Authored by Mike Shedlock via MishTalk.com,

Insurance costs are soaring and companies are canceling policies and upping rates. I address the real reasons for this mess.

Dropped

I had been working on this insurance idea for a few days. The tweet below by Adam drives the message, but only for fire insurance. I added hurricane and river flooding.

Adam Taggart
@menlobear
How many of you are seeing extreme escalation in your home insurance premiums, or having your coverage dropped by your carrier?

I live in California, and State Farm dropped my renters insurance policy like a hot potato when they pulled out of the state last year

The housing market is being hit by home insurance shocks across the country.

These charts that @NewsLambert created for ResiClub PRO members tell a stunning story of wind, fire, and flood risk.

READ: https://t.co/F8xlv8vmbh> pic.twitter.com/Xy7juWnJ6I

— Pomp 🌪 (@APompliano) January 12, 2024

https://twitter.com/APompliano/status/1745951644871733318

There are other flood zones along any major river or low areas. Hurricanes also cause flooding. People need wind and flood insurance in some zones. Judging from the map, some places in Florida are at risk for several reasons.

The link in the above Tweet is paywalled.
Buying Home and Auto Insurance Is Becoming Impossible

The Wall Street Journal reports Buying Home and Auto Insurance Is Becoming Impossible

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.

Farmers Insurance Group increased home-insurance rates by more than 23% last year for tens of thousands of policyholders in both Illinois and Texas, according to S&P Global Market Intelligence. Nationwide Mutual said it won’t renew 10,525 home-insurance policies in hurricane-prone areas of North Carolina.

State Farm racked up $13 billion in property-casualty underwriting losses in 2022, its worst ever. Last year, it stopped writing new home-insurance policies in California. The state’s regulators last month approved a 20% home-insurance rate increase.

In California’s wildfire-prone San Bernardino County, insurers in 2021 refused to renew 1,355 policies in a zip code that abuts Lake Arrowhead, north of San Bernardino, up sharply from 157 refusals in 2015, according to an analysis by research firm First Street Foundation.

In November, Chaucer Group, a London-based reinsurer, named several regions once considered low risk for wildfires that it said are “quickly becoming areas of concern for catastrophic wildfire insurance losses.” They include mountainous areas between Salt Lake City and Denver, and the Appalachian Mountains from Tennessee to New York.

Another concern is Texas, partly because of increased development on the fringes of metropolitan areas stemming from migration from California, the report said.

Despite some concessions from regulators, insurers are bracing for a tough future. Allstate’s Wilson said that everywhere in the country is at some risk from increasingly severe weather. “There is no place that’s safe,” he said, “and no place that’s not going to be impacted.”

Reinsurers to the Rescue?

Also consider the WSJ report The Insurance Market Is Healing

Going into last year, rising interest rates helped lead to a slower influx of capital into reinsurance, which is the backstop that insurers use to protect against so-called tail risks such as hurricanes and earthquakes. That finally gave the upper hand to reinsurers in pricing negotiations, after several years of seeing their pricing struggle to keep up with the rising losses on global catastrophes. That in turn led primary insurers that sell coverage to individuals and businesses to bear more of their own risk.

Climate Change Nonsense

Politicians will be all over this story, but none of this has anything to do with climate change.

In nature, fire is a natural occurrence. Decades of fire suppression coupled with decades of accumulation of dead brush created these tinder boxes such that once big fires start, they are difficult to extinguish.