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Comment by Simulacra | Hacker News Reader

I understand that cities will sometimes raise the property tax to increase the affluence of a certain area, but this makes me wonder if insurance companies might do the same thing.

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Insurance is about playing the odds game where you amortise risk amongst all your customers. As risk approaches certainty, the economics don't work out as you need to charge each customer the replacement cost which at that point they won't want to pay.

Thus. I happened to work with a former Allianz-employed mathematician once (the wonders of working around Munich). Insurances are very good in calculating risks, and if the numbers don't work out anymore, you will see it immediately in premiums. That is all there is.

In a sense, you can se the impact of climate change in insurance premiums. Including the math behind those risks. And the insurance industry doesn't have the reputation of being anything but profit driven.

"The primary mission of a mutual company is to protect members, by maintaining the capital needed to meet their needs and cover any insured losses — not to maximize profits for shareholders"

depends on the structure of the company.

Purely an anecdote, but I live within XX miles of west palm beach. Insurance cancelled with our HOA because our "15-year" roofs reached 12 years old. We just spent 3 million dollars redoing all the roofs in our community, and the new insurance rate is still increased over year 12's.

I wonder if this is retribution for all the TV infomercials for filing for "hail damage" many months after a hurricane last season.

It's retribution for the billions paid in claims yes. If at any point an insurer is paying out more than like 80% of the fees they are taking in, they are going to either jack rates or pull out of the area.

I think this is 100% fair, and the alternative that I should have my tax money go from BFE to subsidize beachfront living is insane. I am 100% fine with people living literally anywhere, but until every square inch of land is used - there is no reason people MUST live on the beach in a hurricane zone.

The hail chasers aren't only lurking around beaches. It is a trend happening throughout the country and leading to a lot of roof replacements.

there's definitely a problem with fake roof insurance claims in florida.

People still have the option to live without insurance.

Perhaps you just decide that you're gonna keep everything that matters upstairs in your house, and the downstairs flooding a couple of times a year is worth it for the substantial reduction in house price.

I don't think you can have a mortgage without insurance to at least cover the bank's portion. If you own the house with cash then possibly.

In which case, there might be a market for mortgages for those in this position... Or perhaps a (far cheaper) insurance product that only insures the banks interest in the house (ie. after a flood, if the homeowner walks away, the insurance compensates the bank).

I don't think there's a market for paying out $20,000 in flood damage every five years in exchange for a $2,000/yr premium. The mortgage providers also don't want to be in a situation where someone owes $160,000 on a house needing $60,000 that the owner can't obtain in repairs or worth $80,000 in a damaged state as that just encourages the owner to walk away and declare bankruptcy, which is not good for the bank. The only way capitalism has of solving this is to roll the effective equivalent of market rate insurance premiums into the mortgage cost, so you've just moved the problem from "the insurance I need for my mortgage is too expensive" to "my mortgage is too expensive".

If costs are so high only the rich can afford to live there, you either end up with a rich area or an abandoned one.

The houses in the article are selling for millions of dollars. They’re already ultra rich or house poor.

Depends on when they bought of course. It sounds like with Florida's wild real estate ride, even having bought a few years ago might mean they're not rich or house poor.

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