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Comment by Havoc | Hacker News Reader

Not a big fan of "uninsurable". They'll happily insure high risk stuff, for an appropriate premium. It just becomes unaffordable to the average family.

As a side note there is another insurance disaster in the making - shadow fleet carrying millions of barrels of oil in old ships with opaque ownership and even murkier maintenance history...they don't do the whole insurance thing. Only a matter of time before the world faces a very awkward "who's picking up the bill" discussion. Small one already happened in the Black sea.

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> They'll happily insure high risk stuff, for an appropriate premium.

From what I've seen, this isn't always the case. My parents' insurer stopped offering fire coverage in their area with no option to buy at a higher price.

Presumably they could try and find a different insurance firm or a boutique.

FWIW and depending on where you are this could be down to local regulations. A lot of (most?) polities do not allow insurance companies to simply set prices based on their assessment of risks and the market, but rather place extremely heavy restrictions on the process (which further inevitably get politicized). They may also have regulations around minimum numbers of people to offer coverage to in an area and endless other related issues. So an insurance company that does the math and thinks it has to raise premiums 200% or whatever to make it work, unless somebody meets specific XYZ criteria around fire resistance (which are expensive), it may find that it simply is not allowed to at all, or not without long delays and a burdensome legal/PR battles. They always have the right to leave though.

This is likely because the state they live in does not allow insurance companies to price their coverage according to risk, and applies political pressure when they try to do so. Insurance companies are demonized and characterized as heartless, rapacious and greedy, despite the fact that they’re probably losing money at current prices. So, many companies decide to exit the market rather than be forced to sell a service that they expect to lose money on.

My parents were with State Farm for decades. SF withdrew from the commercial market since last year, forcing owners to find new policies, naturally for quite a lot more. And it seems like they aren't writing new policies for private residences in California at all now.

Several major insurers have stopped writing policies in California due to the fire risk.

https://www.foxbusiness.com/lifestyle/california-insurance-c...

Not quite. In our part of the world insurers are stopping insuring against storm damage. Due to high incidence. Stopped period, not making it prohibitively expensive.

Are there regulations limiting what they can charge? I think that’s what is happening in CA with fire insurance.

Stopped period because they’re not allowed to charge what it costs to cover that risk.

If you can ensure satellites stuck on top of a rocket they can do storm damage too.

They just calculate the premium realise nobody is going to go for it and don’t offer it. Not because they can’t but because there is no point

Same outcome but the reason isn’t “uninsurable”.

If there are state regulations on rates it's possible that they can't set the rate to cover the risk while also being in compliance. If they have annualized profit caps and they need to cover those once every 10 year mega disasters, then they might not be able to comply and charge enough to cover it.

Well it makes no sense for a company to try to insure properties that are fully expected to be damaged regularly (e.g. due to seasonal flooding, fires etc). That would make the premiums equivalent to the rebuilding costs if the company is to operate long term and customers won't pay for those kinds of premiums. It's not a viable business and so why would an insurance company spend effort to try to offer that product?

Insurance is not gambling. It's the pooling of risk. Mistaking the two is a common error and leads people being confused about the word 'uninsurable'.

yea, that's what I tell myself when I am investing as well.

"bro I am not yolo'ing 10K into 1DTEs, I am pOoLiNg mY rIsK and DivErsIfYing"

Sort of. Not all risks can be known. Occasionally there are occurrences that break the models.

It's like a casino or bookie. They allow others to gamble while trying to have a house edge.

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