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Comment by azujus | Hacker News Reader

Interesting does this mean that global warming will cause the insurance crisis in the US?

I expect there will be a big fight about this.

Insurance companies are already worried. I expect them to start writing into their policies exclusions about man made climate change. Which most people won't notice until it is time to file a claim. And then there will be a big uproar.

No single weather event can be reliably tied to climate change, though. Presumably it's on the insurance company to prove that an event falls into an excluded category, so it's a matter of time before someone fights them on it and wins.

More likely is a gradual increase in premiums, which is probably already underway.

Insurance is a business that’s mostly designed for uncorrelated tail risks. It works well for insuring shipping. It works pretty well for insuring against house fires. It can be tricky with natural disasters where the risks are quite correlated, though insurance companies try to prepare for it.

It works poorly for cases where the risks are unknown at the time the insurance is sold and then turn out to be correlated. For example asbestos-related lung disease claims basically wiped out many syndicates at Lloyds (though this was exacerbated by other problems like the accounting practices or underwriters having unlimited personal liability)

With all the extreme weather events, wildfires, and sea level rising that will be caused by climate change, I would not be surprised.

Insurance companies in the UK have been discussing this for over a decade.

There have been some consequences. It's no longer possible to get buildings insurance or mortgages in certain flood prone areas.

This effectively makes them uninhabitable, because uninsured flood damage can easily bankrupt a house owner.

> uninhabitable

Surely just unmortgageable?

Which for the majority of the UK means unpurchasable. With high rents in many places it's getting extremely difficult for a lot of people to save enough even for a deposit on a house, let alone buy it outright.

Oddly I think refusing to mortgage homes on flood plains is actually a good call by the banks. The local councils are just building in whatever idiotic places they like, stripping hills of the foliage which absorbs water to put houses there, then putting even more houses below where all the water now has to flow.

As a digression, I used to live in Shropshire and know of at least a few houses built close to rivers and streams that used to occasionally flood the ground floor. The buildings were set up to take this into account, with tiled floors and sturdy wooden furniture.

In one case I know well the old couple living there used to just chase the flood water out of the house with a running hose to clean it out. They sold the house to a young couple who redecorated the whole house and put carpets and stuffed furnishings on the ground floor. A few years later the whole lot was ruined, they sold and moved out. Apparently their neighbours tried to warn them.

The effects of climate change are expected to be gradually increasing frequency and severity of extreme events. So that's not too hard to calculate probabilities for on the time scale of typical house insurance policies that are renewed annually. It's not going to be one giant storm that takes everyone by surprise.

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