What Do Socialism and Capitalism Mean to You

[laughing dog]

Why? Insurance lives and breathes volatile events. ...

The answer to your question was already answered by

The reason for this is that the insurance industry as a collective determined that flood was an uninsurable risk given the volatiliy of events.

From your own link
Therefore, when the probability of loss is too high or the claims costs are too high on a particular risk, the insurance company may consider it uninsurable and exclude it from the policy.

So, a capitialist industry decided for capitalist reasons to not insure flood damage.

But why read and reason when one can kneejerk fling blame to a regulatory agency?

Stop being deliberately obtuse.

Lead the way.

Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

If you thought about it - you answered your own question. It has to to probabilities and pooling risks. I am not going to explain how insurance works to you.

And while we're at it, what in the name of god does "a capitalist industry decided" mean? How does an "industry as a collective" determine anything? Individual business executives decide. By extension, the individual companies they lead decide. But each capitalist company decides for itself, unless either (a) they're illegally colluding to restrain trade, or else (b) the government is putting them up to it. If the response from the government was to set up a whole new social program rather than to launch antitrust prosecutions, that kind of points to (b).

Are you really that effing obtuse? The phrase "capitalist industry decided" is short hand for capitalist firms on an individual level decided that it was unprofitable for each of them to insure against floods.

In any event, this is all a counterfactual hypothetical. As Judge Judy would say, it doesn't make sense and if it doesn't make sense it isn't true.

LOL - if you don't understand something, then it isn't true is laughable.

 

[Gospel]

IMO - What Socialism and Capitalism has in common is both systems would function better if it were not for those people actively benefiting unfairly from it.

 

[Alcoholic Actuary]

Why? Insurance lives and breathes volatile events. ...

The answer to your question was already answered by

The reason for this is that the insurance industry as a collective determined that flood was an uninsurable risk given the volatiliy of events.

From your own link
Therefore, when the probability of loss is too high or the claims costs are too high on a particular risk, the insurance company may consider it uninsurable and exclude it from the policy.

So, a capitialist industry decided for capitalist reasons to not insure flood damage.

But why read and reason when one can kneejerk fling blame to a regulatory agency?

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

And while we're at it, what in the name of god does "a capitalist industry decided" mean? How does an "industry as a collective" determine anything? Individual business executives decide. By extension, the individual companies they lead decide. But each capitalist company decides for itself, unless either (a) they're illegally colluding to restrain trade, or else (b) the government is putting them up to it. If the response from the government was to set up a whole new social program rather than to launch antitrust prosecutions, that kind of points to (b).

In any event, this is all a counterfactual hypothetical. As Judge Judy would say, it doesn't make sense and if it doesn't make sense it isn't true. Flood isn't uninsurable. Private non-FEMA flood insurance is available; it accounts for about 15% of the flood insurance market.

Why? Insurance lives and breathes volatile events. ...

The answer to your question was already answered by

The reason for this is that the insurance industry as a collective determined that flood was an uninsurable risk given the volatiliy of events.

From your own link
Therefore, when the probability of loss is too high or the claims costs are too high on a particular risk, the insurance company may consider it uninsurable and exclude it from the policy.

So, a capitialist industry decided for capitalist reasons to not insure flood damage.

But why read and reason when one can kneejerk fling blame to a regulatory agency?

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

And while we're at it, what in the name of god does "a capitalist industry decided" mean? How does an "industry as a collective" determine anything? Individual business executives decide. By extension, the individual companies they lead decide. But each capitalist company decides for itself, unless either (a) they're illegally colluding to restrain trade, or else (b) the government is putting them up to it. If the response from the government was to set up a whole new social program rather than to launch antitrust prosecutions, that kind of points to (b).

In any event, this is all a counterfactual hypothetical. As Judge Judy would say, it doesn't make sense and if it doesn't make sense it isn't true. Flood isn't uninsurable. Private non-FEMA flood insurance is available; it accounts for about 15% of the flood insurance market.

Private Flood Insurance Companies - NerdWallet

Private flood insurance companies offer an alternative to policies from the National Flood Insurance Program. See whether it’s right for you.

www.nerdwallet.com

FEMA appears to dominate the market largely because it's subsidized by the taxpayers. It isn't supposed to be, but NFIP is billions in debt to the Treasury.

History of Flood Insurance

You are wondering how an 'industry as a collective' won't insure something while simultaneously purporting that the solitary government entity that does is billions in debt? Could it be because you aren't the insurance industry guru that you think you are Mr Dunning-Kruger?

aa

 

[Emily Lake]

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

Allow me to direct you to the Casualty Actuarial Society of the US. They have a host of exams that cover this material. It will answer all of your questions, and introduce you to a fairly lucrative career field!

 

[Playball40]

The USA is less of a disaster because it has a representative democracy, which allows people to more effectively oppose the dumbest extremes of anti-socialist totalitarianism. Nevertheless it has much higher levels of homelessness, poverty, and incarceration than the more mixed economies of Western Europe, and this is largely because it's obsessed with doing things in whatever way is least Socialist, even when it's bloody obvious that a socialist system would be most suitable (eg in the provision of healthcare).

Have you BEEN to florida lately?

 

[Bomb#20]

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

Allow me to direct you to the Casualty Actuarial Society of the US. They have a host of exams that cover this material. It will answer all of your questions, and introduce you to a fairly lucrative career field!

I.e., you don't know the answer any more than laughing dog does.

 

[laughing dog]

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

Allow me to direct you to the Casualty Actuarial Society of the US. They have a host of exams that cover this material. It will answer all of your questions, and introduce you to a fairly lucrative career field!

I.e., you don't know the answer any more than laughing dog does.

There are some possible explanations over my (or others) declination to engage in pedagogical discussion over flood insurance with you:
1) I (or we) don't know the answer,
2) I (or we) don't think you are willing to engage in a honest discussion,
3) I (or we) don't think you are capable of grasping the necessary concepts,
4) other possibilities I cannot think of at this moment.

Notice 2 and 3 are based solely on my (or our) expectations based on experience, personality and biases - you don't have to agree with them.

So please stop making baseless claims about people know or don't know.. You cannot possibly know what anyone else knows. And in this case, you are simply incorrect.

 

[Gospel]

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

Allow me to direct you to the Casualty Actuarial Society of the US. They have a host of exams that cover this material. It will answer all of your questions, and introduce you to a fairly lucrative career field!

I.e., you don't know the answer any more than laughing dog does.

Ok I'll wear the dunce cap while taking a shot from the hip at this.

First off, I'm not exactly sure what you mean by more probable. so I'm not going to speak on that. with that said, insurance fraud presents a significant financial burden on the insurance industry, contributing considerably to the overall cost of coverage. Taking into account that floods consistently cause the greatest expense in damages each year, surpassing even vandalism, it's hardly surprising that insurance companies are hesitant to undertake the risk.

It's not that these firms lack the will to provide flood insurance, rather, they struggle to find a sufficient number of clients willing to shoulder the steep premiums. The situation is further complicated by government intervention. By subsidizing flood insurance, the government artificially lowers the cost, encouraging risky investments in flood-prone areas.

This makes flood insurance even less appealing for private insurers. Moreover, taxpayers are essentially footing the bill for those risky investments, often without their knowledge. This begs the question: why should private companies subject themselves to such financial exposure?

End dunce Cap Transmission:


Honestly I feel like I'm still wearing the cap.

Edit: Ok I know why I'm still wearing the cap. This has nothing to do with what Bomb#20 asked.

 

[Loren Pechtel]

So what makes flood uninsurable? Did regulatory agencies enact some asinine rule saying if you write anyone a flood policy on her house you're required to also offer a flood policy on every other house in the same flood zone?

Fundamentally, insurance is about averaging out risk. However, floods don't average out--typically, almost nobody floods or a whole bunch of people flood.

And...

They would have to maintain huge reserves to deal with it--it's this reserve cost that makes flood insurance prohibitive for the private marketplace.

... hence my question about regulations. No, they wouldn't have to maintain huge reserves to deal with it, unless there's an asinine rule in place forcing them to insure a whole bunch of people in the same flood zone. The rational way to deal with the "nobody or a whole bunch" problem is for each of a hundred different insurance companies to each insure a hundred homes in some valley where they're apt to flood all at once. Then when ten thousand people lose their homes all at once, a hundred companies face perfectly manageable fifty million dollar losses. But if the government doesn't like that solution and wants an easier-to-regulate market with one company insuring all ten thousand homes then when there's a flood that company will face a five billion dollar loss, and will have to maintain a huge reserve to deal with it.

The entire private insurance market isn't big enough to handle the loss of a large flood.

Earthquake is similar--some places mandate it be offered but the insurance companies respond by pricing it at a rate far in excess of expected loss * expected chance of that loss.

Earthquakes are perfectly insurable. I have an earthquake policy -- and my house is pretty close to the epicenter of a recent massive quake.

I looked at it here. Premium * odds is way, way above the coverage amount.

 

[Loren Pechtel]

jut off of a casual google, I pulled up this:

17% of adults with health care debt declared bankruptcy or lost their home because of it. 66.5% of bankruptcies are caused directly by medical expenses, making it the leading cause for bankruptcy. As of April 2022, 14% of Americans with medical debt planned to declare bankruptcy later in the year because of it.Aug 30, 2022

This garbage "research" needs to be nuked from orbit.

It doesn't say what you think it says, it was done in a very deceptive way to make reporters think it said this.

Rather, what it really said was that most bankruptcies include medical debt, not that they were caused by medical debt.

The real number is more like 5%--and even there half of those are retirees overspending their assets, the bankruptcy was inevitable and the medical stuff was simply the straw that broke the camel's back.

Causal factors cause, even if they are not the final cause.

It is a contributory cause. This is, however one of the reasons contributory causes are so hard to track and discuss.

Just because the element is a contributory cause rather than complete cause makes it no less contributory.

It is like lead in the environment: It didn't cause crime all on its own, but it certainly gave a push so MORE crime happened, days resolving them WILL decrease The things it causally contributes to.

You've still fallen for it.

All it's actually showing is that most people have medical bills. Most of the bills are small!

 

[Loren Pechtel]

Capitalism: PVP economics.
Socialism: PVE economics.

The question is whether or not you wish to view other people as "players" or "environment".

PVP: Player vs Player
PVE: Player vs Environment.

My thought is that the environment is evil enough without the players adding more to that.

When you optimize for PvE you are often exploiting flaws--I've been on plenty of raids where we did things that in the overall picture were wasteful even though they made perfectly good sense in the situation. Flaws will be countered in PvP, it operates more efficiently.

And operating more efficiently means the average standard of living goes up.

 

[Loren Pechtel]

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

Allow me to direct you to the Casualty Actuarial Society of the US. They have a host of exams that cover this material. It will answer all of your questions, and introduce you to a fairly lucrative career field!

I.e., you don't know the answer any more than laughing dog does.

It's her field, while her explanations are sometimes short on why that doesn't make them wrong.

 

[Bomb#20]

...
In any event, this is all a counterfactual hypothetical. As Judge Judy would say, it doesn't make sense and if it doesn't make sense it isn't true. Flood isn't uninsurable. Private non-FEMA flood insurance is available; it accounts for about 15% of the flood insurance market.

Private Flood Insurance Companies - NerdWallet

Private flood insurance companies offer an alternative to policies from the National Flood Insurance Program. See whether it’s right for you.

www.nerdwallet.com

FEMA appears to dominate the market largely because it's subsidized by the taxpayers. It isn't supposed to be, but NFIP is billions in debt to the Treasury.

History of Flood Insurance

You are wondering how an 'industry as a collective' won't insure something while simultaneously purporting that the solitary government entity that does is billions in debt? Could it be because you aren't the insurance industry guru that you think you are Mr Dunning-Kruger?

Let's pick that apart. You're implying the same underlying cause -- that flood insurance is intrinsically unprofitable -- explains both. That's a beautiful theory. Beautiful theory, meet ugly fact. Flood insurance can be profitable. You ridiculing me for not accepting an argument from authority doesn't magically cause Chubb and the other companies to stop selling the non-NFIP flood insurance they sell.

Now then, let's turn to the explanation in your link.

"During the 1920s, the insurance industry concluded that flood
insurance could not be a profitable venture because the only people who would
want flood coverage would be those who lived in floodplains.
Since they were sure to be flooded, the rates would be too high to attract customers."​

Likewise, the only people who would want death coverage would be those who are mortal. Since they are sure to die, the rates would be too high to attract customers. Therefore the insurance industry concluded that life insurance could not be a profitable venture. Oh, wait. I don't think I'm any kind of insurance industry guru and even I can figure out life insurance is a thing.

 

[Bomb#20]

They would have to maintain huge reserves to deal with it--it's this reserve cost that makes flood insurance prohibitive for the private marketplace.

... hence my question about regulations. No, they wouldn't have to maintain huge reserves to deal with it, unless there's an asinine rule in place forcing them to insure a whole bunch of people in the same flood zone. The rational way to deal with the "nobody or a whole bunch" problem is for each of a hundred different insurance companies to each insure a hundred homes in some valley where they're apt to flood all at once. Then when ten thousand people lose their homes all at once, a hundred companies face perfectly manageable fifty million dollar losses. But if the government doesn't like that solution and wants an easier-to-regulate market with one company insuring all ten thousand homes then when there's a flood that company will face a five billion dollar loss, and will have to maintain a huge reserve to deal with it.

The entire private insurance market isn't big enough to handle the loss of a large flood.

So? That doesn't mean flood is uninsurable; it just means it's rational for the industry to insure some of the flood loss but not all of it. Likewise, you can't make a profit by selling a million Ferraris a year -- at that volume the market won't bear a price that pays for construction costs -- but that's no reason to claim Ferraris are unavailable and you can't make a profit selling eight thousand a year. But if the government decided to manufacture its own subsidized Ferraris because it wanted a Ferrari in every garage but there wasn't that much demand for Ferraris, that would cause the government to take a loss on its Ferrari business; it would also cause Ferrari to cut way back on producing its original Ferraris, what with many of its potential customers buying cheaper government Ferraris instead.

Earthquake is similar--some places mandate it be offered but the insurance companies respond by pricing it at a rate far in excess of expected loss * expected chance of that loss.

Earthquakes are perfectly insurable. I have an earthquake policy -- and my house is pretty close to the epicenter of a recent massive quake.

I looked at it here. Premium * odds is way, way above the coverage amount.

Works the same as investment risk. Riskier stocks have higher average return because companies pay investors to take risk off their hands -- but when you measure a stock's risk you have to pay attention to the beta, not just the volatility. Correlated risk commands a much higher price than uncorrelated risk because you can get rid of uncorrelated risk cheaply just by diversifying. Floods and earthquakes are correlated risk; consequently, flood and earthquake insurance are Ferrari policies.

It's her field, while her explanations are sometimes short on why that doesn't make them wrong.

Medical insurance is her field. Medical insurance is a whole separate universe from normal insurance.

 

[Jarhyn]

Capitalism: PVP economics.
Socialism: PVE economics.

The question is whether or not you wish to view other people as "players" or "environment".

PVP: Player vs Player
PVE: Player vs Environment.

My thought is that the environment is evil enough without the players adding more to that.

When you optimize for PvE you are often exploiting flaws--I've been on plenty of raids where we did things that in the overall picture were wasteful even though they made perfectly good sense in the situation. Flaws will be countered in PvP, it operates more efficiently.

And operating more efficiently means the average standard of living goes up.

Lol, no, when it's PVP things get even more wasteful, where you pop from the highest value target to the highest value target trying to beat the other guys there, and the collateral is even worse.

In PVE at least there's no rush.

If we're talking about the same resources in the same situation, working against folks will always lead to less completion on the objective.

(Caution: data from 2012) This is exemplified by the difference between your average PVP Minecraft server and your average PVE server, most notably the fact that when you spawn in on any of the less moderated PVP servers, you land in a blasted, fucked up wasteland and then die, and in PVE, often enough you land in a town and meet some folks who toss you an iron pick, there are places to mine...

 

[Emily Lake]

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

Allow me to direct you to the Casualty Actuarial Society of the US. They have a host of exams that cover this material. It will answer all of your questions, and introduce you to a fairly lucrative career field!

I.e., you don't know the answer any more than laughing dog does.

Dude, just no. I've been a practicing actuary for 25 years. My practice area is health, as opposed to casualty - which this question is actually relevant to. IIRC, Alcoholic Actuary's practice is casualty.

My point here is that just because you as a layperson don't understand what makes some kinds of risks "uninsurable" from the perspective of actuarial science doesn't mean that you're right. Your ignorance on the topic is not an argument.

I'm not impugning your intelligence. But the fact is that for this topic, you do not have the requisite knowledge to take an informed position on it. Just acknowledge that this is outside of your scope of knowledge and move on.

 

[Emily Lake]

Stop being deliberately obtuse. Reciting the claim does not qualify as an explanation. Why is the probability of loss too high, when other insured losses are more probable? Why are the claims costs too high on a particular risk when much more expensive things are routinely insured?

Allow me to direct you to the Casualty Actuarial Society of the US. They have a host of exams that cover this material. It will answer all of your questions, and introduce you to a fairly lucrative career field!

I.e., you don't know the answer any more than laughing dog does.

Ok I'll wear the dunce cap while taking a shot from the hip at this.

First off, I'm not exactly sure what you mean by more probable. so I'm not going to speak on that. with that said, insurance fraud presents a significant financial burden on the insurance industry, contributing considerably to the overall cost of coverage. Taking into account that floods consistently cause the greatest expense in damages each year, surpassing even vandalism, it's hardly surprising that insurance companies are hesitant to undertake the risk.

It's not that these firms lack the will to provide flood insurance, rather, they struggle to find a sufficient number of clients willing to shoulder the steep premiums. The situation is further complicated by government intervention. By subsidizing flood insurance, the government artificially lowers the cost, encouraging risky investments in flood-prone areas.

This makes flood insurance even less appealing for private insurers. Moreover, taxpayers are essentially footing the bill for those risky investments, often without their knowledge. This begs the question: why should private companies subject themselves to such financial exposure?

End dunce Cap Transmission:


Honestly I feel like I'm still wearing the cap.

Edit: Ok I know why I'm still wearing the cap. This has nothing to do with what Bomb#20 asked.

Additionally, with flood insurance, there's a concentration of risk aspect that makes the required capital simply ridiculous.

Even though the risk of flood in many places is relatively low... in the event that flood does occur, it's not going to affect just one home, it's going to affect a great many homes. The amount of risk-based capital that an insurance company is required to hold is based on the total amount of payout they would be faced with if the uncertain event does occur. The problem is that in order to maintain the capital that would be necessary in the event of a flood... the insurer would either need to charge premiums so high that nobody would buy the insurance... or they would be put out of business if a flood did occur.

 

[Emily Lake]

I.e., you don't know the answer any more than laughing dog does.

It's her field, while her explanations are sometimes short on why that doesn't make them wrong.

Sometimes they're short of why because experience has demonstrated that when I provide the three-page-long dissertation on why, most people don't read it at all, some people read only a little bit and then argue with small elements while not comprehending the entirety of the topic... and some people will skim it and misunderstand nearly everything, but will go on to argue vociferously about why they're right about the things they don't comprehend at all.

It's often a fool's errand. Sometimes I give lengthy explanations anyway, it's in my nature.

 

[Emily Lake]

...
In any event, this is all a counterfactual hypothetical. As Judge Judy would say, it doesn't make sense and if it doesn't make sense it isn't true. Flood isn't uninsurable. Private non-FEMA flood insurance is available; it accounts for about 15% of the flood insurance market.

Private Flood Insurance Companies - NerdWallet

Private flood insurance companies offer an alternative to policies from the National Flood Insurance Program. See whether it’s right for you.

www.nerdwallet.com

FEMA appears to dominate the market largely because it's subsidized by the taxpayers. It isn't supposed to be, but NFIP is billions in debt to the Treasury.

History of Flood Insurance

You are wondering how an 'industry as a collective' won't insure something while simultaneously purporting that the solitary government entity that does is billions in debt? Could it be because you aren't the insurance industry guru that you think you are Mr Dunning-Kruger?

Let's pick that apart. You're implying the same underlying cause -- that flood insurance is intrinsically unprofitable -- explains both. That's a beautiful theory. Beautiful theory, meet ugly fact. Flood insurance can be profitable. You ridiculing me for not accepting an argument from authority doesn't magically cause Chubb and the other companies to stop selling the non-NFIP flood insurance they sell.

Now then, let's turn to the explanation in your link.

"During the 1920s, the insurance industry concluded that flood​

insurance could not be a profitable venture because the only people who would​

want flood coverage would be those who lived in floodplains.​

Since they were sure to be flooded, the rates would be too high to attract customers."​

Likewise, the only people who would want death coverage would be those who are mortal. Since they are sure to die, the rates would be too high to attract customers. Therefore the insurance industry concluded that life insurance could not be a profitable venture. Oh, wait. I don't think I'm any kind of insurance industry guru and even I can figure out life insurance is a thing.

Again, I will point to 1) your ignorance of this topic and 2) the fact that you are welcome to take the exams necessary to be either a casualty actuary or a life actuary if you actually desire to alleviate your ignorance.

Life insurance does not use the same approach, and your argument here is entirely wrong. When it comes to life insurance, death is an inevitability - but WHEN is uncertain. The premiums for life insurance are based on the length of average life remaining at the time the policy is signed, and they're designed so that for a large enough population, the amount of premiums collected over the remaining lifetimes exceeds the payouts. Most people end up paying in premiums more than the interest-adjusted payout on their death.

 

[Emily Lake]

Medical insurance is her field. Medical insurance is a whole separate universe from normal insurance.

No, it's not. It's a separate practice area. And it's health insurance, not medical insurance. The distinction is probably not particularly meaningful to you, but it is a distinction. The content covered up to Associate level is substantially the same for all practice areas (some differ between life and casualty, health is a practice under life). It's the content between Associate and Fellow that differs by practice.

The concept of an insurable risk, and the different applications of that concept, are covered in order to attain the designation of Associate.

IIRC, both AA and I are Fellows of our respective societies.