Come for the politics, stay for the snark.

These days, even the boring Republicans are nuts.

“woke” is the new caravan.

No offense, but this thread hasn’t been about you for quite a while.

Do we throw up our hands or do we roll up our sleeves? (hint, door #2)

“Until such time as the world ends, we will act as though it intends to spin on.”

We do not need to pander to people who do not like what we stand for.

The republican speaker is a slippery little devil.

Our messy unity will be our strength.

“Everybody’s entitled to be an idiot.”

You are so fucked. Still, I wish you the best of luck.

Make the republican party small enough to drown in a bathtub.

Whoever he was, that guy was nuts.

JFC, are there no editors left at that goddamn rag?

Is trump is trying to break black America over his knee? signs point to ‘yes’.

The current Supreme Court is a dangerous, rogue court.

Since we are repeating ourselves, let me just say fuck that.

Let there be snark.

When someone says they “love freedom”, rest assured they don’t mean yours.

Fight for a just cause, love your fellow man, live a good life.

“Can i answer the question? No you can not!”

People are weird.

I swear, each month of 2025 will have its own history degree.

The snowflake in chief appeared visibly frustrated when questioned by a reporter about egg prices.

Never give a known liar the benefit of the doubt.

You are here: Home / Anderson On Health Insurance / Climate risk and reinsurance

Climate risk and reinsurance

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Earlier this month, Keys and Mulder released a new NBER working paper that builds a new property insurance data set and then seeks to project where premiums are likely to increase over time due to catastrophic claims risk.  Catastrophic claims are routinely insured via reinsurance.  For property damage, the major risk is storm and natural disasters risk.  It is mostly fire and hurricane risk.

Reinsurance has gotten expensive:

And these reinsurance costs are not uniformly spread out.  Michigan is not facing substantial new hurricane risk.

Actuaries, with long and varied lags, rule the world. When actuaries get scared, premiums spike and right now actuaries are terrified of climate risk.

And apropos of nothing, this update from the National Hurricane Center came in just after I got back from the gym with my 11 year old:

…RECONNAISSANCE AIRCRAFT FIND BERYL NOW AN EXTREMELY DANGEROUS
CATEGORY 4 HURRICANE…
…LIFE-THREATENING WINDS AND STORM SURGE EXPECTED IN THE WINDWARD
ISLANDS BEGINNING EARLY MONDAY MORNING…

NOAA and Air Force Reserve hurricane hunter aircraft data indicate
that Beryl has strengthened to an extremely dangerous category 4
hurricane. The maximum sustained winds are estimated to be 130 mph
(215 km/h) with higher gusts.

SUMMARY OF 1135 AM AST…1535 UTC…INFORMATION

Tropical weather Reddit is having kittens as this is the earliest Category 4 in the Atlantic and far further east than a storm of this magnitude “should” be. They’re looking at Beryl and saying it looks like an August or September storm rather than a June storm.

The actuarial fear is motivated by storms like these.

Reader Interactions

53Comments

  2. 2.

    pluky

    When recent experience leads one to seriously doubt the credibility of the history upon which one’s rate tables are based, reprice with extra margin for adverse contingency, and reduce exposure in high risk sectors! Yes, before I retired I was an actuary.

  3. 3.

    ronno2018

    I keep waiting to see Florida real estate prices to decline but I think a lot of people there are older short termers and don’t care or don’t have a legacy they want to leave their kids.

  4. 4.

    Steve in the ATL

    BTW, does anyone know there the phrase “having kittens” came from?  My wife says that, and until a coyolpe of years ago I’d never heard it anywhere else.

  5. 5.

    way2blue

    Homeowners’ insurance is being cancelled right & left in my Northern California town due to fear of wildfires—triggered by the payouts following the 2018 Camp Creek/Paradise Fire.  I *think* there are a diminishing few insurance companies willing to take on the risk.  And only if you have a fireproof roof and a vegetation-free perimeter around the house.  Lots of  brush clearing along the main roads through town…

  6. 6.

    TBone

    Thankfully, yesterday’s NWS Emergency Broadcast tornado warning was a narrow miss here.  It would have been tornado #2 at casa TBone.

  7. 7.

    like a metaphor

    Has anyone seen forecasting of where Beryl is likely to go once it enters the Gulf of Mexico? I can’t find anything.  Maybe it’s just too early to tell?

  8. 8.

    Lapassionara

    I remember Hurricane Betsy well. It was a category 4 storm, IIRC, and it landed in August of 1965, maybe around August 20.

    so, now we have the second named storm of the season, and it is the end of June. No wonder actuaries are paying attention.

  9. 9.

    TBone

    Is it too much to ask that a hurricane washes away Mar A Lardass?  Instead of Galveston or Nawlins?

  11. 11.

    Kelly

    Last year a friend of mine attempted to buy a cabin in pine woods on the eastern side of the Oregon Cascades. Backed up to miles of US Forest Service land. A few years ago this was a high demand property. The deal fell through because he could not find insurance. Too far from a fire station. What’s worse when the seller contacted his insurance company to see if they would cover my friend they told him they would not renew the existing insurance.

  12. 12.

    Lobo

    @Kelly: This!  In colorado mountain homes are slowly becoming a negative, property insurance, HOA fees and rising(4x in some cases) to no insurance.

  14. 14.

    Xenos

    Lloyds is marketing Florida reinsurance risk in smaller ($25-50 Million) tranches to PE firms, hedge funds, and the like.  Awfully profitable stuff if you accept risk for a year without major losses.

    The big reinsurers (Swiss RE, for example) are out of the market for the time being.

  15. 15.

    kalakal

    @Steve in the ATL:

    It’s pretty common slang in the UK, I first heard from my grandmother so it goes back to at least 1900.

    I heard somewhere it was originally medieval and related to pregnancy, as in “it feels like something is clawing inside me” but I’ve never seen that proven

  16. 16.

    Betty

    Located just north of Beryl’s path, but expecting some effects as it is a large storm. It is early and as the season progresses, the storms will move north putting us in the crosshairs. We survived Hurricane Maria and are presumably now more resilient. Looks like that will be tested in the days ahead. Worried indeed.

  18. 18.

    kalakal

    @Betty: I’m also concerned that there looks to be something nasty brewing in the wake of Beryl. about 3 or 4 days further away. We could very well have 2 major hurricanes in quick succession, like Irma and Maria

  21. 21.

    lowtechcyclist

    @Steve in the ATL: ​
     

    BTW, does anyone know there the phrase “having kittens” came from? My wife says that, and until a coyolpe of years ago I’d never heard it anywhere else.

    My WAG is that it evolved from “having conniptions.”

  23. 23.

    Anoniminous

    @pluky: ​
     
    The entire FIRE complex is re-evaluating their risk exposure. Lending institutions are quietly pulling back from Florida for example

  25. 25.

    trollhattan

    Be that as it may, you must never, ever take away consumer choice* even if it means walking into the climate woodchipper much sooner.

    Some powerful groups are suing the government to slow the adoption of electric vehicles. The American Petroleum Institute, along with the National Corn Growers Association, the American Farm Bureau Federation, and six auto dealers “collectively operating dozens of dealerships in major markets across the country,” announced Thursday that they filed a federal lawsuit against the Environmental Protection Agency. The groups aim to stop a Biden administration emissions standard that mandates about 56% of new U.S. vehicle sales be electric by 2032.

    “Today, we are taking action to protect American consumers, U.S. manufacturing workers, and our nation’s hard-won energy security from this intrusive government mandate,” said Ryan Meyers, the API’s general counsel, in a statement accompanying the announcement. “EPA has exceeded its congressional authority with this regulation that will eliminate most new gas cars and traditional hybrids from the U.S. market in less than a decade. We look forward to making our case in court.”

    The emissions standard, which was announced in March, is supposed to help reduce climate pollution. The International Energy Association has noted that more needs to be done to cut carbon and other greenhouse-gas emissions in order to mitigate the worst effects of climate change. The standard has drawn consistent criticism from the oil industry since it was unveiled. The lawsuit makes good on a threat that the API made at the time.

    “Whether you’re a Republican or Democrat, Congress has to make a decision whether to protect consumer choice, U.S. manufacturing workers and our hard-won energy security by overturning this deeply flawed regulation,” the API said then along with the American Fuel & Petrochemical Manufacturers trade group. “Short of that, our organizations are certainly prepared to challenge it in court.”

    qz.com/american-petroleum-institute-electric-vehicle-lawsuit-1851537609?utm_content=1851539124&…

    * “Choice” being dictated by us, predicated on earning the highest possible margins in this and the coming quarters.

  26. 26.

    trollhattan

    @WaterGirl:

    “Birthing kittens” and “don’t have a cow, man” are how I learned them, in that order. The second of course being one Bart Simpson.

  28. 28.

    Harrison Wesley

    Even without a hurricane, there’s been some serious flooding in South and SW Florida.  We had a rainstorm a few weeks ago that I heard (don’t know for sure) dumped more water around here in 2 days than Hurrican Ian did the entire time it was overhead.  Interesting times.

  32. 32.

    like a metaphor

    @EmbraceYourInnerCrone: I did look at that site, but it only shows the cone as far up as Yucutan peninsula.  I know it’s early, but if I need to evacuate Houston, I will need lots of advanced warning, due to a house full of cats and elderly parents.

    When the waters of Harvey reached the top of my front steps, I had to put my parents on an inflatable mattress and float them up the street thru chest-deep water.  I don’t want to stick around thru another one.

  36. 36.

    Yet Another Haldane

    Today’s vocabulary word is “ventile.”  It’s hard to look up because the first few pages of results are all for a treated cotton fabric inconveniently named Ventile(TM).  Turns out that in this context a ventile is a 1/20 quantile, analogous to quartile (1/4) and percentile (1/100).  Why “vent?”  Dunno!

    I learneding!

  38. 38.

    jonas

    I forget exactly where I saw the reporting on it (maybe in The Atlantic a while back?), but there is this vicious cycle in the re/insurance business where companies are now scrambling to limit their exposure to extreme weather events being driven by climate change, while simultaneously trying to recoup their losses by underwriting the (very well-paying) fossil fuel and extraction industries that are causing said climate change. Kind of like a health insurance company trying to balance their losses on lung cancer patients by investing in Big Tobacco.

  40. 40.

    JKC

    The online Sunday edition of the Albany NY newspaper had an article today about the continued outmigration from NY to places like Florida. I wonder how long Florida’s appeal for transplants is going to last as the storms worsen and insurance becomes so steep it makes NY’s oft-maligned property taxes look like a relative bargain.

  45. 45.

    jonas

    @JKC: Property taxes in FL aren’t really much better. It’s usually the income tax people are looking to ditch, which isn’t that bad until you get into some very high tax brackets. I think a lot of people moving to TX or FL thinking it will be so much cheaper and freer will find out they were sold a bill of goods and that by the time you add up the higher property insurance, weigh the shitty hot weather against the shitty cold weather, and discover there is little or no safety net in red states for a lot of stuff (e.g. unemployment, disability, abortion care, etc.), it’s not such a great deal.

  46. 46.

    lowtechcyclist

    @JKC:

    The online Sunday edition of the Albany NY newspaper had an article today about the continued outmigration from NY to places like Florida. I wonder how long Florida’s appeal for transplants is going to last as the storms worsen and insurance becomes so steep it makes NY’s oft-maligned property taxes look like a relative bargain.

    I don’t know, but it’s just crazy down there.  Not just places like Anna Maria Island, where a week’s rental is 2.5x what it was five years ago, but also used-to-be-blue-collar central FL towns like Plant City, where in the fall of 2022 we sold my wife’s grandmother’s house (before it fell apart) for at least 3x what we would have expected just three years earlier.

    And yeah, homeowners’ insurance has gone through the roof in Plant City, just like everywhere else down there.  There’s absolutely no way I’d buy a house down there anymore.  Between the storms and floods, and its becoming just too damned hot and humid for too much of the year, fuhgeddaboutit.

  47. 47.

    EmbraceYourInnerCrone

    @Another Scott: Hey we are all helping out. I am paranoid about hurricanes after living in Guam, Hawaii and Florida then got hit by tropical storm Sandy and Irene. People forget Irene but that one beat the Hell out of upside NY and Vermont.

  49. 49.

    Ksmiami

    @E.: have faith. AI will create its own energy solutions within 10 years… these guys are corrupt clowns

  50. 50.

    Bill Arnold

    @TBone:

    Is it too much to ask that a hurricane washes away Mar A Lardass?

    Been watching Hurricane Beryl with great interest. :-)
    Palm Beach County is reliably Democratic (56 percent for Biden in 2020).
    So, no Orleans (Parish) or Palm Beach County.
    Galvaston county was 60 percent Trump in 2020, though.

  51. 51.

    JKC

    @lowtechcyclist: Yeah, a colleague of mine moved down there a couple of years ago with her husband. They lost their house during one of the recent hurricanes (I think it was Ian) but seemed determined to stay there. Damned if I know why…

  52. 52.

    S Cerevisiae

    I’ve been saying for over a decade now that when one of the big re-insurers (Munich Re, Swiss RE, Lloyds, etc.) goes under, that’s a sign that the shit has really hit the fan.

  53. 53.

    Barry

    @JKC:

    “The online Sunday edition of the Albany NY newspaper had an article today about the continued outmigration from NY to places like Florida. I wonder how long Florida’s appeal for transplants is going to last as the storms worsen and insurance becomes so steep it makes NY’s oft-maligned property taxes look like a relative bargain.”

     

    And as the DeSanity cuts deeper and deeper.

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