“They just don’t offer rental insurance in this area anymore, mostly because of fires… We’ve never had flooding up here before. It just wasn’t even something anyone thought about.”
Los Angeles Renter in the San Fernando Valley
As termed out Florida GOP Governor Ron DeSantis was galivanting around the country proving to the entire nation why he would make a terrible president, choosing to fight “woke” vs “me” culture wars and alienating large local corporations as well as minority voters, his hapless constituents were facing escalating renters’ and homeowners’ insurance cost increases, even complete loss of any available commercial insurance.
Among severe tropical rainstorms, including recent massive hurricanes, the rising proliferation of sinkholes, coastal erosion and seawater rising inside south Florida’s massive and very porous limestone subsurface that no longer adequately supported buildings above, commercial insurers were hell-bent on extracting vastly higher premiums… or simply withdrawing from the market. Yet DeSantis continues to decry federal efforts to contain climate change and prioritize alternative energy projects as succumbing to “radical leftist woke” propaganda. Florida residential renters and owners were increasingly left with a huge cost, or even bigger risk, from the ravages of climate change.
On the other side of the country, DeSantis’ “woke” nemesis, California Governor Gavin Newsom was also facing parallel failures in disaster coverage, underscored by recent atmospheric rivers inundating inland properties far from lakes, rivers or the ocean. Added to the spate of mega-wildfires, California’s perpetual earthquake peril and coastal erosion, most Californians faced the same soaring renters’ and homeowner’s insurance costs, amid some of the most expensive real estate to repair and rebuild. Commercial insurers were leaving the West Coast too.
“What’s been called the ‘disaster insurance gap’ has become an increasingly dire concern in recent years. Even those who have insurance but live in imperiled places are often unable to secure policies sufficient to protect their residences and belongings…. Rates of homeowners and renters with flood insurance policies have lagged as more of Southern California has become subject to extreme weather patterns spurred on by climate change. In the eight Southern California counties that were under a state of emergency during the recent storm, only 52,820 homes and businesses were covered by flood policies, according to the National Flood Insurance Program.
“Homeowners, renters and insurance providers have been slow to catch up to the changing climate, leaving families across the Southland with little financial protection against the wind and water at their doors.” Conner Sheets for the February 13th Los Angeles Times. At least California and its leaders recognized the reality of rising global temperatures from greenhouse gas emissions. “[Renters insurance] probably would not have covered [most flood losses], as most standard renters policies don’t cover damage from flooding… It’s the same for most homeowners. For those in certain high-risk flood zones who have mortgages, flood insurance is required.
“For people whose homes are in thousands of federally designated flood zones across the country, the U.S. government offers policies via the National Flood Insurance Program. But payouts under the program are capped at $250,000 for the structure of a typical home and $100,000 for its contents. Beyond that, policyholders are on their own… Nationwide, about one-fifth of insurance claims for flood losses are made outside the designated flood zones, according to Janet Ruiz, a spokesperson for the Insurance Information Institute, a national industry group. In other words, areas not typically known for flooding can still be at risk of sustaining major damage.” LA Times.
So, I guess we are supposed to feel bad for all those giant insurance companies who miscalculated their risk, right? Insurers’ threats to pull out of many at risk market seem to have worked. Like most of corporate America in the last five years, particularly during the pandemic, insurance companies are making higher profits than ever! “The pain for home- and auto-insurance customers is quickly becoming investors’ gain. Insurance giants’ shares and profits are hitting records, thanks in part to steep rate hikes.
“Shares of Travelers …, a bellwether for the property and casualty sector, closed at an all-time high earlier [in late January], up 35% from their lows last fall. The jump came after the company reported a record profit for its fourth quarter, boosted by double-digit rate increases in its business and personal insurance units… Progressive… said [on January 24th] that its quarterly profit more than doubled from a year earlier. Its stock rose, pushing the company’s market capitalization past $100 billion for the first time. Shares of Allstate … also reached new heights this [in late January], up more than 50% from their lows last summer.
“After suffering some of the worst years in their history, insurers say they now see a path to profitability for home and auto policies. Big rate increases are driving up revenue, while the inflationary pressures that pushed up repair and replacement costs appear to be easing. Losses from extreme weather tied to climate change remain a wild card, but the short-term outlook for insurers appears more favorable… ‘We’ve started seeing the potential for light at the end of the tunnel,’ said Josh Esterov, an insurance analyst at CreditSights…
“One factor in the run-up in insurance stocks: the recent willingness of regulators to allow large rate increases, even in states traditionally seen as tough on the industry. Last month, Allstate won approval for auto-insurance rate increases of 30% in California, 17% in New Jersey and 15% in New York. The company had threatened to stop renewing policies in those states after suffering losses. ‘Wall Street assumes that insurers will continue to face little regulatory resistance to rate hikes,’ said Heller of the Consumer Federation of America.” Jean Eaglesham writing for the January 25th The Wall Street Journal. Another kick in the teeth for so many Americans struggling with price increases! And Republicans want to cut both federal disaster relief and reduce corporate regulation.
I’m Peter Dekom, and if you think Congress represents most of us by deregulating, cutting taxes for the rich and balancing their budget deficit by cutting benefits to average citizens… think again, particularly in the land of MAGA mythology.
Posts
No comments:
Post a Comment