolutely no concern for the externalities.
If it now costs $1 million to build an "average" house, then you're going to be spending $20,000+ a year on insurance. If your house only cost $100,000, you wouldn't have that problem.
It's even worse in California because a lot of property taxes are capped so the state government can't even recoupe taxes from a lot of high-priced property but they suffer the costs of it (eg by being the insurer of last resort).
a lot of this here is really what the problem is. for whatever reason, california wants to try to micromanage this particular microeconomy (insurance), but it will fail.
> Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.
It's expensive here, but is it expensive in Japan? Here its' expensive because it requires extensive steelwork which takes you entirely out of the domain of rubberstamp building approval and into needing PE-stamped bespoke engineering and also gets overbuilt to a greater degree.
It seems like "severe storms" have increased quite a bit, the other categories not so much. What does "severe storm" mean here? Doesn't seem to mean hurricanes or winter storms. So what gives? Is this just political patronage handed out under the cover of claiming a big storm knocked some trees down?
Roof damage fraud ... my understanding is the insured has roof damage, takes a payment from the insurance company but does not repair roof, next storm comes along: roof damage again!
The main problem is (a) the cost of roofers has gone up significantly, (b) as a country we switched from more durable forms of roofing like slate to cheap forms that are harder to repair and easier to damage, like asphalt shingles, and (c) the roofing industry is now full of bad actors committing near-insurance fraud.
I'm not sure I follow this: "why are we subsidizing people to rebuild in places that are clearly no longer habitable"
Does/Why would the insurance assume the subsidy is for people rebuilding in the same place? Money is fungible and so it doesn't need to be in the same place, at all. What I'd expect is that insurance for those hard-to-insure places would skyrocket and thus a new balance would be achieved.
You would expect that in a rational market. But go down a reading hole about flood insurance. tl;dr: in many places in the US, the only company that offers flood insurance is the US government because everyone else has pulled out. And people do tend to use the money to rebuild in the same location -- reasons as varied as "I like my beachhouse" to "my entire community was born and lived in this parish and I aint leaving".
Now that the physics of insolvency are starting to overcome political pressure of keeping Daddy Bailout-Bucks around, and people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.
>people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.
I know politics is famous for elites abusing it for their own benefit, but sometimes the population is truly not ready for something that the elites understand is utterly necessary and that's not a bad thing. The risks and benefits of an elite class, I guess.
I live right next to a flood plain and the government doesn’t allow building in 100 year flood plains. This means you can’t get a mortgage for it, and the land is also very cheap - which can be used for grazing animals, growing crops, hunting preserves, or perhaps camping. The land is dry much of the year.
I have observed new owners do things like build open sided barns (which legally aren’t a building). Other owners live in camper trailers on the property. One just finished building an (illegal, obviously didn’t get a building permit) property up on stilts (which will get washed away if any serious flooding happens).
On the plus side, this is all not insurance and not mortgageable, and also won’t survive being sold to someone else, as no title insurance would cover these structures and a mortgage lender would require they be torn down first.
When you become uninsurable yourself, all you're doing is crossing an imaginary line that has always been there, and kept in imaginary condition precisely to insure that your mental health is stable enough to keep on paying more than anything else :\
You're not supposed to notice this.
Whether or not you crossed that line due to any fault of your own, or from the line moving past you with a whimper or a whoosh, you're also not supposed to be able to tell the difference until it's too late.
Working with the big ships that are often covered by some of the most well-established insurers in the world, it turns out that when you really need them to pay a claim, the stronger your insurance company, the more likely their lawyers will outmaneuver yours, and the claim will not be paid.
Otherwise it could be paying the claim but denying further coverage which the limited number of alternative underwriters can also deny. That's a hell of a negotiating position.
This seems like such a gloomy article. There are plenty of other solutions. If you can't insure a home, that home's price should come down. If there is a 5% chance my home is destroyed every year I would expect a steep discount. I could see myself gambling on such a home for 50% off. Alternatively if you don't wanna gamble, just move to a place that's less risky. If moving is too much for you, renting may still be an option. Yes the increased risk will push prices higher, but it will also crash property prices, so who knows what will happen. Yes land owners in these areas will be screwed, but you don't have a right to returns on your investment.
Article seems a bit black and white. After fire insurance dumped my mother's insurance, the "Fair" Plan started out with some similar black and white with insights like "zipcode bad for fire" == "you get worst price". Recently their direction has gotten better, better clearance == better pricing, better building == better pricing, etc. This seems like a better direction. Monthly inspections maybe even == better pricing. Repairs == better pricing. Community changes == better pricing. I think there is a lot of gradual room for improvement here. Ie. More spacing between homes, yard clearance, hydrant locations, accessible fire water sources, quarterly inspections by qualified inspectors, etc. Maybe highly exposed communities would have 10,000 gallon water tanks every square block just for fire.
I think it is easy for people to "dump" on some of these higher priced real estate incidents seen recently but this is also affecting people on social security. What are we going to do just let their house burn down and then just have a bunch of homeless senior citizens in the mix. Why even have government? Seems like a terrible country to live in if a 30 year old needs to plan their house situation out into their 80s.
Also seems a bit ironic to me that you get insurance to cover unexpected future expenses but when insurance takes losses then they can just drop you because .. the losses were unexpected. They've known for 20++ years and I'm sure some... money was made... Did they put some away for this situation? Also if you personally experience a loss they also drop you almost immediately.
This idea that we'd just let insurance companies do whatever is *nuts*. Has that ever worked? Honestly pure capitalism seems like the real behind the scenes American dream or fantasy. This same climate change most likely was created by companies making buckets of money with no plan to deal with the side-effects we experience now. Just let the market take care of it....
These companies aren't about making "some profit" they want to make as much profit as possible. Is some 75 year widow living in her and her dead husband's house in Eureka, CA going to convince them to keep insuring her house at a reasonable price? Even if she paid the same insurance company for 30 years?
I think the solution is going to require some government intervention because insurance companies just don't care and it will be hard for new players to innovate quickly enough to tackle such a large crisis. Ie. legislating the inspections, legislating the fire-resistant building guidelines + insurance scale, subsidizing certain low income locations, working with communities to improve fire safety and resources. Some work has happened but clearly it is not happening fast enough.
a practical problem is that the financial instruments insurance companies create (insurance linked securities or ILS, catastrophe bonds, and other structured products) are not available to retail investors, who would likely buy a lot of higher risk investments if they were allowed to, and this would provide a lot more collateral for writing new policies. if you want more of it, deregulate it. it's that simple.
“Losses rise with inflation, of course, but the losses are rising far above background inflation.”
Losses are very much in line with asset price inflation. If a house rises in value for no good reason other than loose monetary policy, so does the compensation. At the same time, insurers struggle to find safe yields to match these cost increases when that same monetary policy keeps interest rates low.
Looking at the chart pictured, one would expect that extreme weather events have increased dramatically after 2000, but that is not the case:
It’s hard to view insurance as a viable business when overpaying executives has become the norm. Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023. The industry is rife with waste and high barriers to entry.
They bank it as any insurance company should do. Invest it cautiously. Hire sound decent people to run it with solid levels of accountability (including from a board of directors that is mostly made up of a rotating number of clients). Do it from the beginning of the company. Grow your staff slowly. Build enough of a cushion that can last the company years. Right? Right?
I'd run that company well for $250k/annually + benefits (an enormous amount of money).
I don't think you quite get how little money it is for these types of operations, 25m is essentially missing 2-3 zeros before it becomes anywhere near usable and even worth it to bother.
I don’t know. Profit (mostly?) matters to investors and the company’s substantially.
His pay was 0.39% of the loss. Still a drop in the ocean imho.
Should he have been paid less ? Or more? I don’t know.
But what I do know is when people get upset at stock buybacks or CEO pay, the act like if the company didn’t do these things the company would be drastically different.
> Take State Farm, for instance: its CEO was awarded $50 million in compensation over just two years — 2022 and 2023.
Honestly, no one would care about CEO pay if the insurance companies would just pay out and make customers whole. Instead, there are mechanisms and processes in place to keep premiums coming in and to reduce or refuse claim payouts.
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.
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.
"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.
with sufficient competition, it is impossible to price gouge.
So if there is supposed price gouging, then there must be insufficient competition. Therefore, the source of the lack of competition would need to be removed (ostensibly, by gov't - such as increasing business loans so that new insurance companies can be started).
Or, you need to be pragmatic, realize that you're not gods and won't create a perfect system that can't be exploited, and instead tackle the issue from multiple angles while revising your approach as the exploiters attack.
Don't let the perfect be the enemy of good enough.
I'm saying that running a government is a lot like running a ship:
You can't just let the currents and tidal forces ("the invisible hand") run the show unconditionally because even though they can propel you great distances at very low cost, they'll eventually throw you upon the reefs.
And you can't just let the rowers and tillers (legislators & executive) run the show unconditionally because they'll end up exhausting themselves with little to show for it as they fight against the winds and currents when they should cooperate.
It's a balancing act that requires some science, some experience, some luck, and a steady hand - and a capable and honorable captain and crew who believe in the mission.
If I'm reading it right, and the prior context, we shouldn't allow private insurers to charge the prices they want for insurance?
What do you want us to do? Ultimately someone has to pay for the bad outcomes happening here - either that's homeowners in risky areas, insurance shareholders or the general taxpayer, depending on where you fall.
If you don't make the ultimate originators of the risk pay for it (people in risky areas) they won't stop doing the stupid thing and others will bear the cost. Arguably that is the greatest strength of the "free market" - directing the efforts of everyone in the same, positive, direction.
Because although in the recent LA case we're dealing with rich folks who could shoulder the increased burden, often it's the poor areas that are riskier, and where the people there have little choice over where they can live.
There's no universal solution. A "free market" approach will work in some areas, and fail spectacularly in others. Same goes for a full-on centralized control approach.
And in all cases, you also have the confounding factor of bad actors gaming the system - and your current tools may be insufficient to meet the challenge.
So you need a human guiding hand to make sure things don't go too far out of whack.
This isn't an either-or decision. Stability doesn't care about whose motives or approaches are more "pure".
The "human hand" guiding outcomes still needs to get it's resources from somewhere, presumably from government tax income. I disagree this will necessarily result in better global outcomes than the free market.
In cases where almost everyone agrees people should always have access to a service (healthcare) I think it does make sense to obligate everyone to pay. I don't think it makes sense in this specific case of wildfire insurance.
The free market here seems to be failing by your definition because it can't make money. To me that's it succeeding. It's demonstrating that it's underpriced, and people being unwilling to pay the necessary prices shows that they need to find somewhere else to live.
Amusingly enough, the lack of housing itself is another problem caused mostly by human-guided hands in government, not the free market. Enlightened despotism always sounds great when they agree with your perspectives, the reality is rarely so smooth.
I mean, there's sometimes simply not enough capital available to support the creation of further competition in a sector. And government subsidies in the form of cheap business loans are sort of robbing Peter to pay Paul. You're simply allocating capital from one sector (the one being taxed) to another
If the regulators have defined 'price gouging' as a price substantially below the break even mark, literally any profitable insurance product is implicitly believed by them to be price gouging. The US does a weird thing where "insurance" no longer means pooling risk but some sort of transfer payment welfare system. If they're going to define "price gouging" as profitable activity it is hard to see how the economy is going to function.
Allowing insurers to make a profit and run a business without interference is going to be cheaper - and in most instances better - than whatever the politicians are trying to build here. If you get rid of all the mandatory-this and price-gouging-thats then to stay in business insurers have sell products that people want to buy at a competitive yet sustainable price. It works for food, it'd work here too.
The math of insurance suggests that, if it needs to be widely carried (either due to things like mortgage requirements, or the simple realization most people don't have enough resources to absorb a major catastrophe themselves), the most economical way to go is to have a single risk pool that's as broad and diverse as possible, so it can swallow a large clustered crisis more easily. Yes, this is a bit of robbing Peter to pay Paul.
I always found it funny when insurance marketing talks about "personalized rates", when the goal is to DE-PERSONALIZE the risk. If you have 10,000 customers in Los Angeles, and 5 million elsewhere, you can either isolate the LA customers and charge them the "real" price of the risk, which will be unviable as a business and probably politically touchy too, or you can include them in the broad pool, and the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
The concept probably works better if you have some concept of social cohesion to lean on-- you might not get the best possible outcome personally, but the system itself is more robust for everyone.
What if Paul built his house somewhere less flammable? I see options here where Peter doesn't need to be robbed, he could pay a fair rate and Paul could make less risky decisions.
If one pool of people are taking a bad deal vs the market rate when buying insurance then it isn't really insurance any more. It is a transfer payment a.k.a. welfare. Which is cool and all in the sense that welfare is a social tool that exists. But calling it 'insurance' is needlessly polluting the language. If people expect to hoover money off others then they should be charged more until the expected return of everyone in the insured pool is equal. If the payouts are going to be held equal in the event of a disaster then that means the price of insurance has to vary depending on the risk profile of the customers.
Its called solidarity and yes, it means some people NOT have to pay more but others recieve more. Paul AND Peter get the security of disaster coverage in exchange. This is what you pay for. A big risk pool and not your individual disaster recovery.
If you want "solidarity" you need a government service. Private insurance has every incentive to price things accurately and not subsidize higher-risk people. If you tell insurance companies what they have to charge, they have every reason to say "nope, I don't want to offer that service at that price, that doesn't make economic sense".
Insurance that is able to quantify risks precisely and set prices individually based on that is useless. If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone. Whereas solidarity can bring a better society - which even those who have to occasionally pay more benefit from in the end.
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
It is insurance. You pay money, the company takes away the risk. That doesn't make it a bad deal, that makes it a service. That is like complaining about a hypothetical garbage company that charges for taking away trash even though the trash might have some notional value.
Insurance isn't an investment scheme. If you want to pay money for a positive-expected-value deal, go buy stocks and bonds.
whole point of insurance is that you pay for avoiding risk
in other words, you pay more than you would on average loss from bad events - but you avoid catastrophic losses that would break your life
that is why insuring your phone is likely a bad idea (as you can pay for a new one) but liability insurance or insuring your home/flat may make sense
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
paying 3k per year, to avoid 1% risk of 250k losses may be a good idea, especially if 3k loss is survivable without trouble and 250k loss would be more than 90 times worse.
> paying 3k per year, to avoid 1% risk of 250k losses may be a good idea
You are basically guaranteed to pay 3k to avoid financial risk with a mean value of 2,5k. That sounds like a fallacy to me (isn't it the same as saying that paying 3k for 1% chance of winning 250k is a good idea?), may make sense psychologically though.
That logic is reasonable if you can trivially afford 250k; in that case, you might choose to self-insure. However, that logic does not hold if the 1% event is not something you can afford.
Every dollar does not have the same incremental value. Going from $1B to $1B-$250k is not the same as going from $300k to $50k, and definitely not the same as going from $50k to -$200k.
That is why "and 250k loss would be more than 90 times worse" is there.
If loss of 250k would ruin my life and loss of 3k would be annoying, then paying makes sense.
Similarly, taking bet "double your wealth at 51% chance, lose every single thing you own at 49% chance" likely makes no sense, despite mean value being above zero.
> isn't it the same as saying that paying 3k for 1% chance of winning 250k is a good idea?
not in cases where loss of 250k would be more problematic than benefit of gaining 250k
for example loss of 250k may make someone homeless while gaining 250k would allow them to live a bit more comfortable - in such case bad effects of loss are much greater than gaining 250k
in other words, utility of money is not on a linear scale
It isn't a fallacy, it is plausibly optimal if the person being insured is involved in a non-ergodic process. The statistical argument you are applying is too basic to cover a large number of real-world situations.
> Insurance that is able to quantify risks precisely and set prices individually based on that is useless.
This is simply untrue.
This may be true for health insurance, because there is a strong moral case to be made that is unfair and illiberal to make people pay more for genetics or simple bad luck that result in them being likely to need more health care.
It is not true for home insurance, where people can choose where to live and choose what kind of housing to live in.
The purpose of home insurance is to reduce time-based variance for disaster, not for people in low-risk properties to subsidize people in high-risk properties.
It is not "solidarity" for someone in a steel-and-concrete house with a metal roof who clears brush and trees from around their house to subsidize someone who lives in wooden mansion who doesn't take any fire precautions. It is a perverse incentive.
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
Again, it is not the purpose of insurance for it to be positive expected value for people in high risk homes! It is expected for insurance to be negative expected value. The point is to reduce variance.
> Again, it is not the purpose of insurance for it to be positive expected value for people in high risk homes!
Insurance should not be positive expected value for anyone; if it is, either the actuaries are doing a poor job, or the product is a loss leader, or there's some regulatory reason the company can't pull out of the market. (Or, you are in a very rare circumstance where you actually know better than the actuary.)
Incentivizing people to build homes that are likely enough to burn down as to be economically uninsurable is an absolutely wild abuse of the term "solidarity". Solidarity is the idea that an injury to one is an injury to all, not the idea that choices should have no consequences and the environment shouldn't constrain humans; the only way you can possibly sustain a world in which people actually treat an injury to one as an injury to all, is together with some effort to avoid people from gratuitously exposing themselves to injury.
For other disasters, while climate change is "global", the effects are pretty much localized and to various degrees. Some places have had adapted construction to those kinds of blue moon disasters since centuries, so why should they part with more money?
This completely ignores incentives. If insurance isn't allowed to charge people more who live in fireprone or floodprone areas, more people will live in such areas, and overall society will have to spend more money rebuilding when disasters inevitably hit those areas. Personalised insurance pricing would allow insurers to charge much more to people living in such areas, which incentivises people not to live there. It's also a moral issue: if everyone pays the same rate, then people who did the right thing and chose to live in an area that wasn't fire or flood prone are subsidising people who did the risky thing.
What about the people who drive cars, vote for more suburban sprawl, and actively work against reducing CO2 emissions? When are we going to charge them THEIR fair share?
Which implicitly means: "everyone must always pay into the government pool."
If low-risk individuals are allowed to make their own choices, they will choose an insurer that caters to their group, thus depriving the government "option" of "premiums."
Just like with school property tax vouchers: if people are allowed to directly appropriate the benefits of their funds, less "desirable" schools would receive less funding.
Mandated government "insurance" is a form of welfare.
> I always found it funny when insurance marketing talks about "personalized rates", when the goal is to DE-PERSONALIZE the risk.
Actuarial science is not often associated with “fun” but they have been partying for centuries.
“In 1662, a London draper named John Graunt showed that there were predictable patterns of longevity and death in a defined group, or cohort, of people, despite the uncertainty about the future longevity or mortality of any one individual. This study became the basis for the original life table. Combining this idea with that of compound interest and annuity valuation, it became possible to set up an insurance scheme to provide life insurance or pensions for a group of people, and to calculate with some degree of accuracy each member's necessary contributions to a common fund, assuming a fixed rate of interest.”
> you can either isolate the LA customers and charge them the "real" price of the risk […] or you can include them in the broad pool
Maybe you don’t understand that the insurance business is based on including everyone in one pool (so it can swallow a large clustered crisis more easily) AND charge them (more than) the real price of the risk.
I understand. The goal is to make the biggest possible pool, which means a single, preferrably government-run carrier (to limit profit-maximization on a service that's more or less essential)
A lot of the "big boy" insurance on ships etc actually have inspectors - they'll come and inspect your ship (or industrial plant etc) periodically to confirm it meets the agreed safety standards. And if it doesn't, no insurance! That really aligns incentives.
You also have insurance companies that will incentivize risk reduction by subsidizing alterations - if you clear any trees within X ft of home, they will give you $1000 towards it.
But yes on the inspections. I’ve had home insurance inspections around electrical and plumbing. They wanted to make sure it was at code as it was an older home.
> If you have 10,000 customers in Los Angeles, and 5 million elsewhere, you can either isolate the LA customers and charge them the "real" price
That's the only way.
> which will be unviable as a business and probably politically touchy too
Why would it be? If you live in Los Angeles - doesn't mean you don't need insurance (even if it several times the cost of insurance in the safer areas).
> or you can include them in the broad pool
No, you can't. Your competitor who doesn't do this will offer cheaper insurance - because they doesn't distribute high risk of small group to everybody else.
> the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
Why would they do that? 20 bucks is 20 bucks.
> The concept probably works better if you have some concept of social cohesion to lean on
You mean if you with totalitarian governance deprive people of the ability to choose? Yeah, that could work. I mean, that's how the gulags were justified.
I'm trying to understand how what you're suggesting is different from mandating everyone just get a personal savings account, where they must pay some specified minimum calculated to cover them in the event of a loss of their personal property?
Are you saying that we should only pool risk between people in the same risk bucket?
How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
I'm trying to work out how what you're describing works, first I have to understand you before I can form an opinion on it :)...
Ok, I get how you want to value risk, independent actuaries. I suppose, there's some bias there as insurers might lean on them to adjust the risk to be more favourable to them and as they'll be repeat business, they're likely to comply, but let's assume we find some really honest ones.
So given say a pool of people with similar risk profiles, say young professionals in high earning careers, and you calculate that they're effective risk is the same so you pool them together.
Now, what do you believe an insurer would insure them against? And of the things, what would not take them out of the pool they've been placed in and put them into a different, perhaps smaller pool?
I'm not quite sure you understand what insurance are. You have risk, you don't want to have it, so you pay other people to took that risk away (to some extent). How those people are expected to assess risk? Somehow. That's their problem.
It's like how a hair salon owner evaluates the difficulty of a haircut. And generally, when you want to have simple haircut, but they are gonna charge you extra because Jason Statham is their client, and he has very sensitive and delicate hair ends, each of which requires a careful individual approach... You naturally start wondering what Jason Statham's hair situation has to do with your haircut.
> I'm trying to understand how what you're suggesting is different from mandating everyone just get a personal savings account
Because insurance will cover you even if your house burns down in the first year of coverage, whereas a personal savings account will have only a very small amount of money in it in the first year of home ownership.
That's the whole point of insurance.
I don't know where the idea came from that the purpose of home insurance is for people in low-risk homes to subsidize people in high-risk homes, but it's a very strange idea.
Right, that is the purpose of insurance, to take risk and spread it across a population.
Now the simplest way of doing that is you decide whether someone is "insurable" or "uninsurable" and then for everyone insurable, you define payout criteria and a fair pay in rate (premiums) which is based on your ability to calculate their risk and taking some extra on top for providing the service.
Your skill at:
1. assessing risk correctly as to whether you take them on as clients
2. calculating their risk correctly and mapping it to a price to charge them (premiums)
3. defining payouts in a way that allows you to pay out when things happen to your clients so others trust you to pay out, but not so often that you have no working capital
broadly determine how well you'll do.
You can do all kinds of other complicated things on top of that, but from what I can tell, the fundamental idea seems to be that given those considerations, the insurer pays out, so the fact that someone has a high risk home should be priced into their premiums or they should not have been taken on in the first place.
Now you appear to dislike that people who have different risk profiles are grouped together, what I'm trying to understand is how that works.
For example, in the case of the house burning down:
1. The insurer pays the homeowner out and increases their premiums
2. The insurer pays the homeowner out and places them into a different risk category of people who own similar homes, but have had their house burn down, works out their new premiums, which are now likely much higher as they're in a riskier category and it's likely that population is smaller.
I assume you're arguing for something like 2 to happen?
> Now you appear to dislike that people who have different risk profiles are grouped together
There is no problem with pooling properties with different risk profiles so long as each property pays premiums that adequately represent that property's risk profile.
I'm in the industry: regarding California,the answer is that they aren't paying high enough premiums. Regulators have refused to allow catastrophe modeling to set rates, so fire prone areas are effectively getting a discount.
> or you can include them in the broad pool, and the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work
And you immediately start loosing customers to insurers that either did the former or left LA alltogether. This changes $20 surcharge into $25 surcharge, causing more customers to leave, causing surcharge to increase and so on.
This sounds like a very US-centric view and id strongly disagree that only the profit motive keeps economies and people going.
You almost said it yourself, "The US does a weird thing where insurance no longer means pooling risk". Why? Is it the profit motive or gov. regulation?
My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose, insurance companies are justified with.
Free markets have down sides and failure conditions too and only principled gov. regulation can fix it.
> My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose
What’s the non-US-centric view? Lloyd's of London is older than the US.
Price gouging isn't actually what we're seeing in the most disaster prone areas. Insurance companies aren't charging open ended prices, they're simply exiting the market. Florida for example.
I believe Florida market exits had more to do with litigation-friendliness than premium caps or disaster risks. E.g.,
> In 2020, 79 percent of homeowners insurance lawsuits nationwide were in Florida—even as the state accounted for only 9 percent of the U.S. homeowners insurance claims, according to the Florida Office of Insurance Regulation.
There were some recent reforms in response (HB 837, 2023; SB 2-A, 2022).
They're exiting the market because the states have limits on how premiums can increase y/y. The risk modeling (which is turning out to be right) says premiums are fractional of what they should be. So unable to raise premiums, the companies just leave.
For what it’s worth, you can get a house with no insurance or mortgage. They tend to be cheap. I had an uninsured thatched cottage for a while, it was 68k
What's the thinking here? The bank is loaning you money and they want to ensure you buy a particular product.
They're the ones with the money. They can easily guarantee that you buy the product they want. All they need to do is give you less money, buy the product themselves, and give it to you.
I don't know what you mean. Banks loan out money for you to buy a house, but you don't technically own it (that is, you have no title) until it is paid off. The bank wants the house itself as collateral for the loan. It cannot be collateral if something destroys it in the 30 years or whatever during which you are repaying the loan. Therefore, they demand insurance to make sure that they will be repaid. The insurance requirement protects you but also the bank, because what do you think the odds are that someone who just lost their house in a fire or something is going to keep making mortgage payments for a pile of ashes?
I think what you mean is what I wasn't sure about (but found with a quick search), some banks do offer home loan and insurance bundles here in AU. I found one that offered a discount on the insurance if you get the loan with them, for the life of the loan.
But legally, you are allowed to change insurers at any time. They would probably not be allowed to include that as a contract-breaker clause in the loan itself due to free-market-reasons, or force you to take only their insurance to have the loan (we tend to have a few laws about keeping conflicts of interest like this at arms length but I'm not sure about this case). But if insurance is legally required, I suppose they can ask for proof periodically after you leave to terminate the loan.
The insurance is with anyone. They own the house, not you, and so they want to ensure it's not going to burn down (or more likely get washed away in a flood, where I live) and be irrecoverable, so they require you have the home insured. They care naught for contents insurance, just the house/building.
When we bought our house in the UK (a long time ago), it was a condition of the mortgage that we had buildings insurance. The theory is that if the house burns down or similar, the bank will want the rest of their money back and the house buyer is unlikely to be able to afford that considering that they needed a mortgage in the first place.
It's basically the bank just outsourcing a lot of risk to the insurance company (via the house buyer).
It's common for the house buyer to want extra insurance (e.g. contents) whereas the bank is only interested in the house as a sellable structure, so it makes sense for the buyer to take on the insurance requirement (it's also less paperwork for the bank).
Insuring the contents of a home is routinely done as an entirely separate matter from insuring the structure. All renters have to do it that way. You can do it that way in a rent-to-own scheme too.
We've got combined buildings and contents insurance, but yes they're often separate. My point is that owners want more from the building insurance than a bank cares about.
You can do that in the US too. As well the banks won't like it, so what they'll do is protect their assets with force-placed insurance that you pay a hefty premium for.
A quick google suggests a similar situation in that there's no legal mandate but most lenders in NZ require insurance.
You are right that you can get away with it in NZ.
For total loss then bankruptcy might save you money (assuming you have no other assets or kiwisaver; since you still owe the debt).
But part of the contract with the bank is allowing the bank and insurance company to verify/update.
If you cancel your insurance, the insurance company is incentivised to tell the bank since you will probably sign up for insurance again when told to by the bank. I don't believe the banks or insurance have push updates. I would guess banks batch check if insurance is still live annually?
I live in Christchurch and I believe insurance is valuable risk management - plenty of people gambled and lost with Earthquakes. That said: I own an as-is house because I bought a 3 bedroom on 800m2 for $190000 (cheap because you can't get a mortgage for it because it is uninsurable due to subsidence - I only paid land price).
(For those unfamiliar - $190000 New Zealand is roughly $106,000 US, and 800m2 is about 1/5 acre. I know neither Christchurch real estate nor its geology - but obviously that 1/5 acre carries a big "will it keep subsiding?" caveat.)
I can highly recommend buying property after a big earthquake - there's amazing bargains (lifetime wealth changing). I'm guessing more risky to buy after other disasters like fires or hurricanes or floods.
My land is not too bad actually (relatively) - heaps of other insured properties have similar slumping along the river or on the hills.
I've got friends with slumping issues - hidden nightmares for future buyers... In their houses you could feel the uneven floors before the earthquake and the earthquake just accelerated the problem. Pay attention when buying any house in an earthquake zone!!!
My house is actually fine -- only the ring foundation is broken and needs replacing. There are plenty of companies with the skills to do it reasonably, because it is a common issue in Christchurch e.g. a raft foundation.
The property was extremely cheap (less than half price) partly due to another issue - the driveway and front lawn gets flooded by the river occasionally (the house is high and dry).
For the first year I had a policy similar to what farmers use for ag land, then it got cancelled and I was uninsured, which wasn’t ideal.
I sold the house after a while, it was an interesting experiment in cheap living but ultimately it wasn’t great.
Annoyingly I couldn’t insure it because it was thatched, and I couldn’t change the roof because of heritage. The Irish government has screwed over thatch owners brutally.
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.
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).
P&C insurance is a pretty competitive industry, and there are plenty of mutual insurance companies in the P&C business that don't have a price gouging incentive. Most of the regulations that are about reducing counterparty risk for the insured are probably necessary, but price controls are not, and generally, they only distort the market.
Insurance (at least the kind we are talking about) is only mandatory if you have loans, and even then it is not 100% mandated. We do need insurance regulations, but price caps limit what things actually make sense to cover. To put it another way, you are free to buy land in a risky area if you want, but nobody has to insure it or loan you money for it. If you find someone who will loan you the money if you can get insurance, then you can't get insurance, that sucks for you but nobody owes it to you to hand over money on a losing investment. These requirements can be abused, but there really isn't much evidence of insurers, lenders, and investors colluding to rip people off.
Resistant homes will pay nearly the same prices as everyone else. So the cinder block home owner is subsidizing the sticks houses.
Same happens in autos. Monitored safe driving nets at most 10-20% discounts. Biggest factor is age, and even then, difference between 20yo and 35yo driver is 38%.
This is more a matter of market rules than an inherent property of insurance; currently we do not let insurers get sufficiently granular due to some assumptions about wider social benefits of a less individualised system.
This might be reworked to allow for fire resistant designs to be a factor.
> Resistant homes will pay nearly the same prices as everyone else.
but this means the insurance company is mispricing (or is being forced to misprice) the risk of resistant homes.
In theory, when correct pricing happens, these resistant homes should face less claims, and thus the premiums paid on them is high profit margin; ala, the customer is a good one, and the insurer should persue this customer more than another. This ought to results in a discount for said customer's premium, as more insurers vie for this customer over another.
This does happen, it's just done at neighborhood level. That makes some sense, the biggest fire risk factor for your house is probably your neighbor's house burning down.
I would actually guess that biggest risk is internal. Either faulty wiring, appliance or simple user error in kitchen or with live fire. Entire neighbourhoods burning in general is rare event.
Don't know about the us but here we have fire breaks everywhere in the form of low depth waterways (non navigable). They also act as backup water reserves when the mains runs dry. So by design only parts of the neighborhood will burn down.
Yep, those exist across the western US too. I think many people are underestimating the scale and intensity of the winds California experienced. A single house on fire with relatively regular weather conditions isn't likely to spread to others - despite the "ha American houses dumb and wood" sentiment on this topic, there are building codes and fire safety is absolutely considered. But the Santa Ana winds are extremely dry and extremely powerful.
It's a hard engineering problem to solve, but an increasingly urgent one now that these major events are becoming more intense and frequent.
It was only a week or so ago that I learned that a major failure mode of most houses in Florida during Hurricane season used to be the roofs ripping off. The tie plates and straps that were invented to solve that problem created the McMansion as a side effect.[1]
Let's just consider Los Angeles for a second. For decades working class immigrants were pushed to the foothills in Altadena by redlining policies which placed them at risk for wildfires. Today their risk is exponentially greater due to the effects of unchecked climate change, and many cannot afford insurance even now.
How exactly do you expect these people to adapt? Many live in multigenerational households and could never afford to rebuild their house or move without uprooting their communities to another state.
Why are the victims made to adapt to the atrocious actions of the wealthy and powerful? Maybe our policy discussions should start from a place of compassion and work towards solutions from there.
People don't understand the exponential change. As you correctly stated, the effects of climate change are exponential. Why? Because if you take a normal distribution and shift it linearly, the area on the edges grows exponentially. This is why even a linear shift in temperature can lead to an exponential rise in disasters.
One of my daughters was born with moderate to severe autism. There's no obvious cause. I'm told that from what we know it's at least 10 different factors that go into it, one of which is environmental pollution. So maybe corporations are partially at fault.
If I could cure it (yes, I'm using that term. It's a debilitating condition and she'd be better off without it) by selling my house and moving hundreds of miles away from family I'd do that in a heartbeat without complaint. All we can do is make the best of things.
You're going to die if you're around to witness either (if you didn't already pass out from smoke/heat/lack of oxygen). It literally doesn't matter.
The advantage of suburbs in which houses are mostly built from non-flammable materials is that while maybe one or two rows of houses closest to forested areas will likely burn out, there won't be enough calorific potential for the fire to propagate further into the suburb.
Also for firefighting efforts the difference between a house burning out and a house burning down is huge. The former means that most of the fire is already contained in a non-flammable structure, reducing the risk of spreading and also making efforts to quench it with water more effective.
"Brick is much worse than wood for wind-stoked wildfires" is a strange take. If a wildfire is approaching, I'll take a town built from brick rather than plywood any day.
Brick does tend to survive. Brick as an insulating layer can save lives. Brick also explodes violently under conditions where wood merely burns. Neither of these save homes in our wildfires, though; it turns out what saves homes is things no one realized at first:
Don’t plant trees within fifty feet of a structure. More, if you didn’t inflate your home like a balloon to fill a property to the brim with home. Cut them down and make a firebreak. Clearings exist for a real and serious reason. Aesthetics have been given precedence far too long in this regard.
Make your home airtight (or positively pressurize it, if you have the power and tech to do that safely) so that embers don’t get pushed in by the winds and pulled in by the temperature differential currents and catch your house on fire from inside its walls. Not much fun in having a brick building burned out from embers that were forced in through a poorly-sealed door.
Saturate your roof with water, so that it doesn’t trap embers and act as a fire repeater to the next house on the block. Not only will your roof not burn, but every ember that lands on it will likely go out. Even if your roof is metal, consider installing sprinklers anyways. Maybe you’ll help save your neighborhood someday.
It’s not the building material that’s the one problem here; it’s the carelessness of building code, safety enforcement and absence of federal and state aid to fireproof homes in known fire zones. It’s the catastrophically incorrect hundred year old policy that would rather burn down a chunk of homes every ten years rather than admit that policy is wrong and that the indigenous people were right all along. Brick or wood or concrete or steel, none of these will stop the hottest fires with any certainty. We know what does, and we’ve allowed it to become unsafe to have wood homes. We know how to stop these wildfires. Build with brick if you like, but:
This is absolutely an acceptable path forward, and was proposed decades ago. It’s been essentially ignored in building codes and homeowner requirements, but if you own a home or know someone whose home is in a fire zone — which is any home between the Cascades and the coastline where there’s a contiguous (no gaps larger than a mile) line of homes and/or flammable unmanaged land eastward from the house to the nearest forest (i.e. all of Marin county) — then focusing on the home modifications described in this story may save that home, and perhaps all of those west of it, when fire visits them eventually.
I am not sure the wood framing matters much in this case. The fires are burning houses because the roofs are flammable, or embers are getting in the house through the eaves or a broken window. So in the end you have a completely burned down wood-framed house or a hollow concrete house that is no longer structurally safe.
When I briefly lived in Oklahoma I found it frustrating that they use stick frame construction for homes and apartment buildings. Even when we know how to build much safer wind resistant houses.
What I thought was worse was once a tornado rips up a neighborhood builders are allowed to build replacement stick framed homes.
And I’ll huff and I’ll puff and I’ll blow your house down.
Genuine question. Does this story get told to children in Oklahoma, and if so, don’t the children think to themselves “wtf parents, have you seen our house?”.
Oklahoma is full of lowest bidder builders. Living in OK I rarely see a house built in the last 10 years that looks like it was built to last. Yet another thing Americans don't seem to care about anymore.
More like can't care about anymore. Median household income is 63k in OK and housing costs are through the stratosphere, it's no wonder people will pick any home over none.
I don't think its necessarily the case what people don't want, but I assume that type of build doesn't come cheap and people find existing homes expensive enough.
In Yugoslavia, in 1969, one of the biggest earthquakes occurred, destroying several cities. After that, the country’s leaders decided to change building codes. Even today, although Yugoslavia no longer exists, the countries that adopted those codes have homes capable of withstanding earthquakes up to 7.5 on the Richter scale.
My main point is that if we face major natural disasters, we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
Why bother building a better home when it's cheaper to buy insurance and rebuild later?
This is why prices are important - sometimes it's sensible to build cheaper houses without these safeties if the risk isn't there, but if the risk does exist then it needs to be priced right to provide that incentive.
I don't understand the downvote. I think this hit the nail on its head.
People whine about insurances pulling out. All they want is for somebody else to pay for their risk. It's their choice to live in that area, they should bear the consequences. It's not like it is or has ever been a secret. Climate change is known for decades now. Many people just chose not to "believe" in it. Well, their choice, but now that sh* hits the fan, they shouldn't come whine that everything gets sprayed with poo.
But this cuts both ways. The insurers chose to provide their services in the area for the amount of money agreed upon. If anyone was more aware of the risks and probabilities, it's them.
Why do they get to pull out now when it's time to hold their end of the contract?
That depends on what you mean with "pull out". Typically you pay a premium and that means you are insured for a certain
period. A year or so.
Everybody who is insured at the moment of course needs to be paid by the insurance under the terms they had agreed to. The insurances should not be allowed to "pull out" of this responsibility.
But what about the next year? If no insurance wants to offer you another term, especially not for those same conditions, then it's their choice to "pull out" in that sense.
On the other hand, suddenly not offering cover at all is a problem for people who have established interests in a property.
I can see an argument for not writing new policies in an area. But I can also make an argument for allowing existing policyholders to renew -- maybe not at the previous rate, but at an appropriate rate for the risk.
As a matter of public policy, we ought to match the risk put on a homeowner with a mortgage by the bank with the risk assumed by the insurer when the homeowner pays their policies. Not let the insurance company lay the risk on the homeowner if they notice the risk has gone up before the loss is realised.
Alternatively, we need to start treating buildings insurance more like (UK) life cover: I took out decreasing life insurance when I took out my mortgage, it'll pay off the mortgage if I die. The amount of cover goes down every year to roughly match me paying off my mortgage. No matter what happens to my health in the meantime, if I keep paying the premiums then I keep the cover -- even if I wouldn't qualify for new cover.
Or maybe we need to say that if an insurance company declines to renew because they think the risk has risen too much, the customer should be allowed to claim on the expiring policy even if the house is still standing, because it's obviously worthless, and it's obviously due to a risk that was covered by the policy.
If you want a longer reinsurance term, it needed to be agreed to upfront. I'd guess insurance companies are well aware of the risks of writing long-term policies and so don't usually offer them. That being said, your comparison to term life insurance is quite apt - I wonder if such insurance policies actually exist. I would guess they'd cost more than a yearly renewing policy, but who knows.
Your other proposals as extensions to yearly terms certainly go too far. Annual renewal policies are commonplace, and it should be well understood that there's no obligation on any party to continue it.
Oh, definitely. At least not without a lot of discussion around how much the extra insurance would have cost. I'm not in a position to implement it either :).
If we're going to have state intervention though (and it seems at least under suggestion, I've no idea how seriously, in CA) then rather than an insurer of last resort, we (or rather they) should consider what they actually want from their insurance.
California law limits how high the insurance companies can charge for premiums. Did that law or those limits exist when they started offering coverage in the area?
Maybe they didn't, and then the law or limits were imposed at a time when the insurance companies needed to increase the premiums to match the new risk. But if the law prevents them, then they have no other choice but to pull out. Why would they as a business stay if the risk is to great for the premiums they are allowed to charge? They certainly are not obligated to stay.
But it is possible that more private insurers in Florida, who have to adhere to state guidelines for how much they can raise premiums, will cancel policies after this year’s hurricanes, leading more people to turn to Citizens, Rappmund said. “When you don’t allow the price to be matched to the risk, then the private companies can’t make a business there and they retreat.”
Still, if fewer private insurers want to do business in Florida, Citizens would likely need to push for higher rates on its customers more and potentially even reworking what its policies cover, Rappmund told CNN.
More seriously, nowhere of course, but if the risk is manageable (a fluffy term to mean predictable and not too high) then you'll find an insurance that covers you. Those natural conditions are dynamic though, so where such insurance is available can be (and is) subject to change. Predictably so. Nobody will provide you with the same car insurance when your car is new compared to 40 years later (same car). Things change. If you don't want your insurance to change, negotiate a 40-year term. Forcing them is nuts.
For inhabitant survival a sifficient goal is something like “remains structurally intact for ~30 minutes after the end of the earthquake”. Which is significantly leas than is required for staying habitable
Crumple zones in cars exist under the assumption that they will not be occupied by humans. In a house, on the other hand, any place could have a person inside of it during an earthquake, meaning that basically the entire house would need to stand to avoid any human being hurt.
I'm not an architect and don't live in an earthquake zone, but I was under the impression that wooden homes flex in earthquakes and if and when they do fall on you, do less damage than concrete homes which are stiff up until a point and then crack and fall.
So the human surviving may come at the cost of more houses collapsing.
Can personally confirm. Wooden houses do flex and often survive unscathed. The only major damage is usually due to any masonry attached to the house (see: chimney) or the house moving off of the foundation (see: before ties were in the building code).
It absolutely happens in steel and concrete construction in earthquake loading, when loading past the smaller earthquakes.
Plastic/non-linear deformation is intended in shear panels of steel connections and the core of well confined concrete beams/columns. The idea is to provide a lot of energy damping due to the nonlinear nature of the f*D hysteresis curve. This works long enough for the earthquake to go away and the people to get out of the building, at which point, you need a new building but hopefully no one has died.
We were speaking in the context of fires previously - in which case it's usually more about preserving the neighbourhood and land than anything else, you have to evacuate regardless.
Earthquakes are different and you'd need a house that stood anyway (though I'd guess most houses don't have a problem with earthquakes insofar as not collapsing on inhabitants, though they'd probably be damaged)
Not true. In the 2023 earthquake in Turkey 10s of thousands of apartment buildings collapsed. Official death toll is 60k or so but it's widely known that the actual number is at least twice that.
The key thing to understand is that you don't get to choose when the house gets destroyed or get advanced notice. Which means you might be in there, or your kids, or all your belongings. But yes, after you're dead in the rubble someone else can rebuild your house and it might be cheaper.
Hah financialization strikes again. Try explaining this to a person from a third world country, they would say "what are you talking about". Also they would have better health care than your average American.
In 1666 London had a bit of a problem with fire, after that some building codes were introduced. Buildings made entirely from wood were not allowed and roofs had to have a parapet.
If you don't know what a parapet is, take a look up to the roofs on London's older buildings, the front wall rises up past the bottom of the roof. If there is a fire in the building then the parapet keeps the burning roof inside the footprint of the building rather than let it 'slide off' to set fire to the property on the other side of the street.
The parapet requirement did not extend to towns outside London, which makes me wonder why.
The answer to that is to see what goes on in the USA. After a natural disaster they just pick themselves up and keep going. Florida was obliterated in 2024 but nobody cared after a fortnight. Same with the current wild fires, nobody will care next week, it will be forgotten, even though having one's home destroyed might be considered deeply traumatic.
I think that the key to change is to not have too many natural disasters, ideally nobody has living memory of the last fire/flood/earthquake/pandemic/alien invasion/plague of locusts so that there is no point of reference or 'compassion fatigue'. Only then can there be a fair expectation of political will and the possibility of change.
> ideally nobody has living memory of the last [...]
Funny, I would have said the exact opposite. If people forget how bad things were, they seem more likely to repeat them.
Nazism, for one. And the rise in antivax sentiment - people today have never come across an iron lung, which is a testament to medical technology, but it means some silly opinions get way more traction than they should.
"Those who cannot remember the past are condemned to repeat it" - George Santayana
The weird part of living near the tropics is we all look at that and go "not too bad a hurricane season". Everyone not-from-the-tropics stares at your list in horror.
I forgot that any exaggeration is not allowed on HN!
128 billion dollars is equivalent to 200,000 homes, or even more, which does not represent total obliteration, however, if that level of devastation happened in the UK, the only comparison would be what the Luftwaffe did during WW2.
It’s also a lot worse than the pure numbers suggest because the damage here is taking away actual built up stock, so capacity for generating future GDP. And the GDP in Florida includes a lot of economic activity used to rebuild after past damage.
And all of this without Miami even being flooded out of existence. Miami can’t even build dikes due to the porous ground it’s built on.
Yeah, I'm surprised that the damages of the LA fire occurred, because it was known beforehand that California had a fire problem (and also have an earthquake problem I think).
I'm here in Eastern Europe and our buildings can withstand a lot of things.
> we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
As an European, it baffles me as well.
If this doesn't happen to "cheap" homes here, why does it happen in California, to rich people's houses?
The government banned insurance companies from raising prices. They used tax payer money to subsidize this for a while which increase home prices. Eventually insurance companies stopped offering insurance.
When state actors even dabble in socialism disasters happen people die.
> Gov. Gavin Newsom just released part of his solution to California’s home insurance crisis, and it boils down to a push to allow carriers to move faster to raise rates.
> In most cases, the Department of Insurance would be required to act on an insurance carrier’s rate request within 60 days, unless extensions are necessary.
> The proposed bill expedites the timelines laid out in Proposition 103, which requires insurance companies to have changes approved by the Department of Insurance and dictates how quickly the department must act on change requests.
> Critics fear that shortening approval timelines will allow insurance companies to jack-up premiums without room for public appeals and sufficient review by the Department of Insurance.
> The government banned insurance companies from raising prices. They used tax payer money to subsidize this for a while which increase home prices. Eventually insurance companies stopped offering insurance.
Obviously. Such a move by the government is just plain stupid.
> When state actors even dabble in socialism disasters happen people die.
No need to overgeneralize. Not every stupid move is immediately "socialism" and everything smart is "capitalism". It's obvious to every socialist that this move was stupid. In contrast, it's pretty clear that a purely market-based health system costs lives. Nobody is claiming though that "whenever societies dabble in capitalism it results in deaths". Pick your optimization target and then the right tool to reach that target. Sometimes that tool is to let prices regulate risk, sometimes it is laws to regulate risk, and sometimes it's something else entirely.
> It's obvious to every socialist that this move was stupid
Is it? Or is this post hoc rationalization? I really dislike playing the “both sides” card, even for a moment, but it’s hard to deny that there are questionable takes on both ends.
I agree with you that not every regulation equates to socialism, and it’s ridiculous to claim it is. However, the narrative of “insurance companies bad” is incredibly prevalent among left-leaning perspectives, and any regulation around insurance premiums tends to be automatically celebrated as a clear victory.
Ironically (because it's a free market argument), it’s a not-uncommon argument that if insurance companies can’t provide their services for no more than some arbitrarily-decided amount annually, they’re being inefficient or greedy and should go bankrupt and let a new competitor take the market.
> the narrative of “insurance companies bad” is incredibly prevalent among left-leaning perspectives,
Perhaps it is, I don't have enough insight to know. It's obvious (to me) that this is clearly over-simplifying things.
> Ironically (because it's a free market argument), it’s a not-uncommon argument that if insurance companies can’t provide their services for no more than some arbitrarily-decided amount annually, they’re being inefficient or greedy and should go bankrupt and let a new competitor take the market.
Is it actually a free market argument? Maybe it's not possible to provide that service at that price point. I'd think that the free market argument is that the price is already as low as possible, otherwise such a competitor would already exist and have outcompeted everybody. Such an argument has other issues though, like inertia, scaling effects, price-fixing and such, all of which are working against a free market though. Which is why a truly free market needs regulation, otherwise it ceases to be free.
> I really dislike playing the “both sides” card, even for a moment
Honest question: Why? I've found that reality is complicated. It's rare to find saints on "one side" and "pure evil" on the other. The truth is often times that there are many issues, many interests, many world views, and typically even more than two sides. Uncovering the truth usually requires avoiding partisanship and have an open mind about understanding the interests of every involved party. That necessarily leads to "both sides" arguments. Not common in hyper-polarized discourses, unfortunately.
> Perhaps it is, I don't have enough insight to know.
You can spot it in this post, too.
> Is it actually a free market argument?
The argument is:
Large corporation A offers service B at price $C. $C is an extravagant amount, and is due to the greed and inefficiencies of A. A can only charge $C because of regulatory capture, or using capital to elbow out upstarts, or whatever other argument you want to assume (ie it's not a truly free market).
If A should leave the market (forcibly or not), company D can now flourish by offering B at $E, where $E is much less than $C. Because D doesn't have the inefficiencies and greed of A, everyone profits.
Seems like a pretty standard "free markets/Econ 101" argument to me.
> Honest question: Why?
Frequently it’s nothing more than a flimsy pretext for cowardice, a lack of knowledge, or simple indifference.
I don't disagree with you, many topics are complex. Generally though, people dislike those who refuse to take a stance even if it's a weakly-held one (thus Machiavelli's famous advice).
> Seems like a pretty standard "free markets/Econ 101" argument to me.
Hm I think I see what you mean. It's a free market argument that includes that some regulation is in place which keeps A in business and keeps D out of business.
But wouldn't the free market corollary then be to remove that regulation so the market can be more free? That's hardly the suggestion coming from the left-leaning perspective, which instead proposes to add more regulation. So the end-to-end argument (including s corollary for what to do) doesn't actually sound free market to me.
The fire problem can be managed by burning or removing some of the dead wood, and building adequate water storage. Apparently California has been neglecting those two problems for decades.
And give many of Europe's house's a small rattle and they would fall down.
I'm in Christchurch, 6.2 Earthquake in 2011 and wooden framed houses dealt with it pretty good - they flex - lots of the houses survived and are still used.
Just about anything old and bricky was a deathtrap (fortunately many were unoccupied because condemned after nearby 2010 Earthquake).
And considering most of Europe is basically low risk territory, it makes sense?
Afaik, only Turkey and a small part of the Balkans is considered earthquake territory. And there's no fracking in Europe to induce minor manmade earthquakes either.
Despite being hit by earthquakes more often than other parts of Europe, usually only buildings and houses not built up to standard or old ones crumble, other buildings just shake and that's it. Of course, I do not know the exact risk of earthquakes in California and their intensity, but it's definitely possible to build earthquake resistant brick buildings
We had some earthquakes before, I was on the 10th level, you could feel the house "flex" in a way. Nothing happened and it's been standing there since Soviet Union or longer (obviously with maintenance).
We don't get many earthquakes here though, we do get storm but it doesn't cause power outage at all.
Frankly, this is just an ignorant take. Put Twitter/Elon Musk down for a bit. The Palisades Fire was not a forest fire. Please dispel your myths and learn what 60-80 mph winds, sometimes 100 mph gusts, can do.
While having unmanaged accumulated flammable brush
While having an empty reservoir under repair
While having the public water source unable to maintain water pressure for multiple hydrant usage
While having too few fire fighters dispatched in the area anyway
While having houses made out of wood
is it an ignorant take when the houses not made out of wood with their own watersource were able to withstand 100mph wind gusts and firestorm? it really really makes everyone else look ignorant
All of those are a result of American's favorite hobby though, not maintaining infrastructure, because ooh no taxes. LA has not raised enough revenue for decades it seems. The amount of pot holes in even the most expensive neighborhoods was already to damn high.
At some point the US really needs to do bit of cultural reform so they can start paying for all that low density development and the costs associated with it. So stuff can actually be maintained.
LA and California as a whole have some of the highest taxes in the nation, along with the most mild climate. The amount of waste, fraud, and abuse in California is stunning. The problem is mismanagement above all, not a lack of funds (at least in this case).
Frankly, everyone has been warning about the risk for years. The fire started as a forest fire (whether it was arson or not), and was anticipated by insurance companies who dropped policies on thousands of people in the months leading up to this. The winds are a big problem of course, but if there were not so many acres of kindling around the city along with insufficient water reservoirs, then a fire like this could not spread as easily as it did. I will give you that the fire could have still happened and been bad either way, but insurance people who literally study this stuff for a living and have skin in the game knew it was likely to get out of control well in advance.
One of the biggest problems are vents in the eves. Typically these vents have a single screen with a coarse mesh. Embers from fires easily pass through these vents, land on a surface, and start a fire.
Replacing the one coarse mesh with two or more layers of fine mesh significantly reduces the odds of an ember getting into the house.
This is a trivial improvement that dramatically increases survivability.
The real problem is the FIRE. The houses could be made fire-resistant, but making houses to be fire-resistant is going to be more expensive than managing the forests to reduce wildfires and storing more water. I don't believe that a tiny screen is going to make this huge difference you think it is. These fires are HOT and don't just catch houses on fire with little embers. They are hot enough to set wood and plastic on fire from a pretty good distance away. Green trees don't easily burn because of their high water content. Trees have evolved to survive fires as well.
Notice that you said "Green trees don't easily burn." Coastal California has two seasons: green and brown. Brown is in the summer. Green is in the winer. Normally it rains in LA during December and January. It didn't rain this year, so brown continued.
Most of the fires aren't in what you'd think of as forests. It's chaparral. Low scrub, bushes, and grasses. It is mostly what you'd refer to as underbrush. The only way to "thin it out" would be to remove all the vegetation. This environment has evolved to periodically burn.
> Trees have evolved to survive fires as well.
Trees have two broad strategies for surviving fires. One is to resist fire. The quintessential example is a redwood. The other is to burn and regrow faster than anything else. The quintessential example is a blue gum. Eucalypts evolved to literally explode when they burn. The environment in The Palisades is much closer to the second than the first.
This environment is, by its nature, an environment that burns. Yes, we've needed to allow more frequent burning. Environmentalists have been arguing this for decades. The difficulties with these conversations in the US is the Republican party's actual definition of "thinning the underbrush" doesn't mean controlled burns. It means clearcutting forests.
> These fires are HOT and don't just catch houses on fire with little embers.
Yes, in fact they do spread by embers. This is why the fires jump several streets at a time. The wind blows embers, and those embers ignite further buildings before the fire front even reaches them. This is one reason why it is so hard to set up fire breaks during a high winds.
> The houses could be made fire-resistant, but making houses to be fire-resistant is going to be more expensive
(Recently there was a major public building collapse in Serbia: the porch of the Novi Sad railway station collapsed, killing 15 people. This has really focused attention on corruption and caused massive protests.)
What collapsed was the newly rebuilt part of the porch, not the old one built to those codes. It has nothing to do with insufficient building codes, hence a corruption scandal.
Not really. Old concrete cannopy collapsed. It was minimally modified as part of station reconstruction by adding some glass panels, but cannopy itself and its suspension beams were not rebuilt. It's not clear at this point whether this modification was responsible for collapse, but what is clear is that old cannopy and beams were not even inspected during this renovation. That's a major blunder which lead to loss of 15 lives, and main reason for that is systematic corruption where minimal work is performed while full price is billed by private companies close to rulling party.
Reading up on this a bit, it seems it was the 1963 earthquake that precipitated the change in building regulations? The 1969 one seemed comparatively mild(?)
> As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
"Americans" is doing a lot of work in that sentence.
It would probably be more accurate to say "It seems to me that the history of American culture and economic systems have led to a system whose emergent behavior is to prioritize building cheap-but-easy-to-modify homes over constructing smaller-harder-to-modify-but-more-resilient ones."
Sure "we" need to take action, but the machine is very large and we are all very small gears in it. A twenty-something buying their first house doesn't have a magic wand to wave that will summon cinder block houses into being that don't physically exist. A builder who wants to build cinder block houses doesn't have a magic wand to rewrite city building codes that presume residential construction is mostly wood. A city council member who wants to modernize building codes doesn't have a magic wand to get enough constituents to prioritize this over housing costs, homelessness (but I repeat myself), jobs, etc.
Everyone's problems seem easy when you are very far away from them.
Wood for earthquake resistance vs masonry for fire resistance seems like a false dichotomy.
Australia has a lot of experience with building fire resistant homes, and they didn’t do it with masonry, they did it with timber and steel framed homes, plus fireproof cladding and roofing materials, keeping a perimeter free of vegetation and protecting against ember ingress.
It is possible to have both earthquake and fire resistance in a stick framed home, without the expense of resorting to reinforced concrete.
California's building codes are the same. Three problems: overhaul takes generations, monster fire storms will still burn resistant materials, and brush upkeep is difficult
Australia is surprisingly urban, especially in terms of I would guess 90%+ of people live in relatively safe places fire wise (putting inhalation of particles aside).
People in built up areas almost don't think at all about wildfire safety, cladding an so on.
You're correct that buildings must be more robust and literally capable of surviving an ongoing 4th of July event directly above the property.
However they must also be built such that there is less which is able to burn. Also so that that which does burn is less deadly when it burns.
There also need to be better firebreaks and less natural 'fuel load', which when there IS a good set of rain in the near future, needs to be burned in a rotating cycle to restore nature's fuel balance and discourage catastrophic uncontrolled correction events.
I'm curious how the roof is constructed on your cinder block house. That kind of cinder block construction seems obviously superior to me, but I can't think of any roof that would be so obviously superior.
There are a LOT of fireproof roofing materials; the US is quite strange in covering most houses with these asphalt shingles. Clay/concrete tiles are pretty standard; slate or metal also options. There are presumably different ways of dealing with the gaps and ventilation to keep out embers.
We live in an ICF house. People don’t realize it is “framed” with concrete instead of wood unless we tell them. Siding on the outside and drywall on the inside.
In northern Italy, the rebuilding of mountain villages in brick and stone after devastating fires had destroyed many of them was ordered in the nineteenth century. It's absurd to claim you can't do anything against fires and the world has become uninsurable in the 21st century and in the world's richest country, while you keep building everything in the cheapest and lightest wood. The sight of the houses burned to the ground except for their fireplace and chimney in the middle is both sad and infuriating.
Metal roof, passive house so embers don’t get sucked in. Concrete walls around the property and plants that don’t contribute to the fire.
The house might cost an additional $100k to build compared to conventional. But it would make all that back on energy, roofing, and insurance costs- probably at the point the conventional home would need a roof replacement.
Builders don’t build such houses unless a client or building code mandates it.
Other sources say the house wasn’t a passive house but did have fire rated walls.
It seems like a lot of fire resistance can be created just by focusing on defensible space and having a concrete or metal fence. Then protecting the roof ventilation from fire (there are special screening materials that can be bought). Then using class A rated materials on the roof and then the exterior. Then metal framed windows instead of vinyl. Actually doesn't cost that much more- they should require it in building codes in these areas. The issue then is retrofit- insurers should probably require a defensible space in these high risk areas.
> The trouble is, brick isn't earthquake resistant. Not without steel reinforcement.
It's just a matter of throwing a couple hundreds $ of metal and cement every few rows of bricks, like this: https://www.pointp.fr/asset/27/07/AST212707-XL.jpg when you see how much american spend on houses it's a drop in the ocean.
FYI a two storey 10x10m house will run you less than 10k euros in bricks for the external walls, and that's with 30cm wide honeycomb bricks which probably provide enough thermal insulation as is for LA. Add 10k of rockwool insulation and you're good to go for most places.
You use wood for simple reasons: it's widely available, that's the only thing your workers are trained on, it's cheaper so builders make more money, it's faster and allow crazier design (mcmansions). Same thing for asphalt shingles, nobody uses that, it needs constant replacement, but it's cheaper, easier/faster to install.
In europe we mostly build rectangles with simple two pitch roofs, ceramic tiles that last 50+ years, most of them are made of bricks, even in seismically active countries like Italy.
And skill, likely in low supply, and labor. I'm sure some in the Pacific Palisades could afford this no problem, but many in altadena inherited their homes and their homes were the majority of their net worth.
Admittedly not very knowledgeable about this stuff but I feel like a lot of these types of comments are greatly trivializing this problem
Tokyo has high earthquake and moderately high fire risk, people here tend to go with steel reinforced concrete but wooden buildings remain common as well.
This is an extreme that is not true. Bricks are harder to make earthquake resistant but it's perfectly possible to build houses that have SOME bricks in it that are also earthquake resistant.
There are permutations of materials that are both more fire resistant and more earthquake resistant to the required level at a certain height of the building.
Massive not. Italy has mostly buildings made with non-bearing walls made of bricks. The bearing skeleton is made with "reinforced concrete" which is essentially columns and architraves made of poured cement with inside steel bars.
Clearly we should not force the whole US to drop wood.
Very hot an dry regions like LA might be a good place to switch away from wood.
Relatedly, door locks sometimes seem to be "insurance rated", as in insurance companies give their opinion on what sort of lock one should use. If you couple that with the belief that no lock is 100% secure, it sort of suggests that a collaboration with insurance companies to decrease the odds they'll have to foot huge reconstruction bills (via stuff like you said, construction techniques, firefighting capacity, etc.) could alleviate this conflict somewhat.
Most new houses built like that in a lot of places in Europe. Prefab reinforced concrete load-bearing walls + pourous concrete for the rest. It's either stucco or one layer of brick on the outside to give character to the building.
When nerds like me were freaking out about climate change in 2003, what did people think we we’re talking about?!?
This is the exact scenario every single scientist I studied under openly discussed: probably not an extinction level event, but very, very expensive… Expensive to the point of it being cheaper in the long run to switch to renewables asap and hope for the best.
It’s like a 150M conservatives are all at once are saying “Wait a minute! We should do something about this!”
My only hope for climate change is that insurance companies start lobbying to have a more predictable environment since risk models works better when things aren't chaotic, and that gives a monetary incentice for companies to do better
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[ 2.4 ms ] story [ 577 ms ] threadIf it costs 10 million dollars to replace a house, the insurance will be out reach for most homeowners.
I think this is a subset of larger shift in the economics of insurance. While coverage focuses most on the climate change aspect, the majority of the change is driven by building costs. If you cant rebuild economically, then you cant insure economically.
https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
When you put a minimum on the price of wages the true minimum is zero. When you put a maximum on the price of insurance the true maximum is 1/0.
I also see you coupled it with the strawman fallacy, since I didn't claim anything as wide ranging as "people should aim lower."
Pretty impressive to pack so much poor reasoning into one sentence.
Spending within what one can afford is a long running method of resource allocation which has served mankind for millennia, and mankind is now living at a higher standard of living than any point in history.
I was originally responding to the above parent comment. Agree, if you can't afford it, don't buy it.
Developers here in the Midwaste aren't going to put a cheap house on a lot if they can instead put a 3500 sq. ft. home and get triple the profit.
To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.
[0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...
[0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...
This has baffled me ever since Obamacare was first passed - it seems that each year the insurance companies have an incentive to drive up the cost of healthcare, since that’s how they earn more money in absolute terms. Is it not so?
People on HN always talk about European health insurance seems like an easier route than to murder people lol
To answer the substantive point, it’s extremely difficult to pass substantial laws in the US due to the structure of its political system. The mandatory coalition of the president + 60% of the senate + 50% of the House of Representatives is a much higher bar than any other democracy. So laws aren’t written to be optimal policy, they are written to satisfy this extremely high coalition requirement — Obamacare in particular was very fundamentally weakened from some of the more expansive initial proposals to address the concerns of one or two senators and get them on board.
what makes senators hate something that is pro the people? wouldn't that give them better ratings? I come from a dictatorship so sorry if this is a dumb question
The short of it is that you can get anyone you want in office, to do anything you want even if it directly opposes their constituency, as long as you spend enough money on them to get them in office, buy their vote, and keep their PR afloat.
Gilens and Page (2014) found that "average citizens and mass-based interest groups have little or no independent influence" on American government policy: https://www.scienceopen.com/document?vid=e4797592-9d73-4f2b-...
Worth noting that this paper saw pushback for many years after the fact but measurably, its conclusion has been true since its release.
The answer was already given: it was politically infeasible to pass a single payer variant in the US. And it’s not clear it would have been good even if it had been feasible.
Could you say a bit more about the politics? this is very fascinating idk much about insurance or politics
This may be super simplistic but Europe, if you look at it at a high level, is as diverse as US states if not more because a lot of places have multi party systems instead of a two party system with comparable diverse interest groups and comparable GDP etc
What did they figure out to have insurance that the US can't? Or doesn't want to?
Not sure how I can say it more clearly. Most European countries have a functioning political system where it is easy (or at least possible) to pass necessary laws. The US doesn’t.
What period do you put it over for property insurance? Profit caps work for health insurance because claims are typically not correlated. The percentage of your customers with cancer won’t 5x one year and go back to baseline the next. New drugs or treatments (or a drug going off patent) can cause correlated swings, but generally costs to health insurers don’t change a lot year to year.
For property insurance, you need to bring in profits most years to fund the year when there are multiple category V hurricanes or large fires.
You could make the argument for this for healthcare, since no one can choose which illness he is born with. But choosing your housing location is a "choice". And you can/should move somewhere else where it is less risky.
Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage.
Do a search for "ACA three legged stool":
> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.
> So insurance regulation has to be accompanied by the individual mandate, a requirement that people sign up for insurance, even if they’re currently healthy. And the insurance must meet minimum standards: Buying a cheap policy that barely covers anything is functionally the same as not buying insurance at all.
> But what if people can’t afford insurance? The third leg of the stool is subsidies that limit the cost for those with lower incomes. For those with the lowest incomes, the subsidy is 100 percent, and takes the form of an expansion of Medicaid.
* https://archive.is/https://www.nytimes.com/2017/07/10/opinio...
This 'architecture' was developed by Jonathan Gruber:
* https://cdn.americanprogress.org/wp-content/uploads/issues/2...
* https://en.wikipedia.org/wiki/Jonathan_Gruber_(economist)
It is a form of social safety net.
The alternative that is always there is to repeal EMTALA.
> It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.
This misses the problem: [the ACA causes a moral hazard for lower classes likely to use it.](https://pmc.ncbi.nlm.nih.gov/articles/PMC8567089/)
The issue is a policy designed for a highly uniform, high social class, high status state (Massachusetts) was applied to the USA as a whole.
I suspect you think it's not great having homeless people on the street.
Wait till you see what it looks like when they actually start dying in the street because emergency health care is no longer available to them, nor to many of their housed neighbors, family and friends.
And FWIW, US Medicare spending alone is shaping up to grow to almost as much as some EU nations on a % of GDP basis (https://ec.europa.eu/eurostat/statistics-explained/index.php...).). Medicare isn't the solution. It's the problem.
https://www.bea.gov/news/2023/gross-domestic-product-fourth-...
https://crsreports.congress.gov/product/pdf/IF/IF10830
The U.S. Bureau of Economic Analysis puts the 2022 GDP at $25.46 trillion ($25,460 billion). Congress puts 2022 spending on private health insurance at $1,290 billion (5%) and Medicare at $944 billion (3.7% of GDP).
The fact that one program (Medicare) is growing to be as large as the NHE should be cause for pause.
What we can and cannot afford is a choice, not some immutable fact of nature.
A cynical, if realist, version of this would be: if we choose to not spend any more ...
But that's still better since it acknowledges that we, as a nation, have agency in this.
Cigarettes can be taxed with proceeds going to care with those with lung cancer. Dangerous activities can have a separate insurance. For a popular sport, it means most people are engaging in this activity. Houses on the top of a mountain are for a very tiny minority (and a very rich one too). They should finance their lifestyles themselves.
Injuries also hurt, so it's not like people don't have other disincentives to avoid injury aside from the price. This isn't the case in other areas, where it's purely a monetary penalty and thus removing that penalty results in way more of that thing taking place.
Are you this incredulous when the response to a failure in "the market" is more "market" ? Or when companies fail, and the response is "more companies", do you question that in the same way?
I'm not taking a position on the meat of your point, but this particular angle strikes me as very strange.
It sounds like a lot, but if the risk is actually that high then the prices will be too. Houses aren't cheap. Insurance is a very competitive market, it's easy to comparison shop. The root problem is the high risk, not "unfair" private profit.
(Numbers picked out of thin air to make a point)
Transfers wealth from shareholders, patients and taxpayers to management, bankers and intermediaries.
Broadly speaking, caps are stupid—akin to treating liver enzymes directly when they spike versus seeing them as the sign of deeper problems.
You do the first part so they don't die before the long-term treatment kicks in.
In the long term, they’re putting a patient running a fever on immunosuppressants. The fever will go. But the patient will die.
Youre about 20-30 years late to the game, but arrive in time to see the conclusion does not match your assumption. See california for fire, florida for fstorm damage, and everywhere in the us for federal flood coverage. It doesnt work. CA FAIR has higher rates to account for increasing the coverage pool, but it doesnt look like premiums will cover the current or future loses. Which is the universal story when your policy attracts all the high risk/payout buyers. And FAIR, roughly, is setup to go recoup losses from all the _other_ insurance providers in the state. Even ones not insuring those policy holders _or that type of insurance_. Its just a layer of indirection to subsidize fire risk against all poly holders.
If I live in the middle of a city in an apartment block should I pay the same rates to insure against wildfire as someone in the middle of a dry forest? Probably not, but govenrment-mandated insurance programs force me to.
Public benefit corps fit this model as do regulated utilities.
I dont get it. Your argument is that if everything was priced accurately and aggregated "fairly" insurance would work. Ok, totally true statement. Very much the case that's not what is happening now for any of the example markets or gov programs.
You appear to believe "profit" is the problem, which is true in that negative profit is known as "loss" which is what has and will be occurring even with the public "last resort" rates. The private insurers are not withdrawing because their "fantastic" 6-15% margin on disaster insurance isnt enough. Using CA as an example they withdrew because 1) the state required they dont use risk based modeling for individual rates and 2) they dont include reinsurance costs as a rate signal. Shockingly their CA insurance pool turned upside down on costs/losses in a decade or two and they bailed.
FAIR is exactly the sort of or youre talking about; non profit government mandated insurance pool, open to all residents, with proportional policy/loss assignment, rates set based on regulated-interpretation-of-risk-exposure + costs, regulated by the CA Dept of Insurance. And yes, their policies are risk adjusted, but theyre not _accurate_. And yes, insurance should accurate according to risk and (payout) costs but basically none of the public last resort issuers can!
See again florida, national flood, etc. In every case 1) risk & cost modeling (accurate pricing) is suppressed on behalf of the public 2) risk prices/costs soon exceed private risk markets 3) private insurers withdraw 4) public "last resort" insurers emerge 5) risks/costs continue to grow, private insurers withdraw, the "last resort" insurer becomes the risk aggregating insurer 6) last resort insurer shockingly cant meet its commitments 7) public funds and/or backdoor insurance taxes socialize losses due to unprices disk.
You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof. These buildings would be realistically insurable in both California or Florida. They would cost more to build, not THAT much more though especially if land costs many millions, an extra 50k - 100k to build out of concrete is a very reasonable expense.
Flammable trees well away from a leaf free clean guttered (or no gutter) house are also no compromise requirements.
See: https://research.csiro.au/bushfire/ and https://www.csiro.au/en/work-with-us/services/testing-and-ce...
for the rabbit hole of Australian Bushfire housing certification and testing.
Burning Down the House: Trial by Fire CSIRO- https://www.youtube.com/watch?v=KBtawn7IAnI
Which are almost definitely known to the state of California to cause cancer.
https://pubmed.ncbi.nlm.nih.gov/1947241/
https://mesothelioma.net/fiberglass-connection-to-mesothelio...
https://www.jm.com/content/dam/jm/global/en/MSDS/20000000205...
SECTION 11. TOXICOLOGICAL INFORMATION
> warning for formaldehyde.Trace amounts can possibly sweat out in specific conditions .. which is why you might choose to install with a vapor barrier.
Those limits are:
So the Prop 65 warning certainly seems reasonable from here.https://downloads.regulations.gov/EPA-HQ-OPPT-2023-0613-0230...
It also has to be the type of wool that has been treated, etc.
Don't even have to go that far.
Wood framing is fine: make your cladding stucco would do a lot (or brick). You can even have siding as cement-base stuff is available:
* https://www.jameshardie.com/blog/siding-types/what-is-fiber-...
You could have metal or clay roofing, but shingles with a Class A rating is available as well:
* https://www.ameriproroofing.com/blog/asphalt-roofing-shingle...
Just like exactly the rest of the world? We, the non-USA folks, are looking yearly at either fires or hurricanes destroying these wooden houses there and people keep rebuilding them. Insanity.
You can build wood framed (2x4, 2x6) buildings that are resistant to fire:
* https://www.youtube.com/watch?v=yZe-TlYxm9g
A stucco, brick, or fibre cement siding, have 2m/6' clear around the base of your house, tempered windows, and either a metal roof or shingles with a Class A fire rating.
You can make wood not burn on the kind of environment where it would be the only or main object releasing heat. That is still a completely different category from non-flammable materials.
> We, the non-USA folks
Isn't that a sad way to look at yourself?
There is:
* https://www.youtube.com/watch?v=yZe-TlYxm9g
But when a lot of your housing stock is multiple decades old that was built before modern building codes, there's a lot of kindling out there.
https://www.insurance.ca.gov/01-consumers/200-wrr/Safer-from...
https://readyforwildfire.org/wp-content/uploads/2024/05/Low-...
https://osfm.fire.ca.gov/what-we-do/fire-engineering-and-inv...
The problem is storms are getting bigger and more frequent from climate change and hitting areas they normally don't.
They aren't getting bigger or more frequent at all.
NOAA has stated this multiple times and you can read an article addressing it here:
https://www.climate.gov/news-features/blogs/beyond-data/can-...
It's well known that hurricanes go through multidecadal swings.
Why this keeps getting repeated when it's obviously false is beyond me.
> No, we cannot confidently detect a trend today in observed Atlantic hurricane activity due to man-made (greenhouse gas-driven) climate change. Some human influence may be present
> The importance of this distinction between potential causes of AMV for future hurricane projections is clear: if strong man-made aerosol forcing and volcanic forcing were responsible for most of the “quiet period” of Atlantic major hurricane activity from the 1970s through the early 1990s, then a return to this more “quiet” regime in the coming decades may not occur. But if the “quiet period” of the 1970s through early 1990s (as well as the earlier quiet period of the early 20th Century) was caused mainly by internal climate variability, one would expect to return to relatively “quiet” conditions in the coming decades as the climate swings back and forth between more active and inactive Atlantic hurricane periods. This is an important research question that does not yet have a clear answer.
Meanwhile we continue to see stronger storms.
> Another hurricane metric, the fraction of rapidly intensifying Atlantic hurricanes, was reported to have increased since around 1980 (Bhatia et al. 2019), and they found that this change was highly unusual compared with simulated natural variability from a climate model, while being consistent in sign with the expected change from human-caused forcing. Even so, however, their confidence was limited by uncertainty in how well the single climate model used was representing real-world natural variability in the Atlantic region.
We do know for a fact that the ocean temperatures are rising. Also from your article,
> Global surface temperatures and tropical Atlantic sea surface temperatures have increased since 1900 (by around +1.3 ˚C [+2.3 ˚F] and +1.0 ˚C [+1.8 ˚F], respectively), unlike the reconstructed hurricane counts or U.S. landfalling hurricanes. Finally, a number of studies have found that several Atlantic hurricane metrics, including hurricane maximum intensities, hurricane numbers, major hurricane numbers, and Accumulated Cyclone Energy have all increased since around 1980.
But climate science is about studying a complex system, and finding direct causations is hard.
> However, in a 2019 tropical cyclone-climate change assessment, the majority of authors concluded that the recent hurricane activity increases mentioned above did not qualify as a detectable man-made influences (meaning clearly distinguishable from natural variability).
Another study linked recently from climate.gov (near the bottom) https://www.climate.gov/news-features/blogs/beyond-data/2024...
>[R]ecent studies in attribution science show that climate change is causing an increase in the frequency and/or severity of tropical storms, heavy rainfall, and extreme temperatures.
So at the end of the day, it's fine to say there is no smoking gun, but it is absolutely not 'obviously false'. I think your biases are showing.
You won't find a "smoking gun" because it's not happening.
Your biases are in-fact showing that you don't realize you went from claiming it was true to "well we have no smoking gun".
Of course, explaining anything in detail is likely to make people think you work in the industry (I do not) and get accused of being a shill. All of which proves to me that older generations had a much easier life because nobody so financially ignorant today is in any sort of position to be able to buy a home.
All that said, I don't think it's actually a price ceiling. It's a limitation of what factors can be taken into account to set rates, and constitutional amendment from Prop 108 prevents the legislature from changing it.
I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies are making.
When I ask people how much cheaper they think their insurance (health, home, etc) would be if we forced insurance company profits to zero they usually have some extreme guess like 50%. When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. The discourse is so cooked that everyone who just assumes insurers are making unbelievable profits without ever checking.
Like you said, when I try to bring numbers into the discussion I get accused of being a shill (or a “bootlicker” if the other person is young).
The environment this creates has opened the door for some really bad politics to intervene in ways that aren’t helpful. I wouldn’t be surprised if the eventual outcome in a lot of these places is that politicians pass legislation putting the local government on the hook for insurance after they squeeze regular insurers so hard they have to back out to avoid losing money in those markets. The consequences won’t manifest for several years, potentially after the politicians have left office, but could be financially burdensome. Similar to how many local governments were very generous with pension plans because politicians knew the consequences would only be felt by their successors.
Meanwhile, the health care providers:
> But if you look at the list of companies with the highest [return on equity], you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers.
* https://www.noahpinion.blog/p/insurance-companies-arent-the-...
Do you have any source for this?
I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems
* https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...
Note that the first one, United Health, has slightly higher profit margins than the rest because UNH has an enormous business selling healthcare itself, not just insurance (they own a lot of doctor groups and outpatient clinics and employ a lot of doctors and nurses).
https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...
https://www.macrotrends.net/stocks/charts/ELV/elevance-healt...
https://www.macrotrends.net/stocks/charts/CI/cigna-group/pro...
https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro...
https://www.macrotrends.net/stocks/charts/HUM/humana/profit-...
https://www.macrotrends.net/stocks/charts/CNC/centene/profit...
https://www.macrotrends.net/stocks/charts/MOH/molina-healthc...
The other big insurers will be Kaiser Foundation Health Plan and various plans franchised with Blue Cross Blue Shield, but they are all non profit.
https://projects.propublica.org/nonprofits/organizations/941...
As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
In this list, I couldn’t find a single for profit BCBS licensee other than Elevance. They all seem to be mutuals/member owned/non profit.
https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Associa...
> As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
Interesting, I didn’t know UNH sold software!
At a quick glance Highmark and Wellmark are for-profit. And I believe the South Carolina licensee is as well. Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
https://projects.propublica.org/nonprofits/organizations/821...
Wellmark is a mutual insurance company (profits go back to policyholders, seems not comparable to a for profit insurance business, and for this discussion, is not going to have a profit margin that results in higher costs to policyholders):
https://en.wikipedia.org/wiki/Wellmark_Blue_Cross_Blue_Shiel...
https://en.wikipedia.org/wiki/Mutual_insurance
>Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
I see no successful lawsuits, though. Still seems like Elevance is the only for profit BCBS licensee.
>In 2014, BC/BS of Illinois (Health Care Service Corporation) was sued over its nonprofit status. The lawsuit was dismissed, with prejudice, and the dismissal ruling was upheld on appeal.[62] Similar suits occurred with similar results in other states such as Oregon.[63]
Highmark got labeled as for-profit on its Wikipedia entry likely because they own a variety of for-profit companies including e.g. Highmark BCBSD Inc. and Celtic Hospice LLC.
https://projects.propublica.org/nonprofits/organizations/453...
Specifics aside, I think it is conclusively shown that no health insurance / managed care organization earns a ton of profit margin. No one is going to become billionaire rich by starting up a managed care organization, because they will spend almost all they earn.
It’s such a low profit margin business, that Buffett, Dimon, and Bezos abandoned it:
https://www.healthcarefinancenews.com/news/haven-disbands-en...
To who? Are there shareholders profiting? Employees on the take?
> Unlike the non-profit Mozilla Foundation, and the Mozilla open source project, founded by the now defunct Netscape Communications Corporation, the Mozilla Corporation is a taxable entity. The Mozilla Corporation reinvests all of its profits back into the Mozilla projects.
https://en.wikipedia.org/wiki/Mozilla_Corporation
It’s the same with Highmark, assuming there isn’t massive fraud happening.
The shareholders take home only a fraction. But a lot of money gets spent that simply doesn't need to be. Other countries avoid the deadweight loss of the middle man.
Of course, now that getting murdered is on the table, the US health insurance executives might want to up their compensation.
Yeah, and "politicians have to answer to their constituents" is how we got the failed insurance markets in California and Florida. This thread has now gone full circle.
To buy votes, politicians sell “insurance”, but in reality it is a subsidy to a specific group of taxpayers.
When a government directly pays for healthcare, it can’t be called insurance, and so limits to the subsidy are easily attributed to the government leaders.
Whereas, if a government has the population buy “insurance” from non governmental entities, then it can pretend (for the layperson) that it isn’t a government subsidy and so the laypeople can blame limits of the subsidy on someone else.
Obviously, health insurance in the US is far from health insurance and premiums are closer to taxes being paid rather than premiums for one’s own health risks.
That isn’t so true in property and casualty insurance, at least not until governments like California step in.
People are still building in flood zones, or shorelines which will go under. Governments dont have the ability to tell their citizens the bad news.
Someone has to do that, but politicans arent going to take that role up.
that's not a sophisticated analysis. it would be like saying mcdonalds is unecessarily expensive because executive pay, and cars, and dry cleaning, etc. etc. yet, if you tried to found a competitor, you'd have all those same expenses. even charities have to pay management.
insurance companies make money because their aggregate risk is less than your individual risk, and you really don't want your individual risk so you are willing to pay them extra, a premium, to get them to shore up your downside. After that it's like any other company selling any other thing.
They're high because providers are making huge profits.
Now granted, they may ultimately be the same thing, but that's a different discussion [1]
In the context of housing (fires, hurricanes etc) insurance is expensive because housing is expensive to build.
[1] insurance companies have to invest their income somewhere. It makes sense to choose companies will high returns. Which includes some health care providers. Which can basically change whatever they like because of structural reasons that have been well discussed.
United Healthcare alone made $23,000,000,000 in profit in 2023. Health insurance companies have collectively made $371 billion in profits since the passage of the Affordable Care Act.
Property & Liability insurance (home, car, etc) have relatively modest profit margins, but health insurance companies absolutely are making huge profits.
why is this number considered huge? What measure are you using? These absolute numbers are meaningless, because you have to put it into context. That's why profit margin is what analysts use, not the absolute number.
If i changed those figures to: they made $77 per person, per year in the USA for providing healthcare services, does that still seem as big? Or is it now reasonable?
https://www.unitedhealthgroup.com/investors/financial-report...
The end-to-end cost society spends on paperpushing is easily hundreds of billions of dollars per year. (Including time lost while waiting on hold to call them, the actual literal work of dealing with these fucking printouts at each stakeholder, the extra effort placed on the paper industry, the postal service, and so on.)
Profit margin is all revenue minus all expenses.
>and dividends i assume would be part of that profit margin.
Dividends and share buybacks are not expenses. They are not money spent for the purposes of operating the business, they are awards to the shareholders. As such, they are not an expense. Dividends and share buybacks happen with the profit, so they will never be included in expenses used to calculate profit margin.
There are lots of highly qualified people at the SEC and FASB working to ensure some semblance of accountability. There is a reason why people from all over the world want to invest in a developed countries’ public equity markets, and that is a belief that most of the time, the numbers are very close to the truth.
In practice yes, but technically no. If a "non-profit" brings in 100 million dollars, and pays all 100 employees a million dollar salary, then that "non-profit" has made no profit. But when someone hears that a "non-profit" made "100 million" dollars, they think it is some kind of scam or something.
You have to look at the entire healthcare picture and realize that insurance is the system driving the exorbitant costs. There is no legitimate reason for healthcare prices to be so insane.
these profit margins are why some people claim that the US is actually subsidizing the rest of the world's low cost health outcomes.
These companies make money in the US, at high margins, which enables them to operate at low margins in other more regulated countries.
"Executive compensation" is even a "smaller slice" than profits, orders of magnitude smaller.
There is also a lot of other smells of a lack of a competitive market. Very opaque pricing, limits to how many hospitals can be opened in a region, needing paperwork to push against that limit, limits in residency slots, the entire hazing ritual of residency in the first place, limits in opening medical schools, ever escalating requirements to become a doctor, restrictions against doctor owned hospitals or clinics, the fact something like an epipen is still not out of patent and not having many clones by now, large barriers to make medical devices and medications, while simultaneously having great issues with generic drug quality, a horrible food system compared to Europe, while simultaneously having a much harder regulatory state medically compared to europe, etc.
You can typically endure hunger for 15 minutes for the time it takes to go to another food store.
On the other hand, if you are bleeding out in the ER, no such luxury exists.
Insurance executives have a fiduciary duty to maximize the profit of the company.
If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
If the company loses money treating patients, then it has a financial incentive to deny treatment as much as possible.
Unless a legal structure is found which scales profit with quality of care, ethical choices will be at odds with the fiduciary duty of the company officers. Having an AI say “no” and putting someone on hold is a lot less expensive than paying out for a cure that cost billions to develop.
In the case of government-run healthcare, the government at least sees the consequence of poor health outcomes in decreased productivity, competitiveness, gdp, and/or tax revenue, as well as increased use of social services.
In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
There are lots of perverse incentives at work, and vanishingly few people even try to understand them, I think because most people simply don’t believe it could possibly be as bad as it is. And by the time they learn otherwise, they care more about getting healthy again than overextending themselves trying to solve a massively complex problem.
Probably not. Many insurance companies are not "for profit" companies(not a 501c3, something else). Certainly some are, but most of the giant ones, State Farm, etc are not. Most are Mutual Insurance companies: https://en.wikipedia.org/wiki/Mutual_insurance which handily includes a list of them.
I.e. they are operated more like Vanguard, the investment firm than they are Fidelity(a private for profit company) or Schwab a public for-profit company.
Also, this fiduciary duty thing is not really true, but people think it's true. They do have a duty to work in their shareholders best interests. Lately that's been taken to mean profit above all else, but that's a recent(last few decades) interpretation.
> If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
It depends on if they share the cost(s) of keeping patients healthy or not. Incentives matter. If they are incentivized to keep people healthy, instead of just treating X disease today, it would be a different conversation.
> In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
> There are lots of perverse incentives at work
Agreed. But mostly it's just excess waste as far as I know. I'm not an expert in healthcare, so I'm at best a armchair quarterback here.
Good point (buying food would be a nightmare if it worked like American health care!) but that's a different argument from the one made above in the thread, that a profit motive in a vital good inherently creates perverse effects.
If you're going to tell us that because health care providers and health insurance companies are some kind of magic counterbalance against each other that benefit consumers, uh, nope.
A: All men are tall, therefore Giannis Antetokounmpo is tall.
B: Your proof is wrong: see this man here, he isn’t tall!
A: Clearly he has nothing in common with Giannis. He’s not even in the NBA!
Are you talking about healthcare specifically or businesses in general? AMD wants to make the best CPUs for the most amount of money. Is that "unethical"?
Yes, it is deeply unethical that someone can be bankrupted and become homeless because of a treatable condition because the "market" has decided a price for the service that is astronomical without insurance, while at the same time tying insurance to employment, dividing up insurance markets, and making coverage subject to inscrutable, unappealable decisions made by people sitting behind desks in a completely different part of the country, while the leadership of said organizations and investors make higher profits than ever. It is deeply unethical that a CEO can make tens of millions of dollars--which for most regular people is several lifetimes worth of earnings--in a single year, while dealing in a market that regularly denies coverage to people who then suffer, are financially ruined, and die.
It's not the same as making a better CPU for more money. Not. At. All.
For profit fire, military, or police departments result in some very obvious issues, and they would simply be causing maximum distress.
For profit / Not for profit, are all serving the same goal - human well being. We choose for profit models where they would result in surplus, and non profit where its more applicable.
at least thats the theory. Reality is more messed up.
This is besides all the inefficiencies, and nonsense. For example even if a patent hypothetically knew exactly how long a procedure would go, exactly what personnel would be involed and how, exactly how much anesthesia/sutures/other billable supplies were used, and that there were no complications, and even if they know that no denial of coverage would happen, it is not structurally possible for them to know the out of pocket costs, except for the handful of surgeries that get treated as package deals. It would literally take dozens of hours of phone-calls to the hospital's and each provider's billing department to get the exact codes and amounts they would submit, and then trying to get insurance to price the hypothetical bill, or provide you with sufficient information to price it yourself. And obviously a bunch of the information we are assuming the patient has are unknowable until after the fact.
Part of the problem is insurance has a huge rule engine for deciding which line items are covered by not-allowable (meaning they get written off), plus insurance contract rates are only public for hospitals (so no info for providers that bill separate), and even then the data files don't always contain sufficient data to determine which of the multiple allowable rates for this procedure with this insurance at this facility, with these caveats actually applies).
A few examples: I wanted to get a CAC scan that my insurance wouldn't cover. My insurance website said that a CAC scan would cost this much with my insurance, along with a total price that would be charged, covered or not. It was something like $80 total. I then called the place to get a CAC scan, and they said since the insurance didn't cover it, the price was $300, and there was no cash pay direct price where I could get it at the listed $80 price, even though they could hypothetically bill the insurance, and the insurance could just bill me the full price. The same place does not have a price listing; there is no online ordering I can do for the CAC scan, I needed to go through a permission process by talking to another doctor to even get the CAC scan in the first place. The fact I even needed to call people, and there was all this bullshit, to do direct cash pay for a simple scan is emblematic of a very broken system.
Or I want to get a blood draw for a blood test ordered by a doctor at one medical. They do not list the total price, even though that should be automated and very clear since it isn't a procedure that would have any 'complications'.
Even the simple shit is not clear at all and takes way more work than it needs.
You ever think it's curious that for-profit insurance companies pay out 2–3x what Medicare does for the same procedures?
You know what else is "a cute bit of misdirection"? Mentioning that profits are capped without mentioning why it's that way in the first place.
>You ever think it's curious that for-profit insurance companies pay out 2–3x what Medicare does for the same procedures?
...because the government low-balls healthcare providers?
When you consider that single digit percentages of trillions of dollars is still an obscene amount of money it makes sense. People making tens of billions by applying formulas to spreadsheets and shuffling other people’s money around doesn’t sit right with most people.
An alternative is to split these companies into smaller companies, which will each have much lower profits but also higher costs due to lost efficiencies, but people will not be happy with that either.
The federal government will pay you $4.4 billion a year[1] if you lend them a trillion dollars, no "shuffling money around" required.
[1] current 5-year treasury yields
It's not that I don't believe it, it's that this figure is completely unrelated to the damage and waste caused by the system of healthcare and health insurance we have in the US.
I mean, in a system of chattel slavery, you see above-normal profits competed away, but that in no way means the system isn't exploiting anyone, because that's not how the harm shows up! And yet still we'd see that argument get batted around in comments like yours:
"No, your owner can't possibly be exploiting you because, when you consider your purchase cost, he doesn't actually make much profit!"
Its not just the insurance costs either. My neighbor is an architect who now does planning/consultation with the RFS (rural fire service, australia). Its basically de rigueur for people to try and avoid or evade fire sensitive planning controls. Just the most basic concepts like defensible space, eve guards, or nonflammable finishes, let alone adequate on site water storage or site access. People are intentionally building in bushland because they want to be “in trees”, unless they block the view of course.
Even if they understand the concepts and remember black saturday, or a few years back!, it doesnt apply to them. Theres no concept of personal risk & consequences, and theyre right. They will probably get bailed out by volunteers and socialized losses. Just like new developments along riverine flood ways.
To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX?
If State Farm didn’t exist and the state ran insurance instead, and were willing to insure all comers, they’d be subsidizing people who can’t be insured profitably. That’s not crazy on its face (the state subsidizes lots of different things), but it’s at least worth asking why we should be paying for people to live in high-fire-risk areas rather than any number of other things the state could be spending those resources on.
No way that happened, the state would not allow it.
https://ktla.com/news/california/state-farm-to-non-renew-720...
>It’s important to note that nonrenewal is not canceling. Customers affected by the decision will retain coverage until their current contract is up. The company said those impacted will be notified between July 3 and Aug. 20.
I don’t think it was moronic at all; the point is to get to the bottom of what assumptions and axioms you’re using. What is the moral framework according to which you claim State Farm has wronged you. Only then can we judge whether your claim is in fact correct.
> because they aren't in the business of insurance
So, if I understand your implicit argument correctly, it seems to be that anyone who sells a product be forced to sell it to anyone, no matter how costly it is to them.
There’s no McDonalds in Barrow, Alaska, presumably because running a McDonalds there would be prohibitively expensive. Is that immoral? Should they have an obligation to open a store there?
That is clearly, clearly not my argument, but I have a feeling that you're one of those bad faith "and yet you participate in society, curious!" guys, so I'm done here.
And what is fire insurance? Is that something unique to CA?
CA regulation basically capped their premium increase and my insurer did calculations that said “this is a net negative business”.
If I had a business making a loss I would get out, so why would I blame my insurer for doing the same?
https://www.insurance.ca.gov/01-consumers/101-help/index.cfm
It's likely that you are not alone, but I've not heard of anybody not getting notification, despite a lot of people not getting renewed.
In the face of climate change, places that have been safe for a very long time are becoming unsafe. But I don't see a reason these shifts won't happen over and over as climate change unfolds. It might be worse than mass migrations... migrations to locations which later become dangerous, turning into recurring mass migrations.
How well can we predict where it will be safe in the coming decades and where it won't. Coastal land at or below current sea level (plus storm surge) is fairly predictable, especially where there isn't the population density (and money) to support building sea walls. But with things like rivers changing course (e.g., https://en.wikipedia.org/wiki/Alsek_River), it might become very difficult to predict what's going to be safe down the road. Today we talk about things like 100-year flood plains, but how will we establish flood probabilities when the river that might flood in 10 or 20 years doesn't even exist today?
Are the people who get unlucky with predictions just screwed because their home equity is gone? Or are we going to decide to shoulder the burden together? We're going to find out a lot about humanity, the role of government, etc. as we go through all of this.
Disagree. "the entire economic system that caused climate change in the first place" is also responsible for the green transition, including cheap electric cars and renewable energy.
>Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
Alright, what's your solution to "the entire economic system that caused climate change in the first place" that aren't just "lol just stop capitalism"?
In the many many complaints I have heard about the insurance industry, nobody has complained about them acting as an oligopoly or about a lack of competition.
Further, pricing is extremely regulated in terms of what can be factored in, so being an oligopoly doesn't have much impact on that.
Does not answer the question. With no price caps, no one will be able to buy insurance even if required by law. So that means if you own a house in a risky area, you will be unable to sell it and your values will fall. The price caps are to prevent that. But to me, there should be big incentives to prevent building and re-building in risky areas.
So yes, the world in some areas are uninsurable. And other areas are becoming uninsurable.
In some cases it makes sense to socialise the losses, but I'm not convinced this is one of them.
So in reality the burden is falling on Insurance Companies. High rates will in a way prevent building in those areas.
good?
I very strongly doubt that say Elon Musk or Jeff Bezos wouldn't be able to afford market-rate insurance costs. They would just choose not to because its too expensive. Which is the point of letting the market set the rate
Burden of proof?
> the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there…
Seems like the result is the same — people will live there but without insurance.
Change the euphemism from government to private insurance to satisfy capitalism gods and keep their giant foot from squishing us… still “on the books” as a co-mingled pool of funds to shift around to solve problems.
Aw …sad… other people exist and need resources too. Not just about your first world skin suit playing temp host to a run of the mill electromagnetic field effect.
But the dikes have been collectively maintained through laws and regulation from a local semi-democratic system for 800 years (separate from government). It was a necessity as 1 delinquent could screw up everything.
https://en.wikipedia.org/wiki/Water_board_(Netherlands)
The most recent moves seem to be relaxing the pricing rules to allow major disaster pricing and recharging reinsurance rates in exchange for insurers offering more policies in high risk areas.
> The Bulletin was issued pursuant to California Insurance Code section 675.1(b)(1), which states that an insurer “shall not cancel or refuse to renew a policy of residential property insurance for a property located in any zip code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency . . . based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”
Typical California redistribution...but this is from the bottom to the top.
Do you not understand that this is precisely how insurance works?
Of course insurance is about pooling risk. But subsidizing implies you’re doing it below market rates.
If I pay my market rate but still -EV insurance premium, I’m not subsidizing anyone. I’m just happy to pay for the convexity insurance provided.
If I have to pay 20% more than I otherwise would, because the insurance company can’t charge someone else 20% more, that is actual subsidization.
A subsidy distorts natural market forces. This is what I am talking about.
Don’t be so quick to be a dick.
Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists). I would also make sure that the live video footage would be used only for that purpose. It would use AI at the edge to flag every fire immediately and alert nearest authorities, and otherwise delete footage. There may be other AI at the edge uses added later by the regulators but I’d work to put in place heavy bars to overcome (eg 70% in a public referendum) before they are added.
I would also invest heavily in mobile firefighting tools and materials. The firefighters using buckets is pitiful.
But then again, LA hasn’t invested in itself for decades. It’s like the opposite of NYC: rich people don’t want to live in Downtown LA, they live in the equivalent of our Brooklyn, say Manhattan Beach and Sheepshead Bay by the beach.
Because half of downtown looks increasingly more like skid row. Signage and streets are something out of the 70s literally. And there pretty much hasn’t been any new skyscrapers built since the 80s. The skyline is stuck in the Arnold Schwarzenegger movie era.
I stayed in Freehand hostel which is actually pretty nice, even though there’s abandoned buildings and homeless all around. I met a drunk Andy Dick there by the pool one evening LOL.
And you people from San Francisco — it ain’t much better over where you are. I visited Twitter HQ right when Elon took over. And let me tell you — there is a curious juxtaposition of City Hall, City Opera, The SF Philharmonic, and the fourth corner of that illustrious intersection is… a large abandoned alleyway with dumpsters. What? Imagine Lincoln Center in NYC having that.
On my show I did a lot of interviews — with regulators, technologists, sociopolitical commentators like Noam Chomsky. But one of my most down-to earth interviews was in SF of a homeless guy w his dog. See it for yourself what I’m talking about:
https://www.youtube.com/watch?v=rqjFeaDLuYQ
PS: to the silent downvoters… normally I don’t mind but this time you’re just doing it out of spite. Watch the video or say something. I bet you live there and don’t want to have these things pointed out. SF and LA were so great… so many movements started there. Lately people are fleeing and the homelessness is out of control.
NYC doesn’t have them and the city smells terrible from all of the garbage
In fact my video literally shows trash on the street as well in SF, as well as homeless.
Seriously, other cities have city hall. There are no dumpsters around it. We have courthouses and government buildings.
Certainly none around Lincoln Center which has the Metropolitan Opera and NYC Ballet and Philharmonic. It doesn’t smell there. There are beautiful fountains etc.
I took some photos of the homeless in SF juxtaposed in front of the skyline in the background. It is very pervasive there. LA and SF seem to be magnets for homeless.
If I was mayor I’d give them all a $50 phone preloaded with gigs including ones from the city, like sweeping the streets and from businesses such as handing out flyers. Have the app unlock mini storage and showers, and help them have digital ID. This ain’t rocket science. Crowdfund the support for each homeless the way we support kids in Haiti. Give them opportunities. But instead the bureaucracy just kicks them around and denies them opportunities without an address.
Anyway…
Larger buildings like a city hall or Lincoln center will have better waste management than a bodega or small shop. The larger places will have a loading dock and probably a compactor. Source: I worked at a waste tech company
https://en.m.wikipedia.org/wiki/Homelessness_in_New_York
https://www.sf.gov/data/homeless-population
This is a terrible way to deal with fire. The issue isn’t preventing fires from starting at all, because small fires are all over the place. A dropped cigarette can light a city block on fire if the wind is just right. The issue is preventing spread, and taking precautions when conditions (like wind) are conducive to rapid spread.
If anyone ever implements your drone-based surveillance-state wildland fire suppression system, please let me know so I can avoid hiking in the area.
If you want to do controlled fires IN ADDITION to the fire suppression system, you can. If fires are the only way to neutralize the fuel, at least control them, and don’t allow any uncontrolled fire to spread and get out of hand. The controlled burns would be planned in advance, done on good days and isolated from spreading too far. Of course those burns would be excluded from the fire suppression system.
But it seems reckless to just “let the fires spread”. You need actual control over fires if you want to have any chance of avoiding disasters.
Imagine you did this in any other area where you're in charge of a system. For example you run a forum and refuse to implement any sort of moderation or spam control. You claim we shouldn't put anything in place to clamp down on it and need to let things run their course naturally, because sometimes risking spam is necessary to get really good updates about stuff by experts. The proper thing to do, then, is to intercept spam from spreading as much as possible but then carve out a whitelist of exceptions. Not to simply not have an anti-spam system at all.
Prescribed burns make sense in certain high-risk areas, but there's no substitute for actual, natural forest fires. We can never artificially cover the same kind of area that a natural fire can cover.
> For example you run a forum and refuse to implement any sort of moderation or spam control. You claim we shouldn't put anything in place to clamp down on it and need to let things run their course naturally, because sometimes risking spam is necessary to get really good updates about stuff by experts.
That analogy has absolutely no bearing on anything we're discussing. Online forums and human behavior aren't a good analogue for forests and forces of nature.
I'm not so sure. The Pacific Palisades have astronomical real estate prices. (actually costly property in Florida isn't cheap either). I think the insurance costs would come out of the property prices.
I say this on the basis that the prices the real estate sells for is already what the market will tolerate, if there are other costs to owning it-- then the remaining part the market will tolerate will be less.
Perhaps a result of this is that it may only be realistic to construct lower costs 'disposable' cabins in areas with higher disaster risk... if so, that wouldn't sound like an unreasonable way to allocate resources.
Is it a bad thing that we should consider most of the planet unlivable because disasters happen that aren't eternally and increasingly profitable to insure?
Is it a bad thing that literally tens of millions of Americans would no longer have insurance? That you're asking double digit percents of the entire population to leave cities and just... what? Suddenly have new homes in a region with plentiful resources and access to water and food and an economy and no disaster potential?
Is it a bad thing to compare entire states to missile testing grounds?
Is this satire?
https://wildfiretaskforce.org/updated-fire-hazard-severity-z...
The Florida situation is actually markedly different. The main problem was extreme litigation-friendliness. Florida saw 80% of the nation's insurance lawsuits but only ~8% of the insurance business. They've also since passed some reforms (HB 837, 2023; SB 2-A, 2022).
But I do agree they should be able to set the premiums, otherwise they just go bankrupt. People should not live in idiotically constructed neighborhoods in danger zones if they can't afford it. But they shouldn't be gouged.
You can replace "insurance" with any other business, the whole of capitalism is built upon this. Every stock on the stock market is trying to "provide returns to their investors" - each one is as guilty as the next - theres nothing special about insurance companies.
If the argument is that insurance should be a federally provided service, then we must have a different conversation. Look at the FAIR plan. They are government created, and will get wiped out because of these fires, possibly because they weren't charging enough to begin with (and taxpayers will now need to bail them out). The math doesn't change whether its state backed or privately backed. If a home, on average, gets burned down every X years, then the insurance premium needs to be adjusted to be able to cover that.
And here is the crux of the problem - if you take away the free market aspect of being able to adjust prices, and get forced to sell a product/service for less than what you need to, there will be a loss somewhere, in this order of operations:
1. loss at the insurance company --> insurance company goes broke or leaves the state
2. loss at the FAIR plan --> FAIR plan reserves get wiped out
3. loss at the state level --> taxpayers need to bail the situation out.
Id argue that letting the free market work (at layer 1 above) is the proper way about it. If a house burns down every 10 years, let insurance charge 10% of that cost, because that is the actual risk involved in the system. House prices will naturally come down to reflect that reality of risk.
At some point you have to consider that as indistinguishable from having a policy to drive people out: deny them insurance, wait for natural disaster, redevelop the now-very-cheap land however the government and its developer friends wants. Whether such a policy is adopted on purpose may not be possible to tell. You'll get called a conspiracist if you even hint that you wonder about it. But you know these people know -it's hard to believe that they don't- what happens when you set price ceilings.
You can't get a mortgage without insurance, so if insurers were allowed to freely control the price, they'd charge an arm and a leg since buyers are forced to buy. If insurance companies are allowed to freely raise their prices, then they would certainly love to do so because any homeowner with a mortgage would be absolutely stuck and have to pay whatever they demand or risk the bank taking their home back.
I think you have an idea that the free market would naturally lead to an efficient insurance price that let's them cover disasters. But markets aren't magic, and insurance markets are anything but efficient. I don't think anyone really knows what the "right" price for homeowner's insurance is in places like Florida and California.
(1) The author tried to get homeowner's insurance, but was denied because their home was a significant hurricane risk
(2) The author (maybe?) got insurance through a state-run FAIR program, but then cites news reports that these programs are close to insolvency (As are a significant amount of non-state-run homeowner insurance programs).
(3) The author is like, "well, if it's so hard to insure my house, maybe I should think about living somewhere else." And then generalizes to "a lot of places should be uninsurable and uninhabited - apocalypse here we come"
The issue in California is not the price of insurance, it's availability because of extremely myopic ballot initiatives that are entirely political in nature. Should insurance be fairly priced, then the market can force people out of uninsurable areas and into areas with far less chance to burn.
Living in areas in constant danger of flooding and/or burning and/or storm wind damage and/or drought seems like quite an eccentrically inconvenient lifestyle flex.
Unless you like disaster movies.
This is like half of the country.
"Each year, on average, 31,000 square kilometres (12,000 sq mi) (around 21% of the country) is flooded. During severe floods the affected area may exceed two-thirds of the country, as was seen in 1998."
https://en.wikipedia.org/wiki/Floods_in_Bangladesh
Most of the world does not want to aspire to be Bangladesh, but humans have been living in extremely disaster-prone areas for millennia because the short-term benefits (rich soil etc) outweigh the occasional catastrophic losses.
And, well, most of the US is just a hanger-on to California's economy.
CA is a huge economy but by no means is the US just CA + 49 other states. Might be fairer to say it’s CA+NY+TX+FL but at that point you’re just aggregating the population.
[1]:https://www.ppic.org/publication/californias-economy/
Other kinds of insurance are no different.
But important, useful things will still be burning and flooding, at huge cost to the economy. Which is less nice.
At this point I think we've tipped into a world of complete delusion, where imaginary "markets" are more important than keeping the planet comfortable, stable, and inhabitable.
Also. this, from that most volatile, irrational, and least sensible of all professions - the actuaries:
https://www.theguardian.com/environment/2025/jan/16/economic...
Lots of societies and civilizations have collapsed. Some were straight up wiped off the earth and we don't even know what happened to them. Western civilization has had a good 500 years, and America has had a good 250 years, but that doesn't mean things can never go bad in the future.
Plenty of places have had catastrophic droughts, famines, and plagues. Nearly half of Europe died a few times from plagues. Most natives in America were absolutely wiped out from disease and other issues. Tens of millions died of famine in China last century. Tsunamis washed away and killed hundreds of thousands in Indonesia and Japan this current century.
In the past, the Krakatoa eruption messed with the climate around the world and made the sky dark. The Bronze Age Collapse is something we still don't understand but nearly wiped out everything in the western world. With population density higher than ever, disasters that match major historical ones would be far more destructive. It's really just been an unusually peaceful few decades in first world countries and people have gotten too comfortable.
Conveniently you selected pre-technology examples. How curious.
Meanwhile the impending global famine(s) - (plural) of the 20th century never came to be because captitalism kept pumping out agriscience improvements to improve crop yields to 10 times what they were in 1900.
Technology has been around for hundreds of thousands of years. What are you defining as "technology"? Software as a service chatbots? Because those aren't saving anyone.
And 227000 people died 20 years ago in a tsunami in Indonesia. They had cell phones and the internet. Is that pre-technology? 50 million died in famines in China in the 1950s. They had TV, radio, and computers. Is that pre-technology?
Technology is just tools that humans make to solve a problem.[1] It's not magic. And in the case of the Japanese tsunami, the most basic technology that humans have had for tens of thousands of years saved countless lives: just building a wall, and making it tall enough to block rising water. [2] But wrapping an entire country in walls is kind of unfeasible. And you can't protect the entire world. We never know what kind of disaster will strike next, and technology to protect us only develops after we suffer the consequences at least once.
[1] https://en.wikipedia.org/wiki/Technology#Prehistoric
[2] https://www.japantimes.co.jp/photo-essay-the-seawalls-of-toh...
Vernacular methods of doing things have been around - without science or rapid innovation. Key point in time was invention of printing press combined with lutheran zeal to read and the western alphabet that allowed unprecedented platform for knowledge transfer. After that it's been pure acceleration.
Before literacy was a major thing (which it has not been historically) knowledge transfer and preservation was based on human to human contact. You could not literally just crank the machine to print out out going edges in a knowledge graph.
I'm not meaning just a few literate people. I mean an entire society capable of reading and eager to create and learn new information.
> Technology is just tools that humans make to solve a problem.
According to a dictionary it's "the branch of knowledge dealing with engineering or applied sciences" / "the application of scientific knowledge for practical purposes, especially in industry" and I would argue it's this sort of technology that enables novel, rapid adaptation.
Applied sciences need science before application. Now - knowledge seeking that sure looks likes science even though it was not called that has been around few millenia - Thales of Miletus, Ibn al-Haytham etc etc.
What is novel in our time is application of science to every goddamn problem on an industrial scale. And the understanding that things can improve. This requires a literate society (imo but arguable maybe), eager to adapt, and pragmatic recognition of what works and what does not.
There are areas that are lacking in literacy and capital. While people in those areas sure enough are able as anybody else to individually use technology developed and manufactured elsewhere, the societies in which they live simply lack the means to apply industrial level technological innovations.
With industrial level technology adaptation it's a whole different ballgame.
Many places in US would be uninhabitable without technology and are thus testaments to the idea that MODERN technology allows survival in unprecedented places. For example Colorado. The place was so arid and unhospitable no one could or would want to live there. But then there came railroads, industrial engineering to implement water reservoirs etc etc and visit Denver today and it's very hard for an outsider to realize they are visiting a modern goddamn miracle.
I'm fairly sure if people can live in Colorado they can live anywhere given sufficient capital is applied (capital being the enabler of applied science and technology).
But in modern, literate society, people think "nah it'll be fine bro" and build houses right up on and flat against the coastline. Then entire towns get washed away.
The biggest mistake modern people make is assuming ancient societies were stupid. They didn't have people sitting in offices thinking up solutions to problems. But the reality is those societies learned just as quickly as anyone else did, and a lot of them probably had a much stronger fear of nature and didn't sit around thinking "nah bro we'll totally survive. we have technology". They knew a tiny mistake meant death. Death to modern first worlders seems like a very out of reach thing. We operate on the assumption we'll live long lives and die in a retirement home.
And Colorado isn't by any means inhospitable. There were plenty of tribes in Colorado before literate enlightened megagenius westerners came along to save the day. It has some of the oldest known towns on the North American continent.[1] Westerners may have at first struggled to survive there with their modern technology, but natives lived just fine in Colorado for thousands of years.
Tibet is a far more inhospitable place. So is Saudi Arabia. But those also have thousands of years of history all without a printing press. Arabian culture even managed to spread across the world out from the inhospitable desert and even dominate part of Europe before the printing press existed. Spain and Indonesia became Islamic before enlightened Europeans went out to save the world and make it "habitable".
[1] https://en.wikipedia.org/wiki/Mesa_Verde_National_Park
My point was it’s false narrative to compare any historical society to a modern industrial one.
Printing press, latin alphabet and market economy were suberb for knowledge transfer. There was no historically comparable system to commodotize and scale literacy.
It’s false narrative to claim european developments were not unique and transformative. That’s just how the history goes. Literacy, capital, binding contract law and science created a heady mix that created a system that now is global standard how societies try to operate.
Large parts of the system came from other parts of the world. The point is not where this happened or by whom, but the point is it happened.
Modern technological societies are able to adapt in unprecedented scale. Regardless of culture or ethnicity.
It would be pretty weird to think this would be a narrative of european supremacy - cultural, racial or otherwise. Europe was an inconsequential periphery and it’s once again an iconsequential periphery.
Latin characters really had nothing to do with it. Western society was built off the lessons learned from those two societies. What separates post-printing press western civilization has been the incredibly rapid expansion (which Mongols also achieved with nothing but horses and bows and arrows). But whether this post-printing press civilization will last as long as Ancient Egypt did (3000 years) is yet to be seen. We've got about 2600 years to go.
[1] https://www.jef.or.jp/journal/pdf/unknown_0003.pdf
In reality that is lot less harsh than Europe before industrial agriculture. Just looking at list of famines shows that Europe was a harsh place to live for stable society.
Think what a modern country would look like with 3M people of which 150K can read. It would not be pretty and Egypt was probably worse. Of course if you can control thousands of people you always have some capabilities which is the reason why we adore their art to this day. But I think one should think "North Korea" what pharaonic egypt likely was like rather than "pinnacle of imaginable civilization". This is not to put down the achievements of the egyptian civilization, but like pointed out, they had lots of time.
Most people anywhere (except the pastoralists ofc) were agricultural labourers before modern farming kicked in.
What makes the capabilities of the current civilization different is a combination of things, some of which are unique this time around.
The major differentiators are 1. Global scale monoculture in knowledge (take engineers from US midwest, Ethiopia, China, Brazil, France, Japan, Finland, Chennai - we all basically can mesh instantly to a product team since tehcnological education is so homogenous). This monoculture was enabled by the printing press and later digital technologies. 2. Insane amount of energy per capita available 3. Amount of capital available including finance
2. and 3. simply were not available before. We can argue all day about merits of education systems of old but you simply did not have this global talent mass on hand. This talent mass is prerequisite so that you can scale capital and technology rapidly on a global scale.
Energy&Capital then feed the machine to give it energy. This machine simply did not exist before. The energy per person in any society was tiny fraction what we can utilize. Similarly for capital.
Japan is excellent example.
a) It demonstrates how long it takes for a society, if it's educated and all around excellent but pre-modern to reach parity with modern societies. I would argue based on facts it's about two generations or 50 years (for Japan) from Perry expedition 1850's to Japan wiping a western industrial nation state fleet to the bottom of the Tsushima straits (1905).
b) It demonstrates this society, when in it's pre-modern configuration lacked things, that it felt necesary to acquire to be able to go head-to-head with societies that had these implemented.
It's this difference between pre-modern,pre-capitalist pre-industrial and modern I'm talking about, why it's false narrative to state "people througout history have been smart and able" as a contradiction why modern societies would be more capable. Because they are. It's not a statement about why some people with different upbringing or genes would be different. That's irrelevant (except up to a point where their upbringing relates to prevalent institutions i.e Acemoglu, "Why nations fail" etc).
I agree we know nothing of how long the current system can last, or will it evolve or devolve. But it's very hard for me to imagine the system going away unless we go full mad max. Because it's not about cultural identity anymore. Who is your king or god. While we live in tumultuous times, Fukuyama was still more or less correct IMO, even though clearly it's not a "end of history" as much as "beginning of new history".
It's about capital, energy, education and markets.
> forgotoldacc: Technology has been around for hundreds of thousands of years. What are you defining as "technology"?
I think he meant "industrial".
Technology is the only thing that can save anyone from that type of situation. Prayer sure wouldn’t help!
Billions would perish. If the luckier rich countries did not get nuked or invaded by armies or waves of endless starving refugees then they would be able to save a good amount of their population. At best world development goes back ~50-100 years. At worst, modern civilization basically ends from the combination of conflict and famine.
is technology helping, or hurting in that situation?
near as i can tell, it is the only thing that could help.
we aso have significant food stores and buffers, and if it was the situation you described it would literally be a ‘drop everything and get working’ emergency. we’d likely do better than you expect.
what else could possibly help besides technology?
But yes, a lot of people would die.
And if a couple billion people (minimum) would be dead if we didn’t do it ASAP, do you think that energy or material wouldn’t be expended at the drop of a hat?
Hell, look at how much energy we expend just to serve cat videos.
People generally respond to sudden, external, visible risks pretty well.
It’s when risks are hidden, build slowly, or are caused by behaviors they consider ‘unsolvable’ and they’ve learned to adapt to that they suck.
[https://www.sciencedirect.com/science/article/abs/pii/S09601....]
[https://spectrum.ieee.org/amp/how-much-energy-does-it-take-t...]
But let’s say we take the upper end of energy consumption multiples between input energy and output energy (kcal), say 120 times. So to feed 1 person 2000 kcal per day, would require 240,000 kcal worth of ‘production’ energy, which at that multiple would add up to 278 kWh per day per person. Signifiant!
Multiply that by the population of the US (345 million), and that is a lot of kWh for sure - 95910000000 kWh. But it looks like national energy usage is measured in ‘quads’. And that is .3 quads per day.
Current US energy production is approximately 100 quads per year, and consumption a bit less than that at around 90 something.
[https://www.eia.gov/energyexplained/us-energy-facts/]
So if we picked the absolute least efficient most energy consuming plants, and grew them in the least efficient type of growing environment, we’d need to drop everything and devote all our energy production to it.
Assuming no rationing, no efficiency improvements (LED lights are quite efficient now, and if we really had this issue we’d of course devote 100% of available production to them!), and no bulk commercial production of simpler foodstuffs (we can make bulk sugars and proteins via bioreactors right now, for instance), it would be terrible but possible. At least for the US.
Countries with more solar production, or colder, would be harder hit of course.
China would be well positioned probably to pivot, and I’d be surprised if they didn’t use it to their advantage. Especially with turning up their nukes and pivoting all their solar plants to making LEDs instead.
India and Bangladesh would be really screwed though.
Everyone would finally think farming was cool again though, so that’s a plus.
But every response of yours is dismissive. And this makes this thread frustrating to read. You answer every reply with more questions and a tone of dismissal. If you know so much about this area, why don't you begin sharing some facts and enlighten us? Dismissing your co-commenter and answering their replies with more questions is not educating anyone of anything!
It would help if instead of answering a comment with questions, you share what you know. So how much is the cost of wiring, installation, programming and making greenhouses in the span of a year? How much copper is needed per capita? What do you know? Tell us!
[Trivial googling shows you $750K to $1.25 million Euros per hectare](https://www.floraldaily.com/article/9574650/half-fewer-order...). At 400 square meters of greenhouse to feed a single human being (a reasonable estimate, lower bound being 300 under super intensive conditions with experienced growers), that's at least $30K _per person_ under the existing constraints of the industry just for an industry-standard greenhouse. You could of course lower construction costs and do the bare minimum, at the cost of a dramatic decrease in yield.
That of course assumes materials and fabrication is abundantly available and wouldn't see an impossibly high rise in materials and service costs if suddenly the entire world were to demand greenhouse construction with the attending demands in electricity distribution, power generation, and the sudden need to turn most of society into a sort of high-tech agrarian population, something that just doesn't happen in a year.
This took me 5 minutes to Google.
I’m not saying it would be pretty, or that people wouldn’t die.
I’m just saying that actually doesn’t sound impossible.
Far more effort than that was expended per person in WW2, and that wasn’t nearly as severe of an existential threat.
Hell, in this case it would be an obvious/visible, sudden, external, non-human existential threat, so would be ideal for uniting humanity on somewhat common grounds.
> This took me 5 minutes to Google.
If this is how you get your information, I doubt what you say can be taken seriously. Not to mention that the reference you quote seems like a random website nobody has ever heard of!
This was a very interesting topic and a serious discussion about this topic would at least include references to bonafide surveys or well established trustworthy sources. To find them takes much more than 5 minutes of Googling. Unfortunately I don't have the time to do that, so I requested that if you know something, you share it here with us.
Clearly you do not have the time to do your research either since all you have to present us is "5 minutes of Googling" that turns up a random source!
And the solution of turning gas into fertilizer requires a free trade system to be reliable.
At best your logic works because people get concerned, and work to solve the problem. Once there is a critical mass of people unconcerned, like yourself, that think we will magically adapt and solve the problem, we're screwed.
it’s ok if insurance is expensive - let it result in the insured goods or services having a serious price adjustment.
rather than price controls a slightly better solution would be just to nationalize insurance and force everyone to use it, but even that is not really a solution since highly correlated events are the antithesis of insurance.
It's a "Do we want cultural extinction or a relatively comfortable and habitable planet?" problem, which is not quite the same thing.
No amount of faith-based "We will adapt!" is going to make an impression until evidence appears that we are actually adapting in real, tangible ways.
Clearly, objectively, and empirically we are not. We are doing the opposite - pretending to ourselves the problem is going to be solved by continuing with the same mistakes which caused it.
the result would be people not living in areas that a risky, engaging in behaviors or risking, or partaking in things the contribute to the world becoming more volatile.
Insurance costs rising are a good signal, but they're essentially a way to tax normal people for the faults of governments and major companies. It does reflect the real risk, but it's not like the fact of people living in most of these areas is the reason the area is risky.
But it's a great way to deliver the signal that '(Climate) RISK IS INCREASING' directly to the voters. If the government socialises the losses, society won't learn the harsh lessons about our changing world quickly enough.
The same people who have the power to fix it always have and they've almost always taken the easy way out. The few times anyone's tried to do real changes on these issues, the other externalities of the changes has usually led to voters rejecting them.
Long term, sure. In the short term, the rapid rise of housing prices combined with the increased rates and severity of disasters means the extra monthly cost would be enough to price a number of people out of homes they purchased when rates were much lower. While it's easy to say, "They should just move," that has huge transaction costs. Aside from the obvious things, which are already substantial, consider the cost of paying off a mortgage taken out a few years ago and acquiring a new mortgage at current interest rates. That can cost you hundreds of thousands of dollars (which shows up as now only being able to afford a much worse house, probably in a much worse location, if you can continue to afford to own at all), and you are basically gifting that money to the bank by paying off your loan early.
You can understand why such people would be willing to take a chance on not having insurance rather than incur a definite loss, and why it might be tempting to try to come up with some other solution than just unleashing the unrelenting might of the free market on them.
When you distort risk pricing, you distort the market, and if you do it hard enough for long enough, you are basically pulling back the slingshot.
While this also applies to mutual insurers, my philosophy is being serious about solvency is the best way to know if you are properly underwriting and pricing. I feel like the government operates too much knowing that they can backstop it either themselves or by imposing an assessment on the market.
You are right that the really big disasters are very correlated events. While not a silver bullet, reinsurance and other risk transfer stuff can help smooth those kind of events out. The good-ish thing with those risks is that while they are uncertain, they are sort of identifiable, known unknowns in Rumsfeld parlance.
I agree with that sentiment, the thing that always seems crazy to me is that California's housing pricing in the face of all these things, but perhaps it's sort of pick your poison. Like I don't want to harp on it, but the only implicit or explicit thing everyone appears to agree on given the decisions that have been made is protecting housing prices above all else. But don't expose people to the ramifications of the housing appreciation (Looking at you, Prop 13).
At the end of the day if your house burns down you can go and get some wood / stone / whatever and build one somewhere else and this will basically always be possible to do to some degree.
The question is just about what the chance of having to do that per year is and what that represents in dollar value. It can’t not be possible.
IMHO we should be seizing the fossil fuel companies' assets and using them for disaster relief around the world due to the catastrophe they have deliberately caused.
The talk about insurance rates is a deliberate distraction.
I saw an article on npr [1] which basically agrees with the chart on the blogpost. I 1980, there were 3 disasters a year that cost $1B, inflation adjusted. In 2024, 24. The second chart in the npr article is pretty terrifying.
[1] https://www.npr.org/2024/10/08/nx-s1-5143320/hurricanes-clim...
But insurance is one of the best signals we have to true risk/consequence/likelihood, which commercial interests pay attention to
The best long term outcome here would be rebuilding safer but the downside will be "which excludes the poor" -that's where I think state and federal policy should apply the lever: require socialised housing outcomes.
Price controls on insurance forces socialised losses. Better is some middle ground: mandate insurance, demand adequate mitigations and defences. But losing the price signal is bad.
I didn't say we shut off all the gas pumps tomorrow. It will obviously take time to transition off. I said we seize their assets and use the proceeds for climate relief. We can keep the revenue coming and using the profits for disaster relief while we transition off fossil fuels. It's not that hard to understand.
https://www.bbc.com/news/world-europe-46460445
Yes wildfires do happen in nature. No this is not normal for this area. Yes it is about climate change. Stop believinf fossil fuel company propaganda.
https://en.wikipedia.org/wiki/List_of_California_wildfires
And if those companies don't find other things to do (they'd be quite good at geothermal, or durable carbon sequestration, with all their drilling and fracking expertise), then they'll go bankrupt without needing to do anything so extreme as nationalizing/seizing/whatever.
Ironically there is a great case that varrious environmental groups that vigorously opposed controlled burns are among the greatest proximal human causes of the current situation. If careful analysis concluded so, would you support seizing their assets for use as disaster relief?
Stop trying to distract with fossil fuel propaganda trying to distract with everthing else they can. Yes controlled burns still happen but it is also understandable that people would be jumpy about them with the problems fire has been causing in that area in recent years.
https://yaleclimateconnections.org/2025/01/the-role-of-clima...
Essentially they fit a logistic regression of climate measurements the amount of area burned by wild fires each year in the forested parts of northern California to try to express how much is burned as a function e.g. of humidity, temperature, max temp, rainfall, wind, etc. Then the took historical weather data and eliminated the trend in order to try to construct an alternative time-series without human influence then their apply their aforementioned coefficients to figure out how much fire would be had in the counterfactual climate conditions.
To their credit (or perhaps their reviewers credit) the paper does observe the most obvious flaw the wildfires don't work that way-- that fuel builds up over time then is cleared by fires and once an area is burned it can't burn again for a long time. While the structure of the model is such that that if the air gets dry enough it will tell you that will constantly be fire everywhere forever no matter how much has already burned. They constructed a number of dynamic models that attempt to account for that and the increase largely disappears, with a constant level being shown for the next decade. True that the dynamic corrections seem even more adhoc (they don't seem to have data that allows them to fit the dynamic parameters), but the model that ignores these effects is pretty obviously wrong in a meaningful sense.
Even without that correction, their model doesn't fit the last ten years of data with many times the number of acres burned than the model predicts.
Their approach also has the effect that if run on the data from the first third of the study or so, it would instead result in claiming that climate change was reducing wildfires. (because wildfire acres burned were decreasing over that period)
More fundamentally, you could instead run the same analysis using any other measurements that increased over the same period that wildfires in the region increased and the model would come back attributing significant levels of wildfire to it. E.g. plugging in metrics of internet traffic growth into it looks like it would probably work even better. (See also: https://www.tylervigen.com/spurious-correlations )
As an insurance buyer, in a hypothetically ideal market situation, you would want all those who also purchase from the same insurer to have the lowest risk of needing an expensive claim paid. The lower the expected payout * risk of disaster means lower premiums for the insurer to still make an expected profit.
I think what will happen is simply: Houses are built in places which are more insurable, existing danger-prone houses will exist until they are destroyed, until then they will increasingly be status objects for the elite who can afford the loss and have inaccurate risk appraisal. The fact that so many valuable objects are kept in Malibu/Palisades homes despite fires happening there a lot (as recent as 2018) indicates homeowners in disaster-prone areas aren't acting perfectly rationally.
I'm not convinced that that's true, and even if it is a huge chunk of population (world, US, pick your area, it applies broadly) keep fighting to regress us to these periods.
People complaining about rules they don't understand is in some sense as old as the existence of rules, but the internet has dramatically increased the number of people who consider themselves experts on politics, healthcare, construction, electrical code, and every other topic on the sun, and who are proud of ignoring the science and the rules and who go out of their way to avoid permits, inspections, etc.
At the same time a significant chunk of the population works to defund and defang all government, preventing the existing rules and codes - labor protections, fire protections, food safety protections, etc. - from being adequately monitored and enforced.
So you have a huge mix of things which are old and degrading, things which were never built right, and things which people are actively modifying in dangerous ways. People have a false sense of confidence build during the years where we were enforcing these rules; I do not believe that confidence is still warranted.
This isn't helped by actual bad rules and regulations on the books. Some minor examples are the prop 95 warnings on every damn thing or the way CAFE standards work to encourage the sale of more pickup trucks. I don't blame some people for wanting to scrap the whole regulatory system after encountering enough of these.
You should. Just because something is imperfect doesn't make it bad. Should the truck loophole be closed? Yes. Has CAFE improved every other class of vehicle? Yes.
Regulation can used to save lives and improve outcomes, but it can also be used to suppress competitors or favor a particular business practice and stifle innovation.
Would some places have become what they are today had they not built their subway system when it was opportune or hilariously less expensive than it is now? The good things we can iterate on or refactor now would have way more overhead to build from scratch at todays standards, not all of which are inherently useful or justified. Sometimes a whole city burns down or all the labor was forced, which sucks and we don't want, but sometimes you're having to get shadow studies done to build anything higher than a bungalow
1. The state who sets insurance price caps for political expediency, basically to increase house prices (because they'd go down if insurance prices could float freely). BTW we have examples of areas that are uninsurable like the Florida Keys;
2. The homeowners who want their house prices to go up and want to pay as little as possible for home insurance; and
3. Insurance companies who can't write too many policies so they remain solvent. Price caps ultimately lead to insurers leaving the market.
LA in particular has competing problems: wildfires and earthquakes. If you want to avoid total loss due to wildfires, first you wouldn't build in Pacific Palisades at all. It's a vegetation rich area between hills with potentially high winds. If you want to avoid fire loss, you would build out of concrete not timber-framed buildings.
But the problem is that earthquakes have the opposite building priorities. Lumber is actually quite good in earthquake zones because you tend to get less loss of life from the collapse of timber houses.
Now you can build concrete houses that are earthquake-resistant (eg in Japan) but it's expensive.
Ultimately all of this comes down to a malaise brought on by high house prices. Voters consistently vote for policies that increase their house prices with absolutely no concern for the externalities.
If it now costs $1 million to build an "average" house, then you're going to be spending $20,000+ a year on insurance. If your house only cost $100,000, you wouldn't have that problem.
It's even worse in California because a lot of property taxes are capped so the state government can't even recoupe taxes from a lot of high-priced property but they suffer the costs of it (eg by being the insurer of last resort).
[1]: https://www.tiktok.com/t/ZT2Jek6a6/
It's expensive here, but is it expensive in Japan? Here its' expensive because it requires extensive steelwork which takes you entirely out of the domain of rubberstamp building approval and into needing PE-stamped bespoke engineering and also gets overbuilt to a greater degree.
"tornado outbreaks, high wind, hailstorms"
So most of this cost is roof damage. Which is an area rife with insurance fraud and getting worse.
Easy enough I think to solve.
Does/Why would the insurance assume the subsidy is for people rebuilding in the same place? Money is fungible and so it doesn't need to be in the same place, at all. What I'd expect is that insurance for those hard-to-insure places would skyrocket and thus a new balance would be achieved.
Now that the physics of insolvency are starting to overcome political pressure of keeping Daddy Bailout-Bucks around, and people are whispering "managed retreat" without actually being able to say it outloud around polite company, we are starting to see programs like "we'll make you whole in case of a flood, but you aren't allowed to rebuild on the lot if you take our payout". But those buyouts are often met with yells of "government is taking my property!" because again, no one wants to face the stark reality of managed retreat.
I know politics is famous for elites abusing it for their own benefit, but sometimes the population is truly not ready for something that the elites understand is utterly necessary and that's not a bad thing. The risks and benefits of an elite class, I guess.
I have observed new owners do things like build open sided barns (which legally aren’t a building). Other owners live in camper trailers on the property. One just finished building an (illegal, obviously didn’t get a building permit) property up on stilts (which will get washed away if any serious flooding happens).
On the plus side, this is all not insurance and not mortgageable, and also won’t survive being sold to someone else, as no title insurance would cover these structures and a mortgage lender would require they be torn down first.
In health insurance they don’t cover the elderly, and until Obama they did not cover people with prior conditions.
For home insurance they don’t cover flood get your are mandated to carry one if you have a mortgage.
In life insurance they do not cover you if you have a disease.
It’s more like a lottery rather than insurance.
When you become uninsurable yourself, all you're doing is crossing an imaginary line that has always been there, and kept in imaginary condition precisely to insure that your mental health is stable enough to keep on paying more than anything else :\
You're not supposed to notice this.
Whether or not you crossed that line due to any fault of your own, or from the line moving past you with a whimper or a whoosh, you're also not supposed to be able to tell the difference until it's too late.
Working with the big ships that are often covered by some of the most well-established insurers in the world, it turns out that when you really need them to pay a claim, the stronger your insurance company, the more likely their lawyers will outmaneuver yours, and the claim will not be paid.
Otherwise it could be paying the claim but denying further coverage which the limited number of alternative underwriters can also deny. That's a hell of a negotiating position.
I think it is easy for people to "dump" on some of these higher priced real estate incidents seen recently but this is also affecting people on social security. What are we going to do just let their house burn down and then just have a bunch of homeless senior citizens in the mix. Why even have government? Seems like a terrible country to live in if a 30 year old needs to plan their house situation out into their 80s.
Also seems a bit ironic to me that you get insurance to cover unexpected future expenses but when insurance takes losses then they can just drop you because .. the losses were unexpected. They've known for 20++ years and I'm sure some... money was made... Did they put some away for this situation? Also if you personally experience a loss they also drop you almost immediately.
This idea that we'd just let insurance companies do whatever is *nuts*. Has that ever worked? Honestly pure capitalism seems like the real behind the scenes American dream or fantasy. This same climate change most likely was created by companies making buckets of money with no plan to deal with the side-effects we experience now. Just let the market take care of it....
These companies aren't about making "some profit" they want to make as much profit as possible. Is some 75 year widow living in her and her dead husband's house in Eureka, CA going to convince them to keep insuring her house at a reasonable price? Even if she paid the same insurance company for 30 years?
I think the solution is going to require some government intervention because insurance companies just don't care and it will be hard for new players to innovate quickly enough to tackle such a large crisis. Ie. legislating the inspections, legislating the fire-resistant building guidelines + insurance scale, subsidizing certain low income locations, working with communities to improve fire safety and resources. Some work has happened but clearly it is not happening fast enough.
Losses are very much in line with asset price inflation. If a house rises in value for no good reason other than loose monetary policy, so does the compensation. At the same time, insurers struggle to find safe yields to match these cost increases when that same monetary policy keeps interest rates low.
Looking at the chart pictured, one would expect that extreme weather events have increased dramatically after 2000, but that is not the case:
https://ourworldindata.org/natural-disasters
- $350 annual bonus to the 67,000 employees?
- Lower the cost of the 91 million policies by $0.27 per year each?
- Cover an additional 50 homes in California?
Where should it go?
I'd run that company well for $250k/annually + benefits (an enormous amount of money).
I hope they aren't investing that capital. AFAIK, insurance capital needs to be liquid, for it to be ready for a payout.
You still didn't address my point is that $25m/yr is a drop in the ocean. "investing $25m properly" will have zero impact on the business.
His pay was 0.39% of the loss. Still a drop in the ocean imho.
Should he have been paid less ? Or more? I don’t know.
But what I do know is when people get upset at stock buybacks or CEO pay, the act like if the company didn’t do these things the company would be drastically different.
Honestly, no one would care about CEO pay if the insurance companies would just pay out and make customers whole. Instead, there are mechanisms and processes in place to keep premiums coming in and to reduce or refuse claim payouts.
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.
with sufficient competition, it is impossible to price gouge.
So if there is supposed price gouging, then there must be insufficient competition. Therefore, the source of the lack of competition would need to be removed (ostensibly, by gov't - such as increasing business loans so that new insurance companies can be started).
Don't let the perfect be the enemy of good enough.
You either fight the good fight, or roll over and die. Your choice.
—esoteric capitalism
You can't just let the currents and tidal forces ("the invisible hand") run the show unconditionally because even though they can propel you great distances at very low cost, they'll eventually throw you upon the reefs.
And you can't just let the rowers and tillers (legislators & executive) run the show unconditionally because they'll end up exhausting themselves with little to show for it as they fight against the winds and currents when they should cooperate.
It's a balancing act that requires some science, some experience, some luck, and a steady hand - and a capable and honorable captain and crew who believe in the mission.
If I'm reading it right, and the prior context, we shouldn't allow private insurers to charge the prices they want for insurance?
What do you want us to do? Ultimately someone has to pay for the bad outcomes happening here - either that's homeowners in risky areas, insurance shareholders or the general taxpayer, depending on where you fall.
If you don't make the ultimate originators of the risk pay for it (people in risky areas) they won't stop doing the stupid thing and others will bear the cost. Arguably that is the greatest strength of the "free market" - directing the efforts of everyone in the same, positive, direction.
There's no universal solution. A "free market" approach will work in some areas, and fail spectacularly in others. Same goes for a full-on centralized control approach.
And in all cases, you also have the confounding factor of bad actors gaming the system - and your current tools may be insufficient to meet the challenge.
So you need a human guiding hand to make sure things don't go too far out of whack.
This isn't an either-or decision. Stability doesn't care about whose motives or approaches are more "pure".
The "human hand" guiding outcomes still needs to get it's resources from somewhere, presumably from government tax income. I disagree this will necessarily result in better global outcomes than the free market.
In cases where almost everyone agrees people should always have access to a service (healthcare) I think it does make sense to obligate everyone to pay. I don't think it makes sense in this specific case of wildfire insurance.
The free market here seems to be failing by your definition because it can't make money. To me that's it succeeding. It's demonstrating that it's underpriced, and people being unwilling to pay the necessary prices shows that they need to find somewhere else to live.
Amusingly enough, the lack of housing itself is another problem caused mostly by human-guided hands in government, not the free market. Enlightened despotism always sounds great when they agree with your perspectives, the reality is rarely so smooth.
Allowing insurers to make a profit and run a business without interference is going to be cheaper - and in most instances better - than whatever the politicians are trying to build here. If you get rid of all the mandatory-this and price-gouging-thats then to stay in business insurers have sell products that people want to buy at a competitive yet sustainable price. It works for food, it'd work here too.
I always found it funny when insurance marketing talks about "personalized rates", when the goal is to DE-PERSONALIZE the risk. If you have 10,000 customers in Los Angeles, and 5 million elsewhere, you can either isolate the LA customers and charge them the "real" price of the risk, which will be unviable as a business and probably politically touchy too, or you can include them in the broad pool, and the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
The concept probably works better if you have some concept of social cohesion to lean on-- you might not get the best possible outcome personally, but the system itself is more robust for everyone.
If one pool of people are taking a bad deal vs the market rate when buying insurance then it isn't really insurance any more. It is a transfer payment a.k.a. welfare. Which is cool and all in the sense that welfare is a social tool that exists. But calling it 'insurance' is needlessly polluting the language. If people expect to hoover money off others then they should be charged more until the expected return of everyone in the insured pool is equal. If the payouts are going to be held equal in the event of a disaster then that means the price of insurance has to vary depending on the risk profile of the customers.
Its called solidarity and yes, it means some people NOT have to pay more but others recieve more. Paul AND Peter get the security of disaster coverage in exchange. This is what you pay for. A big risk pool and not your individual disaster recovery.
It is insurance. You pay money, the company takes away the risk. That doesn't make it a bad deal, that makes it a service. That is like complaining about a hypothetical garbage company that charges for taking away trash even though the trash might have some notional value.
Insurance isn't an investment scheme. If you want to pay money for a positive-expected-value deal, go buy stocks and bonds.
in other words, you pay more than you would on average loss from bad events - but you avoid catastrophic losses that would break your life
that is why insuring your phone is likely a bad idea (as you can pay for a new one) but liability insurance or insuring your home/flat may make sense
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
paying 3k per year, to avoid 1% risk of 250k losses may be a good idea, especially if 3k loss is survivable without trouble and 250k loss would be more than 90 times worse.
You are basically guaranteed to pay 3k to avoid financial risk with a mean value of 2,5k. That sounds like a fallacy to me (isn't it the same as saying that paying 3k for 1% chance of winning 250k is a good idea?), may make sense psychologically though.
Every dollar does not have the same incremental value. Going from $1B to $1B-$250k is not the same as going from $300k to $50k, and definitely not the same as going from $50k to -$200k.
If loss of 250k would ruin my life and loss of 3k would be annoying, then paying makes sense.
Similarly, taking bet "double your wealth at 51% chance, lose every single thing you own at 49% chance" likely makes no sense, despite mean value being above zero.
> isn't it the same as saying that paying 3k for 1% chance of winning 250k is a good idea?
not in cases where loss of 250k would be more problematic than benefit of gaining 250k
for example loss of 250k may make someone homeless while gaining 250k would allow them to live a bit more comfortable - in such case bad effects of loss are much greater than gaining 250k
in other words, utility of money is not on a linear scale
This is simply untrue.
This may be true for health insurance, because there is a strong moral case to be made that is unfair and illiberal to make people pay more for genetics or simple bad luck that result in them being likely to need more health care.
It is not true for home insurance, where people can choose where to live and choose what kind of housing to live in.
The purpose of home insurance is to reduce time-based variance for disaster, not for people in low-risk properties to subsidize people in high-risk properties.
It is not "solidarity" for someone in a steel-and-concrete house with a metal roof who clears brush and trees from around their house to subsidize someone who lives in wooden mansion who doesn't take any fire precautions. It is a perverse incentive.
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
Again, it is not the purpose of insurance for it to be positive expected value for people in high risk homes! It is expected for insurance to be negative expected value. The point is to reduce variance.
https://reason.com/2024/01/10/the-feds-shouldnt-subsidize-fa...
Insurance should not be positive expected value for anyone; if it is, either the actuaries are doing a poor job, or the product is a loss leader, or there's some regulatory reason the company can't pull out of the market. (Or, you are in a very rare circumstance where you actually know better than the actuary.)
For other disasters, while climate change is "global", the effects are pretty much localized and to various degrees. Some places have had adapted construction to those kinds of blue moon disasters since centuries, so why should they part with more money?
For socialists this is a goal, not an obstacle.
If it's a product you actually want everyone to carry (like health insurance) it should probably be the government offering it.
If low-risk individuals are allowed to make their own choices, they will choose an insurer that caters to their group, thus depriving the government "option" of "premiums."
Just like with school property tax vouchers: if people are allowed to directly appropriate the benefits of their funds, less "desirable" schools would receive less funding.
Mandated government "insurance" is a form of welfare.
Yes? Of course? That doesn't make it a bad idea.
Actuarial science is not often associated with “fun” but they have been partying for centuries.
“In 1662, a London draper named John Graunt showed that there were predictable patterns of longevity and death in a defined group, or cohort, of people, despite the uncertainty about the future longevity or mortality of any one individual. This study became the basis for the original life table. Combining this idea with that of compound interest and annuity valuation, it became possible to set up an insurance scheme to provide life insurance or pensions for a group of people, and to calculate with some degree of accuracy each member's necessary contributions to a common fund, assuming a fixed rate of interest.”
> you can either isolate the LA customers and charge them the "real" price of the risk […] or you can include them in the broad pool
Maybe you don’t understand that the insurance business is based on including everyone in one pool (so it can swallow a large clustered crisis more easily) AND charge them (more than) the real price of the risk.
It’s good when insurers personalize! Install screens to prevents embers from entering roof vents? Great. You should get a discount!
It’s a win-win. Consumers are incentivized to take measures to reduce risk.
You also have insurance companies that will incentivize risk reduction by subsidizing alterations - if you clear any trees within X ft of home, they will give you $1000 towards it.
But yes on the inspections. I’ve had home insurance inspections around electrical and plumbing. They wanted to make sure it was at code as it was an older home.
NOT lining up the premium with the actual risk is what's non-viable.
That's the only way.
> which will be unviable as a business and probably politically touchy too
Why would it be? If you live in Los Angeles - doesn't mean you don't need insurance (even if it several times the cost of insurance in the safer areas).
> or you can include them in the broad pool
No, you can't. Your competitor who doesn't do this will offer cheaper insurance - because they doesn't distribute high risk of small group to everybody else.
> the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
Why would they do that? 20 bucks is 20 bucks.
> The concept probably works better if you have some concept of social cohesion to lean on
You mean if you with totalitarian governance deprive people of the ability to choose? Yeah, that could work. I mean, that's how the gulags were justified.
Are you saying that we should only pool risk between people in the same risk bucket?
How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
People should be free to make that choice even though it increases net costs for higher-risk or less-affluent individuals.
> How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
By allowing private actuaries to make these pricing decisions: skilled organizations will succeed, others will fail.
Ok, I get how you want to value risk, independent actuaries. I suppose, there's some bias there as insurers might lean on them to adjust the risk to be more favourable to them and as they'll be repeat business, they're likely to comply, but let's assume we find some really honest ones.
So given say a pool of people with similar risk profiles, say young professionals in high earning careers, and you calculate that they're effective risk is the same so you pool them together.
Now, what do you believe an insurer would insure them against? And of the things, what would not take them out of the pool they've been placed in and put them into a different, perhaps smaller pool?
It's like how a hair salon owner evaluates the difficulty of a haircut. And generally, when you want to have simple haircut, but they are gonna charge you extra because Jason Statham is their client, and he has very sensitive and delicate hair ends, each of which requires a careful individual approach... You naturally start wondering what Jason Statham's hair situation has to do with your haircut.
Because insurance will cover you even if your house burns down in the first year of coverage, whereas a personal savings account will have only a very small amount of money in it in the first year of home ownership.
That's the whole point of insurance.
I don't know where the idea came from that the purpose of home insurance is for people in low-risk homes to subsidize people in high-risk homes, but it's a very strange idea.
Now the simplest way of doing that is you decide whether someone is "insurable" or "uninsurable" and then for everyone insurable, you define payout criteria and a fair pay in rate (premiums) which is based on your ability to calculate their risk and taking some extra on top for providing the service.
Your skill at:
1. assessing risk correctly as to whether you take them on as clients
2. calculating their risk correctly and mapping it to a price to charge them (premiums)
3. defining payouts in a way that allows you to pay out when things happen to your clients so others trust you to pay out, but not so often that you have no working capital
broadly determine how well you'll do.
You can do all kinds of other complicated things on top of that, but from what I can tell, the fundamental idea seems to be that given those considerations, the insurer pays out, so the fact that someone has a high risk home should be priced into their premiums or they should not have been taken on in the first place.
Now you appear to dislike that people who have different risk profiles are grouped together, what I'm trying to understand is how that works.
For example, in the case of the house burning down:
1. The insurer pays the homeowner out and increases their premiums
2. The insurer pays the homeowner out and places them into a different risk category of people who own similar homes, but have had their house burn down, works out their new premiums, which are now likely much higher as they're in a riskier category and it's likely that population is smaller.
I assume you're arguing for something like 2 to happen?
Or is it something else?
There is no problem with pooling properties with different risk profiles so long as each property pays premiums that adequately represent that property's risk profile.
Do you believe that's not the case? Or that insurers are giving them discounts? Or are the risks miscalculated?
Nothing. It's definition of insurance - selling your risk.
> Are you saying that we should only pool risk between people in the same risk bucket?
I mean, why would people want to be in a bucket with people with higher risk?
> How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
These are the problems of insurance companies. At the end of the day, the consumer simply chooses the best price for his risk.
And you immediately start loosing customers to insurers that either did the former or left LA alltogether. This changes $20 surcharge into $25 surcharge, causing more customers to leave, causing surcharge to increase and so on.
You almost said it yourself, "The US does a weird thing where insurance no longer means pooling risk". Why? Is it the profit motive or gov. regulation?
My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose, insurance companies are justified with.
Free markets have down sides and failure conditions too and only principled gov. regulation can fix it.
> My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose
What’s the non-US-centric view? Lloyd's of London is older than the US.
There are many examples that hint to other motivations then simple greed. Over all, cooperation is the foundation of our society.
> In 2020, 79 percent of homeowners insurance lawsuits nationwide were in Florida—even as the state accounted for only 9 percent of the U.S. homeowners insurance claims, according to the Florida Office of Insurance Regulation.
There were some recent reforms in response (HB 837, 2023; SB 2-A, 2022).
Rock, meet hard place.
They're the ones with the money. They can easily guarantee that you buy the product they want. All they need to do is give you less money, buy the product themselves, and give it to you.
But legally, you are allowed to change insurers at any time. They would probably not be allowed to include that as a contract-breaker clause in the loan itself due to free-market-reasons, or force you to take only their insurance to have the loan (we tend to have a few laws about keeping conflicts of interest like this at arms length but I'm not sure about this case). But if insurance is legally required, I suppose they can ask for proof periodically after you leave to terminate the loan.
It's basically the bank just outsourcing a lot of risk to the insurance company (via the house buyer).
A quick google suggests a similar situation in that there's no legal mandate but most lenders in NZ require insurance.
For total loss then bankruptcy might save you money (assuming you have no other assets or kiwisaver; since you still owe the debt).
But part of the contract with the bank is allowing the bank and insurance company to verify/update.
If you cancel your insurance, the insurance company is incentivised to tell the bank since you will probably sign up for insurance again when told to by the bank. I don't believe the banks or insurance have push updates. I would guess banks batch check if insurance is still live annually?
I live in Christchurch and I believe insurance is valuable risk management - plenty of people gambled and lost with Earthquakes. That said: I own an as-is house because I bought a 3 bedroom on 800m2 for $190000 (cheap because you can't get a mortgage for it because it is uninsurable due to subsidence - I only paid land price).
My land is not too bad actually (relatively) - heaps of other insured properties have similar slumping along the river or on the hills.
I've got friends with slumping issues - hidden nightmares for future buyers... In their houses you could feel the uneven floors before the earthquake and the earthquake just accelerated the problem. Pay attention when buying any house in an earthquake zone!!!
My house is actually fine -- only the ring foundation is broken and needs replacing. There are plenty of companies with the skills to do it reasonably, because it is a common issue in Christchurch e.g. a raft foundation.
The property was extremely cheap (less than half price) partly due to another issue - the driveway and front lawn gets flooded by the river occasionally (the house is high and dry).
Disclaimer: I like risk and can afford it.
I sold the house after a while, it was an interesting experiment in cheap living but ultimately it wasn’t great.
Annoyingly I couldn’t insure it because it was thatched, and I couldn’t change the roof because of heritage. The Irish government has screwed over thatch owners brutally.
Same happens in autos. Monitored safe driving nets at most 10-20% discounts. Biggest factor is age, and even then, difference between 20yo and 35yo driver is 38%.
There are no tricks or deals to insurance.
That's because age is both observable and strongly predictive of risk.
This might be reworked to allow for fire resistant designs to be a factor.
but this means the insurance company is mispricing (or is being forced to misprice) the risk of resistant homes.
In theory, when correct pricing happens, these resistant homes should face less claims, and thus the premiums paid on them is high profit margin; ala, the customer is a good one, and the insurer should persue this customer more than another. This ought to results in a discount for said customer's premium, as more insurers vie for this customer over another.
It's a hard engineering problem to solve, but an increasingly urgent one now that these major events are becoming more intense and frequent.
Similar to when I look at causes of death for my age group and can pretty much eliminate the top 2 of 3 causes for myself.
[1] https://www.youtube.com/watch?v=3oIeLGkSCMA
How exactly do you expect these people to adapt? Many live in multigenerational households and could never afford to rebuild their house or move without uprooting their communities to another state.
Why are the victims made to adapt to the atrocious actions of the wealthy and powerful? Maybe our policy discussions should start from a place of compassion and work towards solutions from there.
Math is hard for people, even on HN.
If I could cure it (yes, I'm using that term. It's a debilitating condition and she'd be better off without it) by selling my house and moving hundreds of miles away from family I'd do that in a heartbeat without complaint. All we can do is make the best of things.
(This is not a contradiction of your point, just a useful related factoid for the modern era.)
The advantage of suburbs in which houses are mostly built from non-flammable materials is that while maybe one or two rows of houses closest to forested areas will likely burn out, there won't be enough calorific potential for the fire to propagate further into the suburb.
Also for firefighting efforts the difference between a house burning out and a house burning down is huge. The former means that most of the fire is already contained in a non-flammable structure, reducing the risk of spreading and also making efforts to quench it with water more effective.
"Brick is much worse than wood for wind-stoked wildfires" is a strange take. If a wildfire is approaching, I'll take a town built from brick rather than plywood any day.
Don’t plant trees within fifty feet of a structure. More, if you didn’t inflate your home like a balloon to fill a property to the brim with home. Cut them down and make a firebreak. Clearings exist for a real and serious reason. Aesthetics have been given precedence far too long in this regard.
Make your home airtight (or positively pressurize it, if you have the power and tech to do that safely) so that embers don’t get pushed in by the winds and pulled in by the temperature differential currents and catch your house on fire from inside its walls. Not much fun in having a brick building burned out from embers that were forced in through a poorly-sealed door.
Saturate your roof with water, so that it doesn’t trap embers and act as a fire repeater to the next house on the block. Not only will your roof not burn, but every ember that lands on it will likely go out. Even if your roof is metal, consider installing sprinklers anyways. Maybe you’ll help save your neighborhood someday.
It’s not the building material that’s the one problem here; it’s the carelessness of building code, safety enforcement and absence of federal and state aid to fireproof homes in known fire zones. It’s the catastrophically incorrect hundred year old policy that would rather burn down a chunk of homes every ten years rather than admit that policy is wrong and that the indigenous people were right all along. Brick or wood or concrete or steel, none of these will stop the hottest fires with any certainty. We know what does, and we’ve allowed it to become unsafe to have wood homes. We know how to stop these wildfires. Build with brick if you like, but:
Only fire can prevent forest fires.
https://99percentinvisible.org/episode/built-to-burn/
This is absolutely an acceptable path forward, and was proposed decades ago. It’s been essentially ignored in building codes and homeowner requirements, but if you own a home or know someone whose home is in a fire zone — which is any home between the Cascades and the coastline where there’s a contiguous (no gaps larger than a mile) line of homes and/or flammable unmanaged land eastward from the house to the nearest forest (i.e. all of Marin county) — then focusing on the home modifications described in this story may save that home, and perhaps all of those west of it, when fire visits them eventually.
Have we seen any stone cities burn down lately? Because I haven’t seen London burn down since they replaced all the wooden houses with brick in 1666.
What I thought was worse was once a tornado rips up a neighborhood builders are allowed to build replacement stick framed homes.
Genuine question. Does this story get told to children in Oklahoma, and if so, don’t the children think to themselves “wtf parents, have you seen our house?”.
My main point is that if we face major natural disasters, we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
This is why prices are important - sometimes it's sensible to build cheaper houses without these safeties if the risk isn't there, but if the risk does exist then it needs to be priced right to provide that incentive.
People whine about insurances pulling out. All they want is for somebody else to pay for their risk. It's their choice to live in that area, they should bear the consequences. It's not like it is or has ever been a secret. Climate change is known for decades now. Many people just chose not to "believe" in it. Well, their choice, but now that sh* hits the fan, they shouldn't come whine that everything gets sprayed with poo.
Why do they get to pull out now when it's time to hold their end of the contract?
Everybody who is insured at the moment of course needs to be paid by the insurance under the terms they had agreed to. The insurances should not be allowed to "pull out" of this responsibility.
But what about the next year? If no insurance wants to offer you another term, especially not for those same conditions, then it's their choice to "pull out" in that sense.
I can see an argument for not writing new policies in an area. But I can also make an argument for allowing existing policyholders to renew -- maybe not at the previous rate, but at an appropriate rate for the risk.
As a matter of public policy, we ought to match the risk put on a homeowner with a mortgage by the bank with the risk assumed by the insurer when the homeowner pays their policies. Not let the insurance company lay the risk on the homeowner if they notice the risk has gone up before the loss is realised.
Alternatively, we need to start treating buildings insurance more like (UK) life cover: I took out decreasing life insurance when I took out my mortgage, it'll pay off the mortgage if I die. The amount of cover goes down every year to roughly match me paying off my mortgage. No matter what happens to my health in the meantime, if I keep paying the premiums then I keep the cover -- even if I wouldn't qualify for new cover.
Or maybe we need to say that if an insurance company declines to renew because they think the risk has risen too much, the customer should be allowed to claim on the expiring policy even if the house is still standing, because it's obviously worthless, and it's obviously due to a risk that was covered by the policy.
Your other proposals as extensions to yearly terms certainly go too far. Annual renewal policies are commonplace, and it should be well understood that there's no obligation on any party to continue it.
If we're going to have state intervention though (and it seems at least under suggestion, I've no idea how seriously, in CA) then rather than an insurer of last resort, we (or rather they) should consider what they actually want from their insurance.
But if the state regulator sets a maximum cap they wouldn’t be allowed to…
Maybe they didn't, and then the law or limits were imposed at a time when the insurance companies needed to increase the premiums to match the new risk. But if the law prevents them, then they have no other choice but to pull out. Why would they as a business stay if the risk is to great for the premiums they are allowed to charge? They certainly are not obligated to stay.
But it is possible that more private insurers in Florida, who have to adhere to state guidelines for how much they can raise premiums, will cancel policies after this year’s hurricanes, leading more people to turn to Citizens, Rappmund said. “When you don’t allow the price to be matched to the risk, then the private companies can’t make a business there and they retreat.”
Still, if fewer private insurers want to do business in Florida, Citizens would likely need to push for higher rates on its customers more and potentially even reworking what its policies cover, Rappmund told CNN.
More seriously, nowhere of course, but if the risk is manageable (a fluffy term to mean predictable and not too high) then you'll find an insurance that covers you. Those natural conditions are dynamic though, so where such insurance is available can be (and is) subject to change. Predictably so. Nobody will provide you with the same car insurance when your car is new compared to 40 years later (same car). Things change. If you don't want your insurance to change, negotiate a 40-year term. Forcing them is nuts.
Cars being on the move, makes that distinction much much more relevant
I was fixating on the opposition of goals in the car (if car doesn’t bend/deform, then death risk increases).
Crumple zones in cars exist under the assumption that they will not be occupied by humans. In a house, on the other hand, any place could have a person inside of it during an earthquake, meaning that basically the entire house would need to stand to avoid any human being hurt.
So the human surviving may come at the cost of more houses collapsing.
Plastic/non-linear deformation is intended in shear panels of steel connections and the core of well confined concrete beams/columns. The idea is to provide a lot of energy damping due to the nonlinear nature of the f*D hysteresis curve. This works long enough for the earthquake to go away and the people to get out of the building, at which point, you need a new building but hopefully no one has died.
Earthquakes are different and you'd need a house that stood anyway (though I'd guess most houses don't have a problem with earthquakes insofar as not collapsing on inhabitants, though they'd probably be damaged)
https://en.m.wikipedia.org/wiki/2023_Turkey%E2%80%93Syria_ea...
Did you know the most destructive wildfire in California history, the 2018 Camp Fire, destroyed 19,000 buildings but only caused 85 deaths? [1]
[1] https://oehha.ca.gov/sites/default/files/media/downloads/cli...
If you don't know what a parapet is, take a look up to the roofs on London's older buildings, the front wall rises up past the bottom of the roof. If there is a fire in the building then the parapet keeps the burning roof inside the footprint of the building rather than let it 'slide off' to set fire to the property on the other side of the street.
The parapet requirement did not extend to towns outside London, which makes me wonder why.
The answer to that is to see what goes on in the USA. After a natural disaster they just pick themselves up and keep going. Florida was obliterated in 2024 but nobody cared after a fortnight. Same with the current wild fires, nobody will care next week, it will be forgotten, even though having one's home destroyed might be considered deeply traumatic.
I think that the key to change is to not have too many natural disasters, ideally nobody has living memory of the last fire/flood/earthquake/pandemic/alien invasion/plague of locusts so that there is no point of reference or 'compassion fatigue'. Only then can there be a fair expectation of political will and the possibility of change.
Funny, I would have said the exact opposite. If people forget how bad things were, they seem more likely to repeat them.
Nazism, for one. And the rise in antivax sentiment - people today have never come across an iron lung, which is a testament to medical technology, but it means some silly opinions get way more traction than they should.
"Those who cannot remember the past are condemned to repeat it" - George Santayana
> "Those who cannot remember the past are condemned to repeat it" - George Santayana
I have expressed that idea with different attribution before now, but, on reflection, it is a 'trite quote' that can be trotted out far too easily!
That’s an huge exaggeration. FL was not obliterated in 2024.
Stats:
Total storms 18
Hurricanes 11
Major hurricanes (Cat. 3+) 5
Total fatalities 401
Total damage $128.072 billion
(Third-costliest tropical cyclone season on record)
128 billion dollars is equivalent to 200,000 homes, or even more, which does not represent total obliteration, however, if that level of devastation happened in the UK, the only comparison would be what the Luftwaffe did during WW2.
As of 2023, FL has over 10.4 million homes.
> however, if that level of devastation happened in the UK, the only comparison would be what the Luftwaffe did during WW2.
If you are referring to The Blitz, the numbers I have access to is that over 1.1 million homes and flats were destroyed in London alone.
That’s absolutely nuts.
It’s also a lot worse than the pure numbers suggest because the damage here is taking away actual built up stock, so capacity for generating future GDP. And the GDP in Florida includes a lot of economic activity used to rebuild after past damage.
And all of this without Miami even being flooded out of existence. Miami can’t even build dikes due to the porous ground it’s built on.
I'm here in Eastern Europe and our buildings can withstand a lot of things.
> we need to take action to mitigate their impact in the future. As a foreigner, it seems to me that Americans prioritize building cheap homes over constructing better and more resilient ones.
As an European, it baffles me as well.
If this doesn't happen to "cheap" homes here, why does it happen in California, to rich people's houses?
When state actors even dabble in socialism disasters happen people die.
> In most cases, the Department of Insurance would be required to act on an insurance carrier’s rate request within 60 days, unless extensions are necessary.
> The proposed bill expedites the timelines laid out in Proposition 103, which requires insurance companies to have changes approved by the Department of Insurance and dictates how quickly the department must act on change requests.
> Critics fear that shortening approval timelines will allow insurance companies to jack-up premiums without room for public appeals and sufficient review by the Department of Insurance.
https://sfstandard.com/2024/05/30/california-insurance-crisi...
Obviously. Such a move by the government is just plain stupid.
> When state actors even dabble in socialism disasters happen people die.
No need to overgeneralize. Not every stupid move is immediately "socialism" and everything smart is "capitalism". It's obvious to every socialist that this move was stupid. In contrast, it's pretty clear that a purely market-based health system costs lives. Nobody is claiming though that "whenever societies dabble in capitalism it results in deaths". Pick your optimization target and then the right tool to reach that target. Sometimes that tool is to let prices regulate risk, sometimes it is laws to regulate risk, and sometimes it's something else entirely.
That was literally the take about insurance. And here we are, again.
Is it? Or is this post hoc rationalization? I really dislike playing the “both sides” card, even for a moment, but it’s hard to deny that there are questionable takes on both ends.
I agree with you that not every regulation equates to socialism, and it’s ridiculous to claim it is. However, the narrative of “insurance companies bad” is incredibly prevalent among left-leaning perspectives, and any regulation around insurance premiums tends to be automatically celebrated as a clear victory.
Ironically (because it's a free market argument), it’s a not-uncommon argument that if insurance companies can’t provide their services for no more than some arbitrarily-decided amount annually, they’re being inefficient or greedy and should go bankrupt and let a new competitor take the market.
Perhaps it is, I don't have enough insight to know. It's obvious (to me) that this is clearly over-simplifying things.
> Ironically (because it's a free market argument), it’s a not-uncommon argument that if insurance companies can’t provide their services for no more than some arbitrarily-decided amount annually, they’re being inefficient or greedy and should go bankrupt and let a new competitor take the market.
Is it actually a free market argument? Maybe it's not possible to provide that service at that price point. I'd think that the free market argument is that the price is already as low as possible, otherwise such a competitor would already exist and have outcompeted everybody. Such an argument has other issues though, like inertia, scaling effects, price-fixing and such, all of which are working against a free market though. Which is why a truly free market needs regulation, otherwise it ceases to be free.
> I really dislike playing the “both sides” card, even for a moment
Honest question: Why? I've found that reality is complicated. It's rare to find saints on "one side" and "pure evil" on the other. The truth is often times that there are many issues, many interests, many world views, and typically even more than two sides. Uncovering the truth usually requires avoiding partisanship and have an open mind about understanding the interests of every involved party. That necessarily leads to "both sides" arguments. Not common in hyper-polarized discourses, unfortunately.
You can spot it in this post, too.
> Is it actually a free market argument?
The argument is:
Large corporation A offers service B at price $C. $C is an extravagant amount, and is due to the greed and inefficiencies of A. A can only charge $C because of regulatory capture, or using capital to elbow out upstarts, or whatever other argument you want to assume (ie it's not a truly free market).
If A should leave the market (forcibly or not), company D can now flourish by offering B at $E, where $E is much less than $C. Because D doesn't have the inefficiencies and greed of A, everyone profits.
Seems like a pretty standard "free markets/Econ 101" argument to me.
> Honest question: Why?
Frequently it’s nothing more than a flimsy pretext for cowardice, a lack of knowledge, or simple indifference.
I don't disagree with you, many topics are complex. Generally though, people dislike those who refuse to take a stance even if it's a weakly-held one (thus Machiavelli's famous advice).
Hm I think I see what you mean. It's a free market argument that includes that some regulation is in place which keeps A in business and keeps D out of business.
But wouldn't the free market corollary then be to remove that regulation so the market can be more free? That's hardly the suggestion coming from the left-leaning perspective, which instead proposes to add more regulation. So the end-to-end argument (including s corollary for what to do) doesn't actually sound free market to me.
And it is not exactly "left" either. Rothbard was a right-libertarian, aka. libertarian capitalist or right-wing libertarian.
The amount of walls in Europe that you could punch a wall into is low enough that you shouldnt try.
I'm in Christchurch, 6.2 Earthquake in 2011 and wooden framed houses dealt with it pretty good - they flex - lots of the houses survived and are still used.
Just about anything old and bricky was a deathtrap (fortunately many were unoccupied because condemned after nearby 2010 Earthquake).
In areas where we don't have earthquakes, yeah, what's the problem?
Afaik, only Turkey and a small part of the Balkans is considered earthquake territory. And there's no fracking in Europe to induce minor manmade earthquakes either.
Despite being hit by earthquakes more often than other parts of Europe, usually only buildings and houses not built up to standard or old ones crumble, other buildings just shake and that's it. Of course, I do not know the exact risk of earthquakes in California and their intensity, but it's definitely possible to build earthquake resistant brick buildings
We don't get many earthquakes here though, we do get storm but it doesn't cause power outage at all.
While having unmanaged accumulated flammable brush
While having an empty reservoir under repair
While having the public water source unable to maintain water pressure for multiple hydrant usage
While having too few fire fighters dispatched in the area anyway
While having houses made out of wood
is it an ignorant take when the houses not made out of wood with their own watersource were able to withstand 100mph wind gusts and firestorm? it really really makes everyone else look ignorant
At some point the US really needs to do bit of cultural reform so they can start paying for all that low density development and the costs associated with it. So stuff can actually be maintained.
The City of LA has a lower per capita tax revenue than most large Texan and southern cities, largely due to property tax caps.
In lots of pictures from LA, there are green trees right beside burned out houses. The video in this NYT article is a great example: https://www.nytimes.com/live/2025/01/15/us/los-angeles-wildf...
One of the biggest problems are vents in the eves. Typically these vents have a single screen with a coarse mesh. Embers from fires easily pass through these vents, land on a surface, and start a fire.
Replacing the one coarse mesh with two or more layers of fine mesh significantly reduces the odds of an ember getting into the house.
This is a trivial improvement that dramatically increases survivability.
Notice that you said "Green trees don't easily burn." Coastal California has two seasons: green and brown. Brown is in the summer. Green is in the winer. Normally it rains in LA during December and January. It didn't rain this year, so brown continued.
Most of the fires aren't in what you'd think of as forests. It's chaparral. Low scrub, bushes, and grasses. It is mostly what you'd refer to as underbrush. The only way to "thin it out" would be to remove all the vegetation. This environment has evolved to periodically burn.
> Trees have evolved to survive fires as well.
Trees have two broad strategies for surviving fires. One is to resist fire. The quintessential example is a redwood. The other is to burn and regrow faster than anything else. The quintessential example is a blue gum. Eucalypts evolved to literally explode when they burn. The environment in The Palisades is much closer to the second than the first.
This environment is, by its nature, an environment that burns. Yes, we've needed to allow more frequent burning. Environmentalists have been arguing this for decades. The difficulties with these conversations in the US is the Republican party's actual definition of "thinning the underbrush" doesn't mean controlled burns. It means clearcutting forests.
> These fires are HOT and don't just catch houses on fire with little embers.
Yes, in fact they do spread by embers. This is why the fires jump several streets at a time. The wind blows embers, and those embers ignite further buildings before the fire front even reaches them. This is one reason why it is so hard to set up fire breaks during a high winds.
> The houses could be made fire-resistant, but making houses to be fire-resistant is going to be more expensive
Here's an example things that you can do to increase the fire survivability of your home: https://flash.org/mitigation/protect-your-eaves-soffits-vent...
> and storing more water
LA had plenty of water. It didn't have enough water pressure.
https://www.theguardian.com/us-news/2025/jan/08/los-angeles-...
I’m curious about how many others did that burned down too
But so far the ones highlighted had super obvious mitigations that its astounding to see were not more common
It's all considered disposable, much like strip malls.
"Americans" is doing a lot of work in that sentence.
It would probably be more accurate to say "It seems to me that the history of American culture and economic systems have led to a system whose emergent behavior is to prioritize building cheap-but-easy-to-modify homes over constructing smaller-harder-to-modify-but-more-resilient ones."
Sure "we" need to take action, but the machine is very large and we are all very small gears in it. A twenty-something buying their first house doesn't have a magic wand to wave that will summon cinder block houses into being that don't physically exist. A builder who wants to build cinder block houses doesn't have a magic wand to rewrite city building codes that presume residential construction is mostly wood. A city council member who wants to modernize building codes doesn't have a magic wand to get enough constituents to prioritize this over housing costs, homelessness (but I repeat myself), jobs, etc.
Everyone's problems seem easy when you are very far away from them.
Australia has a lot of experience with building fire resistant homes, and they didn’t do it with masonry, they did it with timber and steel framed homes, plus fireproof cladding and roofing materials, keeping a perimeter free of vegetation and protecting against ember ingress.
It is possible to have both earthquake and fire resistance in a stick framed home, without the expense of resorting to reinforced concrete.
People in built up areas almost don't think at all about wildfire safety, cladding an so on.
ZONING and Building Code need to change.
You're correct that buildings must be more robust and literally capable of surviving an ongoing 4th of July event directly above the property.
However they must also be built such that there is less which is able to burn. Also so that that which does burn is less deadly when it burns.
There also need to be better firebreaks and less natural 'fuel load', which when there IS a good set of rain in the near future, needs to be burned in a rotating cycle to restore nature's fuel balance and discourage catastrophic uncontrolled correction events.
https://nypost.com/2025/01/15/real-estate/passive-house-surv...
Metal roof, passive house so embers don’t get sucked in. Concrete walls around the property and plants that don’t contribute to the fire.
The house might cost an additional $100k to build compared to conventional. But it would make all that back on energy, roofing, and insurance costs- probably at the point the conventional home would need a roof replacement.
Builders don’t build such houses unless a client or building code mandates it.
It seems like a lot of fire resistance can be created just by focusing on defensible space and having a concrete or metal fence. Then protecting the roof ventilation from fire (there are special screening materials that can be bought). Then using class A rated materials on the roof and then the exterior. Then metal framed windows instead of vinyl. Actually doesn't cost that much more- they should require it in building codes in these areas. The issue then is retrofit- insurers should probably require a defensible space in these high risk areas.
https://youtu.be/yZe-TlYxm9g?si=Uuqy6rhrhUb8l-_c
It's just a matter of throwing a couple hundreds $ of metal and cement every few rows of bricks, like this: https://www.pointp.fr/asset/27/07/AST212707-XL.jpg when you see how much american spend on houses it's a drop in the ocean.
FYI a two storey 10x10m house will run you less than 10k euros in bricks for the external walls, and that's with 30cm wide honeycomb bricks which probably provide enough thermal insulation as is for LA. Add 10k of rockwool insulation and you're good to go for most places.
You use wood for simple reasons: it's widely available, that's the only thing your workers are trained on, it's cheaper so builders make more money, it's faster and allow crazier design (mcmansions). Same thing for asphalt shingles, nobody uses that, it needs constant replacement, but it's cheaper, easier/faster to install.
In europe we mostly build rectangles with simple two pitch roofs, ceramic tiles that last 50+ years, most of them are made of bricks, even in seismically active countries like Italy.
Europe: https://www.philomag.com/sites/default/files/styles/article_...
US: https://www.reviewjournal.com/wp-content/uploads/2017/10/950...
Admittedly not very knowledgeable about this stuff but I feel like a lot of these types of comments are greatly trivializing this problem
This is an extreme that is not true. Bricks are harder to make earthquake resistant but it's perfectly possible to build houses that have SOME bricks in it that are also earthquake resistant. There are permutations of materials that are both more fire resistant and more earthquake resistant to the required level at a certain height of the building.
Anyways the difference in labor costs between wood and reinforced brick would be massive in LA county not to mention the additional cost of materials.
This is the exact scenario every single scientist I studied under openly discussed: probably not an extinction level event, but very, very expensive… Expensive to the point of it being cheaper in the long run to switch to renewables asap and hope for the best.
It’s like a 150M conservatives are all at once are saying “Wait a minute! We should do something about this!”
Uh… yea, no shit.
Punks feelin lucky are advised to Google (or ask any GPT about) "insurance paradox".
Haha