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Florida State Government's Costly Attempt to Fool Mother Nature
What should be done when a lot of people have built houses, businesses and infrastructure worth tens of billions of dollars where Mother Nature doesn't like them to be? This is the question that Florida is grappling with. Private insurers, burned by huge payouts for damages caused by two recent big hurricane seasons, are pulling out the state. This would seem like a market "signal" for people to get out. But Florida's state government is ignoring this "signal" and is instead creating a risk pool and a state-owned insurance company to cover property owners who can't find or afford private insurance. However, as the Washington Post reports, Florida
...legislators promised as much as $32 billion for insurers, and ultimately homeowners, if a major hurricane hits. This money would come from the state's catastrophe fund, which currently counts less than $1 billion on hand for such payouts, though it annually collects premiums from insurers...
The projected shortfalls could be staggering in the event of a major hurricane strike. If, for example, something like the 1926 Miami hurricane were to hit next year, the state entities by some industry estimates would have to raise an additional $40 billion, or more than $5,000 for every Florida household. The federal government probably would be asked to pitch in to alleviate the burden.
As a reference, keep in mind that the Feds have already paid out over $100 billion in disaster relief in the wake of Hurricane Katrina. If the private market won't insure these properties at an affordable price, is the proper policy just to let these sunk costs sink as inevitable storms wash ashore? Is that even politically feasible?
|2.20.07 @ 10:58AM|#
So you're saying that the government of Florida should pull out of the state like the insurance companies? Any discussion of insurance companies must at least acknowledge that low interest rates are hurting insurance companies just as much as property damage when one looks over the last 5 years.
|2.20.07 @ 11:00AM|#
Maybe the government of FL could pull out of the insurance
business, instead?
JMR
GinSlinger|2.20.07 @ 11:01AM|#
Proper, yes.
Feasible, no.
Lamar has apoint about intrest rates, though I expect that some
insurance companies may have found themselves upside down after the
2001 readjustment.
|2.20.07 @ 11:08AM|#
Insurance is not the business to be in. You are one solid disaster away from being sued into oblivion by a legion of lawyers armed with a knack for preying on the emotions of a jury.
|2.20.07 @ 11:20AM|#
The proper tort action would seem to be to file a civil suit against people who lied for hire to deny global warming during the period when it would have been possible to take action with substantial results. I wonder if we know anybody like that?
|2.20.07 @ 11:21AM|#
Are you kidding, rox_pubius? Insurance companies make billions
of dollars profit each year. I worked with one for about 6 years.
Stock kept going up and up with a few splits here and there. If
they didn't make money, they wouldn't be in business at
all...
As for the comment about being sued...trust me, insurance companies
have the lawyers and the money to fight any case they want for as
long as they want...
|2.20.07 @ 11:22AM|#
Low interest rates are a red herring.
There is no feasible interest rate that would make property
insurance "affordable" by the standards of the Florida Legislature.
Interest rates sufficiently high to cover the gap between premium
income and claim payouts would put the whole country into a giant
foreclosure sale.
However, the politics of "I want it" and "it isn't fair" will
prevail.
|2.20.07 @ 11:28AM|#
Insurance companies actually pay out more than 100% of premiums on claims. They make their money by investing premiums until they need to pay claims. So down markets and low interest rates can clobber insurers as badly as disasters and shoddy underwriting do.
|2.20.07 @ 11:29AM|#
Absent subsidized insurance and government payouts the structures being built in Florida likely would be better designed for surviving hurricanes. It isn't all that more expensive to build a structure that will hold up to everything but a direct hit from the worst tornadoes, and putting a stucture on stilts greatly mitigates flood risks. Allow people to insure structures at below market rates, however, and the incentive to build intelligently evaporates, and ironically, the increased demand drives up land costs, which means the houses are just as expensive as if they had been built right, without insurance subsidies.
|2.20.07 @ 11:34AM|#
So down markets and low interest rates can clobber insurers
as badly as disasters and shoddy underwriting do.
If you can explain how insurance companies are able to properly
price insurance on everything except their own inability to
recognize present and near-future interest rates, you might have a
point.
|2.20.07 @ 11:36AM|#
This would seem like a market "signal" for people to get
out.
Any idea where all 17 million Florida residents should go? How
about out west where we can worry about earthquakes and fires
instead.
I'm all for libertarian ideas...until they start including
stupidly, inane proposals put forth by idiotic loonies with a poor
grasp of facts.
So, the insurance companies CAN'T be part of the problem...it's all
the fault of everyone else, right Ronald? Your ignorance of this
issue is mindboggling.
People have been building houses in Florida for a long time and
hurricanes represent a catastrophe for a remarkably small number of
them. And throwing the government's price tag on Katrina out their
is highly suspect as an honest comparison.
Notice as a Floridian, I'm NOT advocating the legislature's plan -
I can agree that it's a bad one. But where you had a great
opportunity to to shine a light on a complicated issue, you blew it
trying to make all Floridians look stupid.
You're a dumbfuck.
|2.20.07 @ 11:43AM|#
There is some interesting work being done in the earthquake insurance market, where companies are analyzing risk on a site-specific basis, utilizing very detailed fault and soil quality analysis, combined with construction quality, to provide pricing on a case by case basis. As computing power becomes cheaper by the year, it is easier and easier for insurance companies to manage risk, if the right incentives are in place.
Christopher Monnier|2.20.07 @ 11:44AM|#
This is completely reasonable. Working class people from the Midwest should pay for wealthy people to live 50 ft. from the ocean.
Miggs|2.20.07 @ 11:46AM|#
"you blew it trying to make all Floridians look stupid."
Check out FARK sometime. Nuff said.
|2.20.07 @ 11:46AM|#
To be fair, there are working class in Florida who are paying for wealthy Midwestern people to have homes 50 feet from rivers, although it certainly isn't as prevalent. It's all stupid, of course.
|2.20.07 @ 11:50AM|#
Maybe Florida should secede. Then, when the Big One hits, they
can just print as much money as they need to pay the claims.
The comment on building methods is interesting; I seem to recall
seeing large numbers of what appeared to be "throwaway houses" in
coastal regions. Maybe they were pitiful shacks for poor people, or
maybe they were a totally rational form of self-insurance.
*nice response, Mr Bailey
|2.20.07 @ 11:50AM|#
Warren Buffett, who knows something about insurance, claims that
the property-casualty insurance business in aggregate operates at a
loss; that is, that expenses from claims exceed revenues from
premiums. Insurance companies make money on the float -- their
ability to invest pre-paid premiums and earn from those investments
before having to pay subsequent claims. Obviously, interest rates
do affect that ability, but then interest rates affect the
profitability of almost all businesses.
But private insurers of any sort must at least come close to
breaking even on average in premiums to payouts in order to
continue operations; hence, they will not offer insurance where the
risk and/or magnitude of that risk is too great. At least, they
will not underwrite such risk at any premium price would-be
insureds would be willing or able to pay. The risk pool, itself,
must over time be able to generate sufficient funds to pay claims;
that's the whole basis of private insurance.
Hence, any and all talk of government acting to insure against such
risks is spurious from the outset. All taxpayers (premium payers,
if you will) do not live in a flood or hurricane zone, but all
taxpayers underwrite the risk only some are taking. Some may claim
that's good government; it certainly isn't good business.
Similarly, by the way, talk of health care "insurance" and social
security "insurance" is fine if one acknowledges the very real
differences between such things and traditional insurance, properly
understood. Unfortunately, such acknowledgment tends to be the
exception, not the rule. Invariably, when that is so, the
intentional blurring or ignoring of such distinctions means
political mischief of some sort is afoot.
|2.20.07 @ 11:52AM|#
This is completely reasonable. Working class people from the
Midwest should pay for wealthy people to live 50 ft. from the
ocean.
You understanding of state homeowners insurance, economics and the
width of Florida beaches is as weak as Ronald's.
|2.20.07 @ 11:59AM|#
Insurance companies make billions of dollars profit each
year.
I read this in Forbes regarding Allstate just last night:
The decision to drastically cut back in Florida came after the
hurricane season of 2004, when four hurricanes hit Florida, wiping
out all the profits earned by Allstate in the state since Hurricane
Andrew in 1992. Likewise, Hurricane Andrew losses destroyed the
profits the company garnered there prior to 1992. In other words,
the company has not earned a dime in Florida since it started
selling insurance there in the mid-1930s.
URL: http://tinyurl.com/yp6scx
|2.20.07 @ 12:02PM|#
madpad: Calm down for pete's sake. I wasn't trying to make Floridians look stupid (after all they responded to whatever price signals they originally had). I was asking H&R bloggers to consider whether or not the FLorida legislature was acting stupidly. As for the Katrina comparison, Katrina was a hurricane and it didn't just inundate New Orleans. BTW, a look at previous gigantic payouts for hurricane losses in Florida might be instructive.
pigwiggle|2.20.07 @ 12:04PM|#
Any idea where all 17 million Florida residents should go?
How about out west where we can worry about earthquakes and fires
instead.
I see this canard a lot when discussing disaster prone areas. No,
disasters are not, on average, spread evenly across the habitable
US. Some places have none, some have a lineup. You only need to
look at historical FEMA payouts; 9 of the top 10 are hurricanes,
and the other is a earthquake. It's not a complicated issue. Absent
the federal or state funds mitigating the risk, only idiots and
those that can afford the loss would live in these places.
Floridians aren't stupid, they're opportunists.
|2.20.07 @ 12:05PM|#
madpad, whythe hostility? When it comes to flood insurance, there is no doubt that non-wealthy people everywhere are subsidizing, via taxes, the desire of wealthy people to live close to water.
Thomas Paine\'s Goiter|2.20.07 @ 12:07PM|#
No offense here, but the Florida legislature is now laying in the bed it created by caving to insurance companies and basically writing the laws the insurance company wanted.
Thomas Paine\'s Goiter|2.20.07 @ 12:08PM|#
So, the insurance companies CAN'T be part of the
problem...it's all the fault of everyone else, right Ronald? Your
ignorance of this issue is mindboggling.
Actually, it's the legislature in the first place that created
this.
JimmyDaGeek|2.20.07 @ 12:10PM|#
"Any idea where all 17 million Florida residents should go? How
about out west where we can worry about earthquakes and fires
instead."
I don't know about 17 million residents...but all the transplants
can go right back where they came from...especially all the blue
haired old fucks clogging up our roadways...
:)
|2.20.07 @ 12:10PM|#
If you could have some sensible political action (HA!), it would be possible to phase out taxpayer subsidized construction in high risk areas, without it being hugely dislocating to the people who live in such areas now. Unfortunately, not only would it require sensible political action, but it would require it be sustained for a few decades.
|2.20.07 @ 12:11PM|#
Aresen,
Whatever your opinion of the insurance industry, D.A. Ridgely is
correct that interest rates are how insurance companies make money.
They are the vehicle for driving profits in the insurance industry.
Interest rates are THE THING, not a red herring. When interest
rates were high in the 1980's, you didn't see insurance companies
flee the state after Elena in 1985. It isn't a red herring.
Interesting to note that some people say that the insurance
companies rake in billions in profit every year, and others note
that the insurance companies haven't made a dime in Florida
insuring property damage. It seems like the insurance companies
don't have any reason to spread the Florida risk around. Perhaps
the gov't should tell the insurance companies, "you want to write
any other type of policy in Florida, you'll also do home owner's at
reasonable rates, etc." Sure, it's still gov't regulation, but it's
better than a state owned corporation.
|2.20.07 @ 12:13PM|#
Perhaps the gov't should tell the insurance companies, "you
want to write any other type of policy in Florida, you'll also do
home owner's at reasonable rates, etc."
And perhaps insurance companies should continue to tell the state
of FL to suck it.
|2.20.07 @ 12:17PM|#
The proper tort action would seem to be to file a civil suit
against people who lied for hire to deny global
warming...
The 20004-5 hurricane season had absolutely nothing to do
with global warming.
Neither the frequency nor intensity of the storms were exceptional
by historical standards. If anything was out of line it was the
relatively low level of storm activity from the 60s through the
80s.
What has changed is the amount of development that has occurred in
high risk areas.
The fact of the matter is that populist insurance commissioners
have for decades kept insurance premiums lower than they should
have been. Now the chickens are coming home to roost.
I don't like it anymore than any other Florida resident, but it
long since time for the Governor and the legislature to stop
ignoring reality. Insurance premiums need to reflect relative
risk.
If the state wants to do something it should probably provide a one
time payout for uninsured losses. After that, if you decide to stay
you're on your own.
|2.20.07 @ 12:17PM|#
All right, Ronald...and sorry about the expletive. This is a
bitch of an issue for a Floridian who preferes a free-market
solution to a Government imposed one.
This is particularly galling because so many people are standing on
the proverbial railroad tracks warning the legislature that the
bridge is out up ahead.
I saw (and still see) your initial post as overly simplistic. Want
me to agree the Federal government is (still) paying too much for
Katrina? I do. Want me to object to the Crist plan? Bingo. But
insurance companies are not innocent either. Neither are builders,
developers or city planning commissions.
|2.20.07 @ 12:18PM|#
Yeah, that'd be a pretty good way to destroy the auto insurance market in Florida.
|2.20.07 @ 12:25PM|#
I know if I was in the insurance business I would place a high
priority on case by case rate adjustments. If a family had a
smoker, or admitted to using a lot of candles I would charge more
for fire insurance. If the house was built out of concrete and
above a 100 year storm surge line, they could get a discount.
That is just common sense, and with the advent of cheap computing,
as brought up earlier, would be easy to implement.
Even if it was not mandatory to wear a seatbelt, if insurance
companies were allowed to add a factor of ten or twenty to your
deductible if you were in an accident not wearing it, the behavior
would self correct quickly. Same thing with helmet laws. I wear a
helmet when I ride my bicycle, because as a rational human I value
my brain, and life support is freakin' pricey.
Flood, home, fire, any insurance could benefit. I bet we would see
a lot fewer stick built homes in the south-east if this were the
case.
JimmyDaGeek|2.20.07 @ 12:25PM|#
To be fair, Will Allen, there are some Floridians born and raised here. Do you expect them all to just pack up and leave when it comes time for them to buy a property? I can see your point when it comes to out of state people who move down here for the beaches and the weather, but not for the locals.
|2.20.07 @ 12:27PM|#
Actually, Lamar, I didn't quite make that claim. What I said was
that insurance companies make money by investing the float, but
such investment can (and in huge companies such as Berkshire
Hathaway do) include stock purchases or even outright purchase of
other profitable businesses. That's not the norm, but it does
happen. Also, some insurance companies do turn a profit more often
than not in their premium-to-claims ratio. Still, it is true that
interest sensitive short term investments are the norm.
Really, however, my implicit claim was only that insurance
companies are constrained by the degree of risk, the magnitude of
that risk and the affordability of premiums for those desiring
insurance. Unlike the state or federal government, they cannot
saddle the general taxpayer with the the cost of catastrophic
payouts except, as TPG points out, by manipulating their captive
regulators.
Thomas Paine\'s Goiter|2.20.07 @ 12:27PM|#
If the house was built out of concrete and above a 100 year
storm surge line, they could get a discount.
Florida laws have forced insurance companies' hands in this
matter.
|2.20.07 @ 12:27PM|#
Dear Ron:
Did you think I was talking about you? Wow. Wonder why. In the
spirit of helpfulness, I've decided to save you some of the fees
your libel lawyer would charge by finding a few candidates for you
to go after. No need to thank me! Glad to help.
http://www.treehugger.com/files/2007/01/ronald_bailey_n.php
http://gristmill.grist.org/story/2007/1/19/14227/7716#comment7
http://globalwarmingwatch.blogspot.com/2007/02/back-to-re-education-camp-for-global.html
and, of course, many many many more.
I'm as Shocked as you! I know!
|2.20.07 @ 12:29PM|#
This is a bitch of an issue for a Floridian who preferes a
free-market solution to a Government imposed one.
Why is it so hard? Imagine if there were no insurance regulations
in Florida. Insurance actuaries would do their number crunching and
charge rates that would allow for profitability. And they would
discriminate (among other things) between coastal areas and higher
ground. And what would happen? People judged to be in high risk
areas would complain "our rates are too high!". And people
throughout Florida would complain "why don't we pay what North
Dakota pays!". And then the legislature would take action and we'd
come full circle.
The root of this entire issue is with a populace that refuses to
shoulder the risk inherent in the area which they live in.
Thomas Paine\'s Goiter|2.20.07 @ 12:30PM|#
Why is it so hard? Imagine if there were no insurance regulations
in Florida. Insurance actuaries would do their number crunching and
charge rates that would allow for profitability. And they would
discriminate (among other things) between coastal areas and higher
ground. And what would happen? People judged to be in high risk
areas would complain "our rates are too high!". And people
throughout Florida would complain "why don't we pay what North
Dakota pays!". And then the legislature would take action and we'd
come full circle.
They already did and it already has.
|2.20.07 @ 12:31PM|#
Ramsey
That was a good post.
But, it is worth noting that properly built wood frame houses have
done as well as or better than block houses in resisting winds. And
they have certainly been known to do far betterin earthqakes.
|2.20.07 @ 12:33PM|#
...[T]there are some Floridians born and raised here. Do you
expect them all to just pack up and leave when it comes time for
them to buy a property?
Of course not. But they do need to face what it costs to live in
paradise.
GinSlinger|2.20.07 @ 12:33PM|#
Not only do intrest rates affect the long-term profitability of insurance companies, but they also have a more direct impact. Insurance companies must be keeping substantial cash reserves for pay-outs or else risk creating or suffering from adverse market fluctuations caused by selling off enough stocks/bonds/whatever to pay out.
|2.20.07 @ 12:40PM|#
And before anyone accuses me of having ties to the insurance
industry let me state that I, in fact, am part of BIG ROAD whose
natural ally is BIG DEVELOPER whose is the real beneficiary of
these subsidies. And for all practical purpose that's what mandated
low insurance premiums are.
So as a home owner in FLA and a shill for BIG ROAD I am
doubly acting counter to my interests in opposing this bill. Or am
I?
|2.20.07 @ 12:41PM|#
shocked: You shouldn't believe every libelous thing you read or, for that matter, post yourself.
|2.20.07 @ 12:42PM|#
Shocked,
For the love of God, either post some evidence that Ron took money
to downplay global warming or shut the hell up. You are
tedious.
|2.20.07 @ 12:53PM|#
Not only that, but Shocked's pet issue really doesn't have a damn thing to do with this story. The link between GW and the '04 hurricane season is extremely tenuous at best even by GW's biggest proponents (once everyone had two years to chill out).
Thomas Paine\'s Goiter|2.20.07 @ 12:54PM|#
What happened to last year's hurricane season? Climate folks
predicted 'worst ever'. Predicted that the gulf stream would help
put 'Philly, DC and New York under water'.
*checks Hurricane map from last year*
Hm.
|2.20.07 @ 12:59PM|#
Ron,
You left out your normal humorous disclaimer, so Shocked had to
reveal to the world that you have been paid actual money by
somebody for something sometime. I bet you also ride in cars and
airplanes too.
|2.20.07 @ 1:00PM|#
Jimmy, I expect native Floridians to pay insurance rates which are consistent with the risk of having a certain type of home, in a particular location, destroyed in a storm. or to go uninsured. That's all.
|2.20.07 @ 1:06PM|#
To the last few charming commenters:
Of course the devastation of the '04 hurricane season had between
no and only a modest connection to global warming depending on who
you ask, and how much they were paid by AEI. Oops, forget that last
part. '05 had a stronger, but still not airtight, case; with the
disproportionate strengthening of Katrina over that much
warmer-than-seen-before pool of Gulf water.
The point is that homeowners in Florida face paying premiums today
to insurance companies worried about losses 10 years down the road,
which reputable, non-shill, scientists believe will, in fact, be
larger than they would otherwise have been due to global
warming.
If you really want to kill the strawman, please do so by shredding
it for compost instead of lighting it on fire. Thanks in
advance.
|2.20.07 @ 1:10PM|#
The point is that homeowners in Florida face paying premiums
today to insurance companies worried about losses 10 years down the
road, which reputable, non-shill, scientists believe will, in fact,
be larger than they would otherwise have been due to global
warming.
And you base that on what...the voice emanating from the crack in
your behind?
|2.20.07 @ 1:10PM|#
Isaac, purely block construction is certainly a bad choice in
earthquake prone areas like California. However, concrete forms
reinforced with steel rods hold up better than stick-built homes,
along with the substantial benefit of being fire resistant in a
region with rampant wildfires. I recall a photo of a a neighborhood
of million dollar-plus homes in Southern California a few years ago
which was hit with a large wildfire. Every mini-mansion was
destroyed, with the exception of the reinforced concrete home,
which sat pristinely amid the smoking rubble of the rest of the
neighborhood. The homeowner was asked about his choice of home
construction, and he replied, "Everybody here knows that wildfires
are frequent here. Why would you build a home out of something
which readily catches on fire?"
If only homeowners everywhere took this approach, instead of
turning to the taxpayer to subsidize their choices.
|2.20.07 @ 1:10PM|#
Since we're detouring to address Shocked's reckless and false
inanity, I will say that I find it entirely plausible that someone
might "lie for hire" as the result of being employed by some media
outlet that takes grant money from the likes of ExxonMobil. After
all, not a single episode of PBS's long running, Mobile sponsored
Mystery series even once, to the best of my knowledge,
ever concluded with the culprit being revealed to be some greedy,
ruthless oil company.
Mere coincidence? You be the judge!
Larry A|2.20.07 @ 1:13PM|#
If the house was built out of concrete and above a 100 year
storm surge line, they could get a discount. That is just common
sense, and with the advent of cheap computing, as brought up
earlier, would be easy to implement.
Except that insurance is one of the most heavily regulated
businesses around. State laws commonly prohibit "discriminatory
pricing" or the equivalent, forcing companies to offer
state-approved policies at state-approved premiums.
Perhaps the gov't should tell the insurance companies, "you
want to write any other type of policy in Florida, you'll also do
home owner's at reasonable rates, etc."
So anyone who needs any other insurance will pay extra to subsidize
homeowners. Then the other insureds will lobby for the same deal.
Why should homeowners have reasonable rates when auto owners or
health insurance purchasers don't? So the state sets "reasonable"
rates for all insurance, and the companies go broke.
Any idea where all 17 million Florida residents should go? How
about out west where we can worry about earthquakes and fires
instead.
"Florida" isn't a high-risk area for hurricane damage, any more
than Louisiana or Texas. It's the folks who want a kazillion-doller
stick-built home where they can stand on the deck and spit in the
ocean.
They could move to concrete homes built above the storm surge, and
leave the west to its own problems.
And the folks out west could avoid obvious fault/mudslide areas and
cut the brush around their homes.
Just like where I live, we stay out of creek beds to avoid flash
flooding, and keep cedar cut back to reduce fire hazard.
|2.20.07 @ 1:17PM|#
My dream is to live in a house built upon bedrock above the high
flood line of the beautiful body of water not far away. It would be
framed with steel, roofed with slate, and the outer walls would be
covered in something both attractive and fire resistant. That
should take care of earthquakes, fires, and floods. Quality
construction and clever design can protect against wind damage from
storms. Tornadoes destroy almost anything, so I wouldn't build it
in Tornado Alley. Oh, and I'd install a quality lightning rod,
too.
(It would also have a wicked security system and a panic room, but
that's just because I'm a bit paranoid.)
JimmyDaGeek|2.20.07 @ 1:21PM|#
The comments by Will Allen and Larry A help to demonstrate a
certain aspect of the way many people think today:
Let's do whatever we want, no matter what the risk, and if
something goes wrong, blame everybody else. From the McDonald's
coffee lawsuit, to the cases where would be thieves injure
themselves while in the process of committing the crime - then win
lawsuits against the property owners. We now live in a society
where it's acceptable to blame everybody else, and never take
responsibility for our own actions...
|2.20.07 @ 1:25PM|#
Old narrative: Global warming isn't happening. Don't think I'm
saying this because the oil companies are paying our bills; or
because I don't like the ideology I'm assuming is behind the
scientific consensus.
New narrative: Global warming is happening, but there's nothing we
can do about it. Plus, the bad things that global warming implies
aren't having any influence on the insurance industry, despite what
they say.
Only to the residents of this blog could the new narrative be so
credulously swallowed, considering it came from the same
narrarators as the last.
http://www.npr.org/templates/story/story.php?storyId=6607675
http://www.motherjones.com/news/featurex/2005/05/profits_of_doom.html?welcome=true
|2.20.07 @ 1:27PM|#
To The Real Bill:
Performance Building Systems to the rescue!!!
Earth bank construction, shotcrete, steel frame, flooding could be
an issue, but not if you built on top/side of a hill.
Now if they were less expensive (not a chemical engineer yet), but
I think in the long run the complete lack of heating/cooling
requirements would help offset the initial investment.
Thomas Paine\'s Goiter|2.20.07 @ 1:27PM|#
They could move to concrete homes built above the storm
surge, and leave the west to its own problems.
Or they could build a hurricane-proof dome house in the storm surge
zone like I've seen on the outerbanks. Empty first level with doors
that raise to allow water flow.
Thomas Paine\'s Goiter|2.20.07 @ 1:28PM|#
Except that insurance is one of the most heavily regulated
businesses around. State laws commonly prohibit "discriminatory
pricing" or the equivalent, forcing companies to offer
state-approved policies at state-approved premiums.
Like I said above.
This one is on the legislature in the first place.
Thomas Paine\'s Goiter|2.20.07 @ 1:28PM|#
Oh, and I'd install a quality lightning rod, too.
1.21 gigawatts!
Thomas Paine\'s Goiter|2.20.07 @ 1:31PM|#
, flooding could be an issue, but not if you built on
top/side of a hill.
Or if the first floor was a garage with doors on both sides that
can be opened for flood waters to pass through. Put a ramp up the
side of the house to the second floor decking to park the cars
during a flood.
Sure, you'll have to vacation/live in a 2500 square foot house
rather than a 4000 square foot house, but it's not going
anywhere.
|2.20.07 @ 1:31PM|#
To be fair, Will Allen, there are some Floridians born and
raised here. Do you expect them all to just pack up and leave when
it comes time for them to buy a property? I can see your point when
it comes to out of state people who move down here for the beaches
and the weather, but not for the locals.
Perhaps those Floridians could build a house that can handle a
hurricane? The houses I have visited in Florida where so damn
flimsy, ground level, pieces of crap... the houses in Michigan are
more hurricane proof than in Florida (but then again, people in
Michigan have to pay for their own damn insurance bills.)
|2.20.07 @ 1:32PM|#
Tornadoes tend to be such localized events that insuring against them isn't very difficult. Having said that, it is possible to design a house to effecitvely stand up to the forces of the worst tornadoes, but it probably is just easier to insure against the last 100 m.p.h. of a 300 m.p.h. storm.
|2.20.07 @ 1:36PM|#
Shocked,
Are you familiar with "facts" or do you just assume that someone on
the wrong side of a scientific debate was acting in bad faith?
|2.20.07 @ 1:41PM|#
Just think if, when the Federal Flood Insurance program had been
started, if it had been stipulated that any structure built after
the program's inception was ineligible unless the living quarters
were 15-20 feet above the ground. Billions and billions would have
been saved.
Of course, if you build a structure like that, there isn't much
need for flood insurance, which is the point.
ed|2.20.07 @ 2:25PM|#
people have built houses, businesses and infrastructure
worth tens of billions of dollars where Mother Nature doesn't like
them to be
Great. Bailey has anthropomorphized the weather.
|2.20.07 @ 2:44PM|#
I just came in at the end of the thread, but did someone just
suggest that we need to cure global warming so that Florida's
insurance markets work better for Florida's residents?
The facts are the facts. It is either relatively risky to insure
Floridian coastline or it isn't. If you doubt what the actuaries
are saying, you have the opportunity to make a killing as your
competition leaves or prices themselves out of the market. If you
are a Floridian, you are either facing risks or not.
It just seems like the market should be able to sort this out.
|2.20.07 @ 2:46PM|#
The root of this entire issue is with a populace that
refuses to shoulder the risk inherent in the area which they live
in.
Bingo! We have a winner.
This applies not just to Florida, but the entire SE coastal areas.
There is a *good reason* why most building in the coastal Carolinas
and Florida has been modest and unattractive concrete block stuff
until recently. All of these nitwits who build stucco houses in
Florida or the same McMansions you see in suburban everywhere are
building something that will be ruined by even a modest hurricane.
They have the gall to complain about the insurance rates. If an
insurer is not willing to write them a policy at a desireable rate,
then these folks should begin self-insuring by saving/investing for
the inevitable day when their McMansion will be ruined by a
hurricane.
|2.20.07 @ 2:51PM|#
Making hurricane resistant homes aesthetically attractive is not a problem. People simply choose to not shoulder the marginal expense required to build homes to that standard, largely due to the government altering incentives.
Thomas Paine\'s Goiter|2.20.07 @ 3:18PM|#
If you doubt what the actuaries are saying, you have the
opportunity to make a killing as your competition leaves or prices
themselves out of the market. If you are a Floridian, you are
either facing risks or not.
Except that it's not the actuaries making the decisions -- it's the
Florida legislature's history of meddling in insurance
practices.
Thomas Paine\'s Goiter|2.20.07 @ 3:19PM|#
Making hurricane resistant homes aesthetically attractive is
not a problem. People simply choose to not shoulder the marginal
expense required to build homes to that standard, largely due to
the government altering incentives.
I can't find any pics of the hurricane dome on the Outer Banks.
Dammit.
|2.20.07 @ 3:26PM|#
Umm, the Florida building codes are among the strictest in the
country.
Much of the damage from hurricane Andrew was due to non-observance
of the code by contractors with inspectors turning a blind eye to
shoddy practices due to graft and/or negligence. Other than that it
was older structures which predated modern codes.
There were exceptions, of course. There were places where wind
speeds simply exceeded anything the code anticipated.
The three storms in 2004 on the other hand resulted in very few
total losses. Most of the damage was from shingles being blown off
and subsequent water damage due to leakage.
Indeed, for the most part people were treating their insurance
claims like they had won the lotto.
Things have come a long way in Florida from the 2000 plus dead that
they got in the 20s.
|2.20.07 @ 3:33PM|#
Except that it's not the actuaries making the decisions --
it's the Florida legislature's history of meddling in insurance
practices.
Bingo.
Typical of meddling was when Insurance Commissioner (now Senator)
Bill Nelson said that insurance companies should reimburse
residents for their expenses in vacuating fro wildfires in the late
90s.
Never mind that no such provision was to be found anywhere in the
insurance contract, Astronaut Bill just thought it was "fair".
Cooler heads prevailed and it was discovered that he had no power
to make it happen.
Unfortunately Floridians' belief in MAGIC is not confined to a
certain theme park.
|2.20.07 @ 3:40PM|#
I just came in at the end of the thread, but did someone
just suggest that we need to cure global warming so that Florida's
insurance markets work better for Florida's residents?
Actually, Jason, as near as I can tell Shocked actually believes
that the only reason there are hurricanes is because Ron Bailey
lied about global warming.
All those Spanish treasure ships that litter the floor of the
Carribean and the Florida Straits were sunk by something else
apparently.
|2.20.07 @ 3:54PM|#
"Actually, Jason, as near as I can tell Shocked actually
believes that the only reason there are hurricanes is because Ron
Bailey lied about global warming."
Shocked, I am, to see a commenter here resort so quickly to
Ridicule And Sidestep.
Insurance companies are (rightfully, if you believe the evil
science; thankfully we don't need to do that here) worried that
higher sea levels and warmer water temperatures and other likely
near-term effects of global warming will result in stronger storms
and storms that cause more damage at the same strength.
Apparently this eminently reasonable conclusion cannot be allowed
to be discussed; hence the ridicule. Stick to the narrative! Yes,
global warming is happening (even though we said for all that time
that it wasn't); but now we need to say that anything bad that will
happen in the near future can't have anything to do with it.
Ridicule away! Next, you might want to claim that I believe that
without global warming, we also wouldn't have floods.
|2.20.07 @ 4:08PM|#
Insurance companies are ... worried that higher sea levels
and warmer water temperatures and other likely near-term effects of
global warming will result in stronger storms and storms that cause
more damage at the same strength.
There have
been
stories about the possibility of factoring in climate models
into insurance rates. But there is no evidence that this has
actually been done.
|2.20.07 @ 4:27PM|#
Shocked, old boy, what makes you think that the State of Florida
will allow insurance companies to charge premiuns in line with
global warming risks when it would not even allow them to align
their rates with pre-global warming risks?
Bailey's post was about what he believed was an inappropriate state
intervention in insurance markets. It was you who went into your
irrelevant kneejerk accusations. I and others have posted that the
20004-5 hurricane season had absolutely nothing to do with global
warming. It is not hard to find stories that confirm those
assertions.
If you want to disagree with Bailey over how the State of Florida
should deal with insurance markets, fine. But stop pretending that
your bullshit opinions on global warming are germaine.
|2.20.07 @ 4:28PM|#
"Next, you might want to claim that I believe that without
global warming, we also wouldn't have floods."
Nah. That's covered already.
See Genesis, Ch. 5 - 9.
|2.20.07 @ 4:31PM|#
Aresen | February 20, 2007, 4:28pm | #
Interesting that religious cranks can always find a means for God's
wrath to be expressed.
|2.20.07 @ 4:39PM|#
"I and others have posted that the 20004-5 hurricane season had
absolutely nothing to do with global warming. It is not hard to
find stories that confirm those assertions."
'absolutely nothing', huh?
http://scienceblogs.com/intersection/2007/02/ipcc_on_hurricanes_and_global.php
Shocked, I am, that you would run your mouth off about something
you're so very wrong about.
All my claim was:
"Of course the devastation of the '04 hurricane season had between
no and only a modest connection to global warming depending on who
you ask, and how much they were paid by AEI. Oops, forget that last
part. '05 had a stronger, but still not airtight, case; with the
disproportionate strengthening of Katrina over that much
warmer-than-seen-before pool of Gulf water."
Please find a new narrative. I recommend one of Ron's; they've got
a certain sheen yours lack.
|2.20.07 @ 4:43PM|#
A better follow-up summary, which addresses the coastal issue
even:
http://scienceblogs.com/intersection/2007/02/the_ipcc_hurricanes_and_global.php
"What does all this signify? Unlike yesterday, we now know that
"more likely than not" simply means that the IPCC's experts, noting
a trend towards increased intense hurricane activity that is most
uncontroversial in the Atlantic (i.e., "some regions"), and noting
that this trend correlates with increasing sea surface temperatures
(widely believed to reflect human induced global warming),
essentially suspect there's a human influence on hurricanes. But
they can't quantify the size of that influence or make the point
any more strongly, because no formal detection and attribution
research has been done. In short, this is not something that the
community of experts as a whole can assert with strong confidence
yet (although a number of prominent scientists, individually, are
very convinced of it)."
[...]
"Based upon this likelihood of at least somewhat stronger
hurricanes in the future, even as we act immediately to deal with
our coastlines, we can also consider the possibility that there
might be an increased risk due to changes to storms themselves.
That's something I suspect some insurance companies are already
doing."
|2.20.07 @ 5:10PM|#
I repeat:
What makes you think that the State of Florida will allow insurance
companies to charge premiuns in line with global warming risks when
it would not even allow them to align their rates with pre-global
warming risks?
Neither the frequency nor intensity of the storms were exceptional
by historical standards. If anything was out of line it was the
relatively low level of storm activity from the 60s through the
80s.
|2.20.07 @ 5:18PM|#
I, for one, am comforted by the fact that we'll still be
tracking hurricanes in 20004.
(Sorry, Mr. Bartram. I know it was just a typo but somehow I just
couldn't resist.)
|2.20.07 @ 5:35PM|#
"What makes you think that the State of Florida will allow
insurance companies to charge premiuns in line with global warming
risks when it would not even allow them to align their rates with
pre-global warming risks?"
I wasn't answering that question, which is one that I probably
agree more with you than you think. I was answering this claim of
yours:
"I and others have posted that the 20004-5 hurricane season had
absolutely nothing to do with global warming. It is not hard to
find stories that confirm those assertions"
But, I'll play along: Ron Bailey clearly doesn't want us to blame
global warming even 1% for the increasing difficulties finding
insurance in Florida. You want to ignore that. Fine. I'll give you
that the state is making it very hard for the insurers; but you
have to also admit that the insurers are flat-out telling you that
they're scared to death of global warming's impact on hurricanes.
Deal?
|2.20.07 @ 5:39PM|#
I don't understand why property values don't go down in Florida if insurance is so high. If you are calculating an overall cost to own a home, it would seem that higher insurance costs would bring down the value of the home one could afford. No?
|2.20.07 @ 6:30PM|#
...but you have to also admit that the insurers are flat-out
telling you that they're scared to death of global warming's impact
on hurricanes. Deal?
Sorry, no deal. We do not need global warming for hurricanes to be
a problem in Florida, or the entire cost from Virginia to Texas for
that matter.
And we do not need more subsidized development on those coasts to
have a continuing problem.
I am not disputing with you the possibility that GW will affect
future storm seasons. However hurricane experts have said that at
present it has zero to negligible affect on the storm cycle.
And no, the insurers are not flat-out telling anyone that
they're scared to death of global warming's impact on hurricanes.
they're saying they cannot take anymore chances with Florida's
"Alice in Wonderland" insurance market, with the governor (who I
must say otherwise seems to be a fine fellow, although I would've
voted for Rod Smith myself but the FL dems didn't nominate him)
playing the Queen of Hearts (and yes there is a double entendre in
there).
And no, I am not going to follow you down any more global warming
rabbit holes. Except to say that if a belief in GW is what it takes
to get a sane insurance market in which the costs of taking risks
is imposed on those taking them, fine, I'm a believer, true blue
and totally dyed in the wool.
|2.20.07 @ 6:34PM|#
Lamar
Floridians have not yet faced reality over this issue.
Not everyone's insurance bill has come in yet. Mine won't come
until May. I'm not sure what it will bring.
So far my rates have not gone that high. But that's partly because
I have accepted higher deductibles.
|2.20.07 @ 8:25PM|#
And no, I am not going to follow you down any more global
warming rabbit holes. Except to say that if a belief in GW is what
it takes to get a sane insurance market in which the costs of
taking risks is imposed on those taking them, fine, I'm a believer,
true blue and totally dyed in the wool.
Wow, that would definitely be worth crappy carbon markets. Sign me
up!
This talk of risks got me thinking about those climbers that had to
be rescued from Mt. Hood. While it was in the news, I kept
wondering why taxpayers have to pay for rescuing people who do
crazy shit like climb mountains.
|2.20.07 @ 9:49PM|#
I kept wondering why taxpayers have to pay for rescuing
people who do crazy shit like climb mountains.
Perhaps they need to do what's done with Everest climbers. Once
you're on the way, you're on your own. If you get in trouble
nobody's coming for you, not even to recover your dead body.
|2.21.07 @ 10:43AM|#
"However hurricane experts have said that at present it has zero
to negligible affect on the storm cycle."
That's a bit of a goalpost-move. The statement was that it seems to
be making storms _stronger_, not that it has affected the cycle
itself, and in fact there are hurricane experts who are willing to
state this today.
"And no, the insurers are not flat-out telling anyone that they're
scared to death of global warming's impact on hurricanes"
It's hard to take this as anything but a willful misrepresentation.
Do you not have the ability to google?
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/04/AR2005100401700.html
From 2005. Note that science asserting the likelihood of such a
link has been dribbling in ever since.
http://www.commondreams.org/views06/0919-22.htm
From 2006. Note the opening line:
"BOSTON -- A NEW REPORT linking global warming with more powerful
hurricanes is only the latest evidence of why climate change is
perhaps the greatest threat that the insurance industry may ever
face. It is an equally serious threat to those whom it insures -- a
reality New Englanders know all too well."
|2.21.07 @ 12:55PM|#
Can't you guys use a search engine? Type in Global Warming is Man Made. You will find all sorts of articles that talk about how Global Warming is man made. It's f'n nutty wicked. You can then link to them as proof that you have read them. Some have science in the name of them, some are reputable news print sources. It's that easy!! Type in Global Warming debate, and amazon pops up with a DVD of the debate that took place ($19.99 plus S and H in case you missed it during the 97' Super bowl halftime) and GW folks won, hands down. mock me if you will - it's all you have, you have no links such as those that i have read after search ingine queries to back up your moving soccer nets.
|2.21.07 @ 1:20PM|#
tazered
This thread is not about global warming, it's about the insurance
crisis in Florida.
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