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This doesn't address the core issue, that the math simply doesn't work in several places. Even ignoring profit, at the very least, you have to balance your payouts with your premium revenue, and if your payouts are so high that premiums must be higher than what people can afford, then you're toast.
Or you invoke government subsidies, in which case it's essentially a tax to subsidize people's poor decision making. At the end of the day, living in an area extremely prone to fires or flooding has real costs, and either somebody pays them, whether that be the individual, an insurance pool, or the government, or you simply stop incurring the cost by moving somewhere else (there's a strong argument for some amount of government assistance here)
I'm not suggesting we stop at nonprofit insurance. We can use the data so states can determine regions that are unfit for human habitation, which will become necessary due to climate change. A state-ran insurance could still have risk pools as well for matters like house and car insurance, without nonsense like charging charging more for owners of red cars.
I mean, there's no mystery here. You can literally just look at the regions that home insurers have been pulling out of to get a pretty good start. This data already exists. Collecting and processing that data is literally the primary thing that insurance companies do.
If a company whose sole purpose is extracting every bit of profit they can is deciding that insuring an area is not feasible, that probably says something. The inevitable, but obviously unpopular, answer is that there are some places where people moving there need to do so at their own risk, because it's not fair for them to throw these fundamentally unnecessary high costs on other people. Minus a small adjustment to account for how state insurance doesn't need profit and so can operate at zero margin, the structure of the insurance doesn't really make a difference here.
People moving into areas of high risk are only a tiny portion of the problem. The existing owners, and their kids, are already too much risk for a lot of places. Hundreds of thousands of retiree's already live in beach front condos that have been there for 30 years or more, and they have no way to move. There are millions more in similar places, that just have to accept whatever happens to them, because they have no resources to move, and a fixed or non existent income.
That problem is going to be the biggest one when dealing with climate change as a species. Moving hundreds of millions of people, who can't afford to move, to places that don't want them to move there. Interspersed with random natural catastrophes causing horrible loss of lives and resources.
I have always thought that the people you are talking about should be able to get insurance, maybe even at a reasonable rate, but if/when a natural disaster occurs the insurance payout should be for a property/place not in a high risk zone rather than rebuilding, and that land should then be disallowed for human habitation.
Basically a compromise of sorts. I'm sure someone will tell me why I'm wrong though, lol.
In some places that's exactly what has been done. Usually the government uses eminent domain on the land rather than allow reconstruction. The problem being the cost. Most cities and states would have nowhere near enough money to move a fraction of the homes in danger, or even pay for their relocation when they're destroyed.
While sea levels rising may be something that someone 30 years ago didn't predict, most of the other risks were well known 200 years ago.
Replace climate with war and this is how refugee groups have lived for centuries. Life doesn't always work out, bad choices can have very long timelines and there's likely zero way to bail everyone out, even with the most altruistic of motives.
Bailing them out might not work at scale but ensuring they have somewhere to live when things get too hot, literally and metaphorically speaking, is feasible and will prevent the negative consequences of millions of displaced people.
You're absolutely right. This is a problem that requires some amount of direct government assistance. Beachfront housing is significantly more costly than people think it is and than it used to be, and it's only going to get worse. If you can't afford regular repairs after storms (or if a collectively relevant insurance pool can't), you can't afford to live there, and for people who are already there and can't afford to easily get out, some government assistance is more than warranted.
I don't think that there is an inherent link between profit and safety, so I'm hesitant to call their data useful for determining where a place is safe to live. Maybe useful for determining risk pools, but not for determining safety. There are places that should not be habitated, but it shouldn't be determined by capital interests.
I'm not talking about raw safety. I'm referring to the situation where the average costs a resident of the area will incur due to environmental damage surpasses the amount an average person is willing to pay in insurance premiums. In these kinds of areas, insurance in inherently unworkable, regardless of profit seeking or not (again, minus a minor adjustment in margins)
In these places, you can either add in external subsidies to make the numbers work, which is bound to be unpopular with the people having to pay extra money to support people choosing to incur unnecessary costs, or you can accept that there is no workable insurance scheme in the area that and residents must take account of their own risks. There's no real way around this basic reality.
This isn't about safety - those places are safe to live most of the time, and the weather predictions are very good at giving you a week notice to get out before the exceptions.
It is just too expensive to have buildings in those areas. Nobody builds a house that can be moved away from those areas in a week. Thus if you live there you need to account for the costs of rebuilding your house every few years when the weather destroys it. Or you need to build a house that can survive the weather - I don't know how expensive that would be.
I don't care if you want to live in those places, but I do not want to subsidize your housing if you choose to live there. Come move closer to me if you don't like it. (note that there are other risks living close to me)
What you're describing is the reason risk pools exist. Someone in a high risk pool pays a higher premium, and there is no reason that couldn't exist with gov run insurance. Personally, I imagine something like 3 major natural disaster claims in 5 years before a higher premium, and 10 natural disaster claims in 10 years to be declared unfit for habitation. After the 3rd claim in 5 years, claimants can accept a payout equivalent to average cost of a safer regional house under the condition to vacate the area
Good actuary science needs to figure out people who while they haven't yet had a claim still belong in the ultra high risk group. There are houses all over in hurricane areas that have never been hit in 150 years, while not too far away some other land was hit several times - this is random chance.
Sorry, but I'm not willing to formulate a major piece of legislation for a discussion on the Internet. I'm aware that something like what I'm describing requires a lot of detail and needs to handle edge cases that I don't even know exist at the moment
You understand that there's nothing about the paint that makes red cars more prone to claims, but rather the drivers predominately that select red cars statistically have higher claims. If you're a generally safe driver, is there a reason that you would want to subsidize someone who is statistically a less safe driver?
For a few reasons. It's not easy to determine the difference between a streak of bad luck and a bad driver. I also don't think that people should go bankrupt because of an accident, regardless of fault. I believe that people will feel more responsible if they have a sense of collective responsibility through mutual funding.
You seem to be arguing that drivers of red cars statistically have worse luck. Statistics doesn't deal in luck, only results. If red cars cost more to insure (and we both acknowledge there nothing in paint pigment that can cause this) then it is a behavior of the drivers that choose these cars. That does seem like a good reason to not penalize safer drivers that don't drive red cars. Also, realistically we're talking about one tiny input into the actuarial tables that go into pricing insurance premiums for drivers. Red paint is probably way lower than other more important factors such as the complexity of repairs necessary for like accidents or the individual driver's previous driving history.
How is a person going bankrupt is if they're insured? Their future premiums will can certainly go up, but that's not a bankruptcy event.
Perhaps in some cultures, but certainly not in the USA. If anything socializing the losses creates less feeling of responsibility because the person committing the act only suffers a tiny fraction of the consequences.