this post was submitted on 16 Jan 2024
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Huge losses from national disasters prompt industry to jack up prices and pull back from some markets; ‘worst possible scenario’ for consumers

After Allstate suffered billions of dollars in losses and failed to get the rate increases it wanted, it resorted to the nuclear option. 

The insurance giant threatened last fall to stop renewing auto insurance for customers in three states that hadn’t given in to its demands, which would have left those policyholders scrambling for coverage. The states blinked.

In December, New Jersey approved auto rate increases for Allstate averaging 17%, and New York, a 15% hike. Regulators in California are allowing Allstate to boost auto rates by 30%, but still haven’t decided on its request for a 40% increase in home-insurance rates after the insurer refused to write new policies.

For many Americans, getting insurance for both their cars and homes has gone from a routine, generally manageable expense to a do-or-die ordeal that can strain household budgets.

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[–] BraveSirZaphod@kbin.social 9 points 7 months ago (13 children)

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.

[–] Skyrmir@lemmy.world 16 points 7 months ago (6 children)

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.

[–] TonyOstrich@lemmy.world 3 points 7 months ago (1 children)

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.

[–] Skyrmir@lemmy.world 2 points 7 months ago

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.

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