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Insurance Company - fails due to global warming

It appears Merced oversold their policies. The taxpayer will be left with the bills. Merced's upper management should end up behind bars, but that probably won't happen. They should be forced to repay all bonus and other extra compensation they've recieved as far back as necessary until all the money is repaid.
 
Another failure of allowing things to be dealt with in the marketplace.

Home insurance should be a national project.

Divided into regional divisions.

The national government is responding to these ever increasing huge environmental and weather related problems already.
 
Is the insurance industry where the next financial bubble bursts due to the effects of climate change? Like the banking industry, insurance can't keep up if too much demand is placed on them. Of course, like the banks, they got so used to partying because they were sitting pretty while scamming the system.

And then they have the nerve to put commercials on television creating a false narrative about shaming the people gaming them (insurance fraud). Unbelievable.

This is how the markets actually work, folks.
 
poster said:
It appears Merced oversold their policies. The taxpayer will be left with the bills. Merced's upper management should end up behind bars, but that probably won't happen. They should be forced to repay all bonus and other extra compensation they've recieved as far back as necessary until all the money is repaid.
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This always happens in a natural disaster, or at least something similar. Usually, the insurance company simply refuses to pay the money that they promised to pay, and insurance holders are simply left holding the bag.

The problem that you're ignoring is that these disasters will become more frequent as global warming gets worse, which means either the public will lose confidence in the insurance industry altogether, or else the insurance industry will go broke. Either way, it's going to be a financial disaster for the insurance industry in the future, all so that oil companies and coal companies could get higher profits in the past and in the short-term future.
 
That's an interesting take on the matter which I hadn't considered before. If insurance companies start raising rates in order to take these things into account (which they'll need to do), it's really going to drive up the cost of home ownership and make living in affected areas (which are a whole lot of places) much more unaffordable.
 
Tom Sawyer said:
That's an interesting take on the matter which I hadn't considered before. If insurance companies start raising rates in order to take these things into account (which they'll need to do), it's really going to drive up the cost of home ownership and make living in affected areas (which are a whole lot of places) much more unaffordable.
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As a member of the monied elites (in my nightmares) - GOOD! We don't need no steenkin' rabble devaluating our pristine oceanfront third homes! If they can't afford the insurance, or to lose a few million bucks on a destroyed mansion - fuck 'em!
 
Liberty Mutual - that has the commercials for the little people - oh we will insure your car and give you a whole car back, dumped my business last year due to a huge hail storm that damaged about a million cars in our area, said we live in a hailstorm prone area and they will no longer insure. Although the hailstorm can't be blamed on global warming (at least it hasn't yet), this is an example.
 
starwater said:
Liberty Mutual - that has the commercials for the little people - oh we will insure your car and give you a whole car back, dumped my business last year due to a huge hail storm that damaged about a million cars in our area, said we live in a hailstorm prone area and they will no longer insure. Although the hailstorm can't be blamed on global warming (at least it hasn't yet), this is an example.
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Well, an increase in extreme weather events is exactly what global warming causes. While any individual storms can't be blamed on it, the larger and more severe number of storms in general can be.
 
starwater said:
Liberty Mutual - that has the commercials for the little people - oh we will insure your car and give you a whole car back, dumped my business last year due to a huge hail storm that damaged about a million cars in our area, said we live in a hailstorm prone area and they will no longer insure. Although the hailstorm can't be blamed on global warming (at least it hasn't yet), this is an example.
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I think they created an out for themselves a long time ago on natural disasters. "Acts of God" exemptions.
 
So all of our insurance premiums will rise due to people who build on beaches, landslide-prone areas, floodplains, etc., due to poor planning and allowing developers to run rampant. I would switch in a heartbeat to an insurance company that either refused to insure in these areas or charged a huge premium.
 
starwater said:
So all of our insurance premiums will rise due to people who build on beaches, landslide-prone areas, floodplains, etc., due to poor planning and allowing developers to run rampant. I would switch in a heartbeat to an insurance company that either refused to insure in these areas or charged a huge premium.
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I would expect that's the future of the industry. On the one hand, insurance companies would prefer to keep everybody in the same pool so that they don't drive away customers in the high risk areas by having those costs offset by the people in low risk areas. There would, however, be competing companies who'd take the tack of not insuring the high risk areas at all and thereby undercutting the prices amongst the low risk customers.

As more and more areas become high risk and unaffordable, however, I expect that you'll see the government step in and do something like cover the first $100K or so of damage for free in order to offset the costs to the insurance companies so that people will still be able to actually live in those places.
 
AirPoh said:
They should have had re insurance.
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Regardless of who the costs are passed on to, the issue still remains that there are increased costs and the only payment for said costs is from the end consumer.
 
starwater said:
Liberty Mutual - that has the commercials for the little people - oh we will insure your car and give you a whole car back, dumped my business last year due to a huge hail storm that damaged about a million cars in our area, said we live in a hailstorm prone area and they will no longer insure. Although the hailstorm can't be blamed on global warming (at least it hasn't yet), this is an example.
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Yeah, well ... those are the same people who say they won't raise your rates after an accident, for drivers with "accident forgiveness". Which of course costs extra. IOW, they've ALREADY raised your rates, whether you have an accident or not. Slimeballs.
 
AirPoh said:
Not exactly.
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How so? Regardless of how all the payments are distributed down the line, the entire premise of the industry is to have more paid in premiums than are paid out in claims.

That’s actually how they make money.
 
poster said:
It appears Merced oversold their policies. The taxpayer will be left with the bills. Merced's upper management should end up behind bars, but that probably won't happen. They should be forced to repay all bonus and other extra compensation they've recieved as far back as necessary until all the money is repaid.
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I see nothing in that that says they oversold.

Insurance companies fundamentally work on a model of spreading risk across the customer base. Any insurance company that suffers too many claims at once is going down. The bigger the company the less likely this is to happen (which is a good reason to deal with big insurance companies) but it can happen anywhere.

This is why insurance companies exclude floods and nuclear incidents and make earthquake coverage uneconomic--they are risks that when they happen will hit too many policyholders at once. The risk can't be averaged out so it can't be offered at economic rates. Fire is normally a one-house-at-a-time risk, they got smashed when it was hundreds of houses at once.
 
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