Insurance CEO: We don't see a necessity for a replacement house.
this post was submitted on 14 Jan 2025
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yo premiums be going up yo πΉ
ps direct your anger at fossil fuel lobby and their politicians please. they knowingly cause this shit.
I was quite surprised when I first learned it, there are insurance companies which specialize in selling insurance to insurance companies in case the insurances they sold have to be paid. See Reinsurance on Wikipedia for example.
Obviously Reinsurance companies might reinsure their claims to other Reinsurance companies until nobody knows who is actually paying.
Similar to packing rotting investments with other investments and selling them to retirement founds, because hey look, there are good investments in it.
Reinsurers don't really take out their own insurance further, at least I haven't heard of that happening. I do work for one of those Reinsurers
Maybe I remember it wrong, been a while since I had contact with the insurance industry.
Also might depend on national insurance regulations.
I assume you're right since you are in the sector, but I don't know where I picked up the notion, that reinsurers would reinsure themselves.
To be fair it could happen in some circumstances but I don't think it's normal, there is just no business case, reinsuring works by the insurance company paying a part of the premiums to the reinsurer to insure X amount from the portfolio, reinsurer would have to do the same, you run out of money quite soon.
I don't know that much though, I am new to the company and I am in IT, so it's not my domain to know exactly how it works.
My finance teacher said that reinsurance often used financial derivatives to offset risk... is that true? Just made me have a wild flashback to like a couple decades ago.
Cali also requires a significant cash reserve for disasters like this.
Like the old W.C. Fields line, βSorry, I canβt give you money. All my money is tied up in currency.β
Which is a lie, they're making billions in profit every year while committing this fraud, including the big ones like State Farm (which also has a history of racism, shocker).
Profits are paid out in the form of dividends. They arenβt just sitting on a pile of cash. That is the problem. Instead of having money they are giving it to the wealthy instead of paying out policies.
And there's legislation saying that the American peasants are mandated to have insurance just for them to be able to turn around and refuse having to pay out. Insurance is huge government backed scam.
The problem is not on the side of mandating the insurance though. It is on the insurance being able to wiggle itself out as well as not requiring insurance companies to have sufficient liquidity for these kind of events.
If we're at the point of mandating insurance then the government should just provide it themselves out of taxes. No reason for profit middlemen should be involved in basic public necessities.
So how do you address the varying risk and values of the places? Would you like your taxes to pay for the rebuilding of a 20,000,000 movistar mansion?
Of course the government could also run a public housing insurance, but that also becomes a whole can of worms politically.
Presumably they pay more into the government insurance if they have more to insure. Like we do today with normal insurance. You just call it taxes since you can't opt out. Which is fine because there are laws already saying you can't opt out.
The issue is just with middlemen being incentivized to deny claims to increase profits. With government running it, there's no profit motive so that is fixed.
Your property tax would be assessed based on the value of your home so the homeowner would be paying for it. Or if nothing happens to theirs a bunch of poorer homes. It'd work just like how insurance does. There's just no profit motive so you don't have to deal with the shenanigans from that.
The price should be [cost to rebuild an identical house] * [expected monthly risk of catching fire]
Invest the yearly excess into something stable to pay for when a large wildfire happens and a large amount has to be paid.
Property values shouldn't be part of the equation because they're massively overinflated and rather useless.
The risk part is extremely important because houses built out of matches should probably cost more to insure than houses built with fire safety in mind.
I mean I'm not an insurance adjuster so if your method is better than sure. The point is that what you were taxed for your house would pay for the insurance. So a more expensive house would pay more (and contribute more to the overall system when they didn't have a fire).
Sorry, I wasn't quite clear.
What I meant is that more expensive houses should pay more insurance - just that the property value of the house is usually not the correct metric for determining whether a house is expensive. After all, it takes hardly any cost to reconstruct a lawn even though every square foot of lawn raises the property value.
Plus it can help prevent gentrification to avoid your insurance skyrocketing the moment an investor turns every property in your neighborhood into luxury flats.
I think we're on the same page.
They should have the same rigorous stress testing requirements as imposed on financial institutions. Banks and bank regulators learned from 2008 time for insurance regulators to wake up.
I think they have force majeure clauses in almost everything.
Insurance: exists for the case something bad happens.
Insurance companies: "Something bad happened, we can't do anything!"