thisbody wrote:

It's the worst economic system there is...except for all the others humans have conjured

Noted anti-capitalist agitator Adam Smith had it right: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

(1/85)

 black321 wrote:
I’ve had USAA for decades (Dad was Chair Force) and a few years ago when they started running commercials I began to think it was time to switch. The product is so prevalent with the military, why would they need to advertise so globally to somehow capture the folks who are qualified to join - but haven’t heard of it? That’s gotta be a very small number. So it seems like a horrible business decision that can do nothing but cause a rate rise.

 Isabeau wrote:
We all hear facts and stats and data in support of things getting really hot really fast... but the fact that water temps in Florida reached 100 degrees last summer still makes me shake my head.  It's not "shoreline" water (a bay)...but still.

I've been in hot tubs at 103... 105... and had to get out.  100-degree ocean/bay/sea/lake water?  

 rgio wrote:
'just'
Heat related Deaths last Summer:
874   AZ
450   TX
226   NV
  84    FL
  83    LA

Many believe these numbers are lower than the reality.

No climate change here man...  s/

 black321 wrote:

This gets incredibly complicated... because storm counts, deaths, damage costs, etc. (the quantitative measures) can't embed the severity.   There are only "so many days" in a weather pattern per season, so while the number of hurricanes in Florida might not rise, the severity of them can significantly change financial impact/exposure.  

On top of all of that... insurance company employees enjoy unreasonably high compensation levels.  As I've heard Scott Galloway say a few times ... "if you meet someone average who seems to make a lot of money, they likely work in insurance" 

 rgio wrote:

you're talking about diversification...putting everyone in the pool to share the risk. this lowers cost by reducing variability...and one of the reasons why we need some type of universal health care. 
the cost of the risk is calculated using the probability of the event and the cost of the event. 
we know the cost of the even has increased, at least your 20% #, but I havent seen real data that shows how the probability of the event has changed. 
and i was being facetious (kind of) about the advertising. 

 black321 wrote:
Insurance, for some asset classes, is very competitive.  It is... because there is so much money made.  How do you think Warren got soooooo rich?

The deflection to inflation is short-sighted and wrong.  Sure the cost of shingles and labor are a big part of the pricing, but when you need twice as many roofs repaired every month, the supply and demand for materials and people to use them will remain high. 

Insurance is based on 100% of the people supporting the financial needs of 1%.  If the need doubles to 2%... without any inflation ... it costs twice as much.  That's MUCH more expensive than a 20% increase in the price of lumber.

 kurtster wrote:

Well yes, as RP commented, its a contributor.
Material costs have actually somewhat normalized, but labor rates are through the roof. The small business cos are really driving ridiculous inflation for home improvement.
For a 12x 14' deck, i received quotes from $18-$25,000. I calculated material costs from Home Depot at up to $4,000.  
To fix some concrete shingle tiles and add a few feet of flashing around gutters, no material costs, quotes up to $7,000. At most this was a 20 hour job for one person. 

As for insurance inflation, how much cheaper would it be if geico, state farm etc...weren't running tv ads every 15 minutes? 

 kurtster wrote:
A false dilemma (with the usual side dish of denial). It's not one or the other, it's both, and more. Location (such as Florida) is a factor.

Insurance rates have been climbing for a number of reasons: Storms have become more frequent and severe, inflation and labor shortages have driven up the cost of repairs and home values have increased, requiring larger policies. The biggest jumps occurred in Texas, Arizona and Utah, which were among 25 states in total that posted double-digit surges last year. In some places, including Florida, rates are up more than 40 percent over the past five years.

It is not climate change that is driving up the cost of home owners insurance. Primarily it is from the rapidly rising cost of building materials and labor as well as replacement costs for personal items.

The rise in cost of building materials is primarily driven by inflation and supply or lack thereof.  Construction labor is in extremely short supply driving those costs ever higher.

Anyone bought any drywall or plywood lately ?  If so, you know of what I speak.

The Age of Recoupment
How power, technology, and opportunity have come together to gouge consumers

 black321 wrote:
So turning to the politics of climate change. It's well known that Republicans either flat out deny it or don't feel they need to do anything about it. Democrats on the other hand acknowledge the problem and for the most part want to pursue the fight to combat it. It's not a secret that insurance companies are running for the hills as evidence in the post below. So why aren't Democrats up on a stump pinning the insurance issue on Republicans? Hey local Joe, your insurance company just dropped you because there was a flood 10 miles from your home. Well you can blame your fellow Republican representative who is wasting your time and money fighting against gay people instead of taking the lead on climate change and the resulting problems it's causing that hits you, Joe, right in the wallet. Where are the ads? The social media memes etc. 

if you don’t believe in climate changec just talk to an insurance agent or claim adjuster. 

 rgio wrote:
Ironically, we get more "Acts of God" caused by humans.

An act of God is an uncontrollable event, such as a tornado, flood, or tsunami, not caused or controlled by humans.

---

NYT article below on archive.

 black321 wrote:
This is another example of people saying one thing and doing another.

Everyone is complaining about inflation and interest rates, yet the average price of a home in April is up 5.7% YOY, and buyers are complaining there is no inventory (an issue that's being driven a bit by people sitting on 3% mortgages who see no reason to move even though their homes are now bigger than they need).  The increase in prices at 7% interest works out to an extra $160/month on a 30-year loan.

Insurance costs are a problem (unless you're in the insurance business).  Hell, Warren Buffett just picked up $6B in Chubb stock on the QT, so besides running GEICO, he's doubling down on insurance company valuations.  If you want to hear some really shitty stories, go listen to the NY Times Podcast - The Daily.  The May 15 one was called "The Possible Collapse of the US Home Insurance System".  

It's got some interesting examples...here's the one I remembered when you posted about your wildfire issues (pulled the transcript from the NY Times... which I doubt you can get to outside the firewall).

I got into my rental car and drove about an hour northeast of Des Moines, through some rolling hills, to this lovely little town of Marshalltown. Marshalltown is a really cute, little Midwestern town with old homes and a beautiful courthouse in the town square. And when I drove through, I couldn’t help noticing all the roofs looked new.

Turns out Marshalltown, despite being a pastoral image of Midwestern easy living, was hit by two really bad disasters in recent years — first, a devastating tornado in 2018 and then, in 2020, what’s called a derecho, a straight-line wind event that’s also just enormously damaging. And the result was lots of homes in this small town got severely damaged in a short period of time. And so when you drive down, you see all these new roofs that give you the sense that something’s going on.

 A place that had previously seemed maybe safe from climate change, if there is such a thing, all of a sudden was not. So I found an insurance agent in Marshalltown —We talked to other agents but haven’t talked to many homeowners. He invited me to his office early one morning and said, come meet some people. And so I parked on a quiet street outside of his office, across the street from the courthouse, which also had a new roof, and went into his conference room and met a procession of clients who all had versions of the same horror story.

Speaker 1

It was more — well more of double.

Speaker 2

A huge reduction in coverage with a huge price increase.

Some people had faced big premium hikes.

Speaker 3

I’m just a little, small business owner. So every little bit I do feel.  I was with IMT Insurance forever. And then when I moved in 2020, Bobby said they won’t insure a pool.

Some people had gotten dropped.

Speaker 2

Where we used to see carriers canceling someone for frequency of three or four or five claims, it’s one or two now.

It's a problem that's going to get worse.  States all have funds to backstop insurers, but they don't have enough for something catastrophic.  Climate change is everywhere.  Beyond the fires and tornados and hurricanes, places that were generally immune have increasingly frequent problems. 

Last comment... adding to this problem is that we don't build anything to last.  We all grew up reciting the 3 little pigs, yet every house we build is made of sticks.  Older Americans have borrowed against the future while simultaneously spreading landmines.  The gifts that will keep on giving.  Good luck kids! 

 R_P wrote:

good point. I read a bloomberg piece that said if CPI had included home insurance inflation (not renters insurance) last year's inflation would have been up near another 1%.  
Obviously, this is a cost that is likely to continue to climb. 
ps., I live in a wildfire zone and got quotes from $4 - $9,000

 black321 wrote:
I've seen insurance mentioned a few times (incl. as taken out of some index in the 80s or so). Today:

Home Insurance Is Clobbering Consumers. Yet It’s Barely Counted as Inflation. *
Skyrocketing premiums are hitting homeowners hard, but they barely factor into common price measures.

Holly Meyer Lucas estimates that as many as 30 of the 100 houses her real estate team sold in and around Jupiter, Fla., last year were put on the market because their owners could no longer keep up with skyrocketing home insurance. (...)

Cue climate change and insurance.

Some interesting inflation data...if you strip out shelter from CPI, inflation was just 2.5% in 2023 and was 2.2% in Apr (YOY), meaning annualized inflation fell to closer to 2% or more less in line with what it was the past 3 decades. Since 65% of us own homes, shelter inflation has little impact (only renters or those who recent purchased a home). Similar story if you track PCE inflation. So, is the fed wrong to focus on inflation, when it has in fact normalized (w/o shelter)...needlessly punishing the economy? But if the fed dropped rates, that would push housing inflation even higher and also stimulate non-housing inflation?

https://fred.stlouisfed.org/se...