A Dream Blown Away

[MountainLaurel]

Great article about the crossroads of climate change and the insurance industry, and how it is affecting Americans.

A place near the water has been an American dream for a very long time. Fifty-four percent of Americans live within 50 miles of a coast.

This is the year, however, in which the big boys in global finance got religion about climate change. As a result, this American dream -- as far north as the Washington area, and even New York and New England -- is under attack.

Follow the money. Insurance doesn't sound like a world-changer. It seems so banal and prosaic, like reliable electricity or clean water.

Yet without it -- you want a place to live? You cannot get a mortgage without insurance.

http://www.washingtonpost.com/wp-dyn/content/article/2006/12/01/AR2006120101759.html

[pooja]

1. And insurance for homes ought to be split out...

There should be general insurance and then nationwide catestrophic insurance that everyone pools a fee into... That would cover your large regional fires, mudslides, sink holes, hurricanes, earthquakes, tornados...etc.

It would make the rest of your insurance affordable.. seriously, how many people claim on their home insurance policy ever?

[Catbird]

3. There are catastrophes, and then there are catastrophes...

Not all catastrophes are the same, and it is reasonable to treat them differently. How wide an impact do they have? How predictable are they?

Pooled insurance for tornados is reasonable. They have a relatively small footprint in most cases, and they are highly unpredictable. In the United States, it is not realistic to expect folks to abandon the vast expanse of land that might have tornados.

Pooled insurance for some other catastrophes, such as hurricanes and mudslides, is not as reasonable. They often affect much larger areas and are more predictable. If it's not possible to build structures resistant to these potential disasters (or cheap enough to rebuild), don't build them. Insurance for this kind of disaster simply encourages more building in vulnerable areas, which makes the disaster even worse when it does happen.

Yes, it's fun to live near the beach. But I don't want to subsidize someone's beach house. Visit the beach, don't live there. If raising insurance rates for coastal homes discourages building close to the ocean, I'm all for it.

One of *'s many bad moves was to emasculate FEMA and eliminate Project Impact, which had the goal of encouraging appropriate building in appropriate locations to minimize the impact of natural disasters.

[XemaSab]

4. Mudslides are an obvious choice

of areas not to build in.

Steep, unstable slopes? Don't build there!

[pooja]

5. If you don't have people that live near the beach, you won't be

vacationing there either... also, the beaches around America bring in huge amounts of tourist dollars all over the world. I do agree that homes should and are being built for hurricane's, but what do you propose that we do with the older homes that are already built? Kick everyone out, re-build them a home, and then who pays for that?

There isn't one place in this country that I can't think has some sort of natural disaster waiting to happen them. If money is pooled from everyone in an insurance fund for catestrophic events, then it would work. If you look at the insurance industry, they didn't go broke in 04 or 05, they mearly had to pay out. So, in one region the lost money, countrywide, they made billions... otherwise, insurance companies would have gone broke and bankrupt.

And look at this year... everyone's rates in FL increased by 50% and are scheduled to increase another 50% this March. I am looking at buying a home, non-evac zone, made it through all other storms, new roof, etc... insurance on a home shy of 1000sq ft. was around $2000.00 a year... I seriously can't afford $4000.00 for insurance and shouldn't have to... they made enough money this year off of no hurricanes. And its not like they have paid out many policies from Katrina. My sister-in-law works in insurance. They are disputing the def. of hurricane related damages.

[Catbird]

6. A couple of comments

When and if the houses need to be rebuilt, require them to be built to current standards or not rebuilt if this is not feasible. This might happen if the coast moves, as it has a tendency to do.

I also note that in many of the resort areas in South Carolina, many of the people actually working in the resort hotels don't live on or near the beach. They can't afford to. Buses bring them to work. I am less familiar with other beach resorts.

[acmejack]

2. Allstate won't renew or write in the five boroughs?

Everyone else is sure to follow suit! What are they going to force housing to become a cash only proposition? Only the rich will be able to buy and the rest of us must rent? The world is shifting to their ideal even faster than I had believed possible. Insurance is putting the squeeze on people everywhere as it is, here in Texas it is mold, they are killing people.