Following on "Reinsurers to only feel “minimal” impact from hurricane Idalia..." A Tokyo Earthquake On The Other Hand....".
The Washington Post had a very disingenuous, borderline deceitful story yesterday:
Home insurers cut natural disasters from policies as climate risks grow
that looks at the pull-out of some major property/casualty insurers from the Florida and California markets.
As the paper hangs its story on the climate hook it makes no mention of the extreme inflation in construction/re-construction costs which have far outpaced general inflation.
Additionally you have the state-level issues, as noted in June 25's "Bank of England tells insurers to brace for persistent ‘claims inflation’"
We started seeing inflation considerations in renewal pricing and/or availability for Florida homeowners insurance in 2022 and 2023 and in California homeowners rates/availability this month.
From CityAM, June 23:
Insurers must rigorously assess the impact on their solvency of the rising cost of settling car, property and other claims and ensure they have sufficient reserves, the Bank of England told the sector on Friday.
The BoE said that claims inflation due to factors such as rising wage, medical and raw materials costs is expected to affect all general insurers.
“There is a risk that persistently elevated claims inflation might result in a material deterioration of solvency coverage for some firms unless they take appropriate mitigating actions,” the Bank of England said in a letter to chief actuaries of general insurers....
....MORE
In Florida you also get the the insurance company litigation exposure. Almost 80% of ALL U.S. homeowners insurance litigation is in Florida.
The WaPo also makes no mention of the great migration of population and construction to the very areas that are at risk. This is a point made by Bloomberg on July 27:
and by the Los Angeles Times on June 18:
RISK: "State Farm is right. California can’t keep building housing in high-risk places"
We follow this stuff pretty closely and try to chronicle, in real time, what the sources say:
- AIG Joins State Farm And Allstate In Homeowners Insurance Pullback, This Time Beyond California (AIG)
- "State Farm Halts Home-Insurance Sales in California"
- "Yet another home insurance giant quietly stops writing new policies in California"
And because of that can confidently say: There is a lot more to this story that the Washington Post, apparently deliberately, left out.
