I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks of climate change and how insurance will have to change. Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything. When in reality, insurance is one of the rare areas where risks are very well assessed, not just by the initial insurer but also by a second party when reinsurance is purchased. And often those exits from the insurance markers are due to inability to purchase reinsurance.
Of course, explaining anything in detail is likely to make people think you work in the industry (I do not) and get accused of being a shill. All of which proves to me that older generations had a much easier life because nobody so financially ignorant today is in any sort of position to be able to buy a home.
All that said, I don't think it's actually a price ceiling. It's a limitation of what factors can be taken into account to set rates, and constitutional amendment from Prop 108 prevents the legislature from changing it.
> Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything
I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies are making.
When I ask people how much cheaper they think their insurance (health, home, etc) would be if we forced insurance company profits to zero they usually have some extreme guess like 50%. When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. The discourse is so cooked that everyone who just assumes insurers are making unbelievable profits without ever checking.
Like you said, when I try to bring numbers into the discussion I get accused of being a shill (or a “bootlicker” if the other person is young).
The environment this creates has opened the door for some really bad politics to intervene in ways that aren’t helpful. I wouldn’t be surprised if the eventual outcome in a lot of these places is that politicians pass legislation putting the local government on the hook for insurance after they squeeze regular insurers so hard they have to back out to avoid losing money in those markets. The consequences won’t manifest for several years, potentially after the politicians have left office, but could be financially burdensome. Similar to how many local governments were very generous with pension plans because politicians knew the consequences would only be felt by their successors.
Health insurance's issue is probably how it induces pure waste everywhere as everyone has to play this dance of ever escalating paperwork which consumes a lot of labor. It's not profit, it's waste. Same with the ever increasing amount of admin. Why is that admin increasing? I estimate insurance or requirements created by insurance is part of the cause.
There is also a lot of other smells of a lack of a competitive market. Very opaque pricing, limits to how many hospitals can be opened in a region, needing paperwork to push against that limit, limits in residency slots, the entire hazing ritual of residency in the first place, limits in opening medical schools, ever escalating requirements to become a doctor, restrictions against doctor owned hospitals or clinics, the fact something like an epipen is still not out of patent and not having many clones by now, large barriers to make medical devices and medications, while simultaneously having great issues with generic drug quality, a horrible food system compared to Europe, while simultaneously having a much harder regulatory state medically compared to europe, etc.
This is spot on. It’s not that I think health insurance companies are making insane profit margins. It’s that their very existence in the system is a pure negative and in fact a moral blight. Inflicting profit into a system that is entirely dedicated to human health is by definition a conflict of interest for basically everyone involved, even if it operated at a hypothetical 100% efficiency.
Lots of things necessary for life are run by for-profit businesses — for example, food production. Do farmers have a “conflict of interest”? What about healthcare in particular makes profit immoral?
If the grocery store decides to remove the prices from everything, and require its shoppers to first call its billing department only open until 5pm to receive a set of numbers, then call their third party subscription service only open until 6pm to receive a non-binding estimate, for every item in their grocery list, then wait weeks or months for the grocery store to have its cashiers take time away from checking customers out to petition the third-party subscription service to allow its customers to buy any item deemed to require prior authorization…
You can typically endure hunger for 15 minutes for the time it takes to go to another food store.
On the other hand, if you are bleeding out in the ER, no such luxury exists.
Insurance executives have a fiduciary duty to maximize the profit of the company.
If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
If the company loses money treating patients, then it has a financial incentive to deny treatment as much as possible.
Unless a legal structure is found which scales profit with quality of care, ethical choices will be at odds with the fiduciary duty of the company officers. Having an AI say “no” and putting someone on hold is a lot less expensive than paying out for a cure that cost billions to develop.
In the case of government-run healthcare, the government at least sees the consequence of poor health outcomes in decreased productivity, competitiveness, gdp, and/or tax revenue, as well as increased use of social services.
In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
There are lots of perverse incentives at work, and vanishingly few people even try to understand them, I think because most people simply don’t believe it could possibly be as bad as it is. And by the time they learn otherwise, they care more about getting healthy again than overextending themselves trying to solve a massively complex problem.
> Insurance executives have a fiduciary duty to maximize the profit of the company.
Probably not. Many insurance companies are not "for profit" companies(not a 501c3, something else). Certainly some are, but most of the giant ones, State Farm, etc are not. Most are Mutual Insurance companies: https://en.wikipedia.org/wiki/Mutual_insurance which handily includes a list of them.
I.e. they are operated more like Vanguard, the investment firm than they are Fidelity(a private for profit company) or Schwab a public for-profit company.
Also, this fiduciary duty thing is not really true, but people think it's true. They do have a duty to work in their shareholders best interests. Lately that's been taken to mean profit above all else, but that's a recent(last few decades) interpretation.
> If the company makes a profit off of treating patients, then it has a financial incentive to not approve treatments that would make patients better.
It depends on if they share the cost(s) of keeping patients healthy or not. Incentives matter. If they are incentivized to keep people healthy, instead of just treating X disease today, it would be a different conversation.
> In other words, if the insurance company refuses to treat you, it costs the government money to pay for welfare indefinitely, not the insurance company.
> There are lots of perverse incentives at work
Agreed. But mostly it's just excess waste as far as I know. I'm not an expert in healthcare, so I'm at best a armchair quarterback here.
>If the grocery store decides to remove the prices from everything, and require its shoppers to first call its billing department only open until 5pm to receive a set of numbers, then call their third party subscription service only open until 6pm to receive a non-binding estimate, for every item in their grocery list,
Good point (buying food would be a nightmare if it worked like American health care!) but that's a different argument from the one made above in the thread, that a profit motive in a vital good inherently creates perverse effects.
Oh yes, these things are exactly equivalent. Problem is, nothing about the health system's incentives aligns with consumer benefit. The most profitable outcome for an insurer is that everyone pays premiums and never uses any services. The most profitable outcome for hospitals is that they charge maximum prices for every service and yet don't really fix underlying problems or prevent future problems. Hospitals profit the most off patients that need a ton of care and have deep pockets. They lose money on giving care to people who cannot afford it and won't pay. They lose money in the long run when preventive care prevents later catastrophic (and expensive) conditions later. Pretty much all of the profit-maximizing forces in the for-profit system are deeply unethical.
If you're going to tell us that because health care providers and health insurance companies are some kind of magic counterbalance against each other that benefit consumers, uh, nope.
>Pretty much all of the profit-maximizing forces in the for-profit system are deeply unethical.
Are you talking about healthcare specifically or businesses in general? AMD wants to make the best CPUs for the most amount of money. Is that "unethical"?
> healthcare specifically
Yes, it is deeply unethical that someone can be bankrupted and become homeless because of a treatable condition because the "market" has decided a price for the service that is astronomical without insurance, while at the same time tying insurance to employment, dividing up insurance markets, and making coverage subject to inscrutable, unappealable decisions made by people sitting behind desks in a completely different part of the country, while the leadership of said organizations and investors make higher profits than ever. It is deeply unethical that a CEO can make tens of millions of dollars--which for most regular people is several lifetimes worth of earnings--in a single year, while dealing in a market that regularly denies coverage to people who then suffer, are financially ruined, and die.
It's not the same as making a better CPU for more money. Not. At. All.
You can also become homeless because the market has decided that rent should cost more than you can afford (in a given area). This involves real estate, equity investing, home insurance, zoning, housing regulation, and banking. Is this equally immoral? How many types of business are similarly immoral?
> Oh yes, these things are exactly equivalent
A: All men are tall, therefore Giannis Antetokounmpo is tall.
B: Your proof is wrong: see this man here, he isn’t tall!
A: Clearly he has nothing in common with Giannis. He’s not even in the NBA!
I don’t think health insurance is actually insurance, but I have seen little evidence that it has “insane profit margins”. From what I’ve read, ‘health insurance’ has middling profit margins relative to other insurance specialties; where are you getting that view/data?
> When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.
Meanwhile, the health care providers:
> But if you look at the list of companies with the highest [return on equity], you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers.
* https://www.noahpinion.blog/p/insurance-companies-arent-the-...
Definition of "healthcare provider" really confuses me. Why is my nurse lumped together with people researching drugs? Is the CEO of the hospital a "provider"?
> When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.
When you consider that single digit percentages of trillions of dollars is still an obscene amount of money it makes sense. People making tens of billions by applying formulas to spreadsheets and shuffling other people’s money around doesn’t sit right with most people.
I hear the same thing about supermarkets. Their margins are razor thin (1-3%), and yet people look at the overall profits and complain, ignoring the fact that the company had to deploy 50-100 times that capital to make that profit.
An alternative is to split these companies into smaller companies, which will each have much lower profits but also higher costs due to lost efficiencies, but people will not be happy with that either.
>People making tens of billions by applying formulas to spreadsheets and shuffling other people’s money around doesn’t sit right with most people.
The federal government will pay you $4.4 billion a year[1] if you lend them a trillion dollars, no "shuffling money around" required.
[1] current 5-year treasury yields
Those people are not collecting the profits by moving their own money around.
The profit margin doesn't include things like CEO salary, correct? I could see a scenario where the issue is still corporate greed just not greed that's measured by profit.
All employee compensation, including CEO and board of directors, is included in the expenses used to calculate profit margin.
Profit margin is all revenue minus all expenses.
Isn't that a bit misleading? Salaries wouldn't be included, but a lot of compensation at the very high end is based on owning stock, and dividends i assume would be part of that profit margin.
>Isn't that a bit misleading?
In practice yes, but technically no. If a "non-profit" brings in 100 million dollars, and pays all 100 employees a million dollar salary, then that "non-profit" has made no profit. But when someone hears that a "non-profit" made "100 million" dollars, they think it is some kind of scam or something.
Compensation, even in the form of equity, has an equivalent cash price that is owed at the time it is awarded. The receiver has to pay income tax for this compensation, even if it is not cash, and the business has to record it as an expense.
>and dividends i assume would be part of that profit margin.
Dividends and share buybacks are not expenses. They are not money spent for the purposes of operating the business, they are awards to the shareholders. As such, they are not an expense. Dividends and share buybacks happen with the profit, so they will never be included in expenses used to calculate profit margin.
There are lots of highly qualified people at the SEC and FASB working to ensure some semblance of accountability. There is a reason why people from all over the world want to invest in a developed countries’ public equity markets, and that is a belief that most of the time, the numbers are very close to the truth.
Executive pay is such a tiny fraction that eliminating it would be lost in period to period fluctuations.
>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs
Do you have any source for this?
I’m assuming (because HN) that you had the USA in mind, and it doesn’t pass the sniff test for me given that US insurance fees are more than single digit percentages higher than other high quality care countries with privatised healthcare systems
Insurance fees are not high because the insurance companies are making huge profits.
They're high because providers are making huge profits.
Now granted, they may ultimately be the same thing, but that's a different discussion [1]
In the context of housing (fires, hurricanes etc) insurance is expensive because housing is expensive to build.
[1] insurance companies have to invest their income somewhere. It makes sense to choose companies will high returns. Which includes some health care providers. Which can basically change whatever they like because of structural reasons that have been well discussed.
> Insurance fees are not high because the insurance companies are making huge profits.
United Healthcare alone made $23,000,000,000 in profit in 2023. Health insurance companies have collectively made $371 billion in profits since the passage of the Affordable Care Act.
Property & Liability insurance (home, car, etc) have relatively modest profit margins, but health insurance companies absolutely are making huge profits.
Using absolute numbers here doesn't really make sense. 23B sounds big but its impossible to say if its a high or low profit margin without context.
It’s profit and it’s very large.
> alone made $23,000,000,000 in profit in 2023
why is this number considered huge? What measure are you using? These absolute numbers are meaningless, because you have to put it into context. That's why profit margin is what analysts use, not the absolute number.
If i changed those figures to: they made $77 per person, per year in the USA for providing healthcare services, does that still seem as big? Or is it now reasonable?
$23,000,000,000 profit/29 million insured makes $793 profit per insured person.
That's huge isn't it? $800 bucks in profit per customer? What does Apple make? Or Unilever?
Why compare to Apple, when the healthcare is arguably more complex and expensive?
the original OP is claiming that the healthcare industry is too profitable. So you have to compare it to something to see if it is too profitable.
Right, but why use Apple ($800 phone every 2-4 years) compared to say, an automaker ($40k in depreciation over 10 years) or a REIT ($2000 in rent every month)? Moreover, why focus on absolute profits? If the healthcare industry split into 3 (eg. doctors, dental, drugs) but with the same margins, does that mean they're suddenly not "too profitable"?
No, UnitedHealth Group made $22B in profit in 2023. Only about half of that profit came from the UnitedHealthcare insurance business. The other half came from the Optum side which is a mix of non-insurance stuff. Optum makes huge profits on software: if the software business was spun out it would be one of the top 20 US tech companies.
https://www.unitedhealthgroup.com/investors/financial-report...
The issue in the US is that there is no price regulation for different procedures (other than Medicare), plus the providers (hospital chains) are intertwined* with insurance. The end result is everyone charges as much as they can and the premiums need to be high, even if insurance technically negotiates the rates down from the “sticker” price. Insurance companies are willing to take a small percent of profit because there is so much money being taken from customers.
* https://www.statnews.com/2024/11/25/unitedhealth-higher-paym...
Right, low profit margins are not a valid argument for why it’s invalid for consumers to suspect there is some inefficiency compared to other markets. Saying the system must be efficient because profits are low is like saying boiling water should be as cheap as 98->99 degrees C because it’s just +1 C - profit margins aren’t as good an indicator of whether there is an unusual amount of disorder in the system, compared to extremely context-sensitive resource costs for hypothetically identical systems.
I think the point is more that the insurers are not the real target for your wrath. You should not motivate your congress person to do something about the insurance necessarily. It's probably better to look at a level further up the chain for example.
Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc.
The shareholders take home only a fraction. But a lot of money gets spent that simply doesn't need to be. Other countries avoid the deadweight loss of the middle man.
>Part of the problem is that the existence of the middle man adds a lot of costs: insurance company salaries, their executives, doctor's office billing coding, advertising, etc.
that's not a sophisticated analysis. it would be like saying mcdonalds is unecessarily expensive because executive pay, and cars, and dry cleaning, etc. etc. yet, if you tried to found a competitor, you'd have all those same expenses. even charities have to pay management.
insurance companies make money because their aggregate risk is less than your individual risk, and you really don't want your individual risk so you are willing to pay them extra, a premium, to get them to shore up your downside. After that it's like any other company selling any other thing.
The genius of the US way is that the politicians avoid the heat when healthcare coverage is denied. Whereas UK and Canadian politicians have to answer to their constituents.
Of course, now that getting murdered is on the table, the US health insurance executives might want to up their compensation.
> Whereas UK and Canadian politicians have to answer to their constituents.
Yeah, and "politicians have to answer to their constituents" is how we got the failed insurance markets in California and Florida. This thread has now gone full circle.
That is the problem with conflating insurance and subsidy.
To buy votes, politicians sell “insurance”, but in reality it is a subsidy to a specific group of taxpayers.
When a government directly pays for healthcare, it can’t be called insurance, and so limits to the subsidy are easily attributed to the government leaders.
Whereas, if a government has the population buy “insurance” from non governmental entities, then it can pretend (for the layperson) that it isn’t a government subsidy and so the laypeople can blame limits of the subsidy on someone else.
Obviously, health insurance in the US is far from health insurance and premiums are closer to taxes being paid rather than premiums for one’s own health risks.
That isn’t so true in property and casualty insurance, at least not until governments like California step in.
no offence but that murder had nothing to do with what is right or caring for the people just a game same reason trains got graffiti on them. At most a beautiful lesson in the power that comes with controlling the narrative
That’s because healthcare is unusually expensive in the US, not because insurers’ profit margins are unusually high.
These are all the publicly listed health insurers in the US, with public financials, so the numbers come from the 10-Q and 10-K reports filed with the SEC.
Note that the first one, United Health, has slightly higher profit margins than the rest because UNH has an enormous business selling healthcare itself, not just insurance (they own a lot of doctor groups and outpatient clinics and employ a lot of doctors and nurses).
https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...
https://www.macrotrends.net/stocks/charts/ELV/elevance-healt...
https://www.macrotrends.net/stocks/charts/CI/cigna-group/pro...
https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro...
https://www.macrotrends.net/stocks/charts/HUM/humana/profit-...
https://www.macrotrends.net/stocks/charts/CNC/centene/profit...
https://www.macrotrends.net/stocks/charts/MOH/molina-healthc...
The other big insurers will be Kaiser Foundation Health Plan and various plans franchised with Blue Cross Blue Shield, but they are all non profit.
https://projects.propublica.org/nonprofits/organizations/941...
Some Blue Cross Blue Shield Association members are for-profit corporations now.
As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
> Some Blue Cross Blue Shield Association members are for-profit corporations now.
In this list, I couldn’t find a single for profit BCBS licensee other than Elevance. They all seem to be mutuals/member owned/non profit.
https://en.wikipedia.org/wiki/Blue_Cross_Blue_Shield_Associa...
> As for UnitedHealth Group, much of their profit comes from a large software business which is separate from their insurance, care delivery, and PBM businesses. If that software business was spun out it would be one of the 20 largest US tech companies.
Interesting, I didn’t know UNH sold software!
In this list, I couldn’t find a single for profit BCBS licensee
other than Elevance.
At a quick glance Highmark and Wellmark are for-profit. And I believe the South Carolina licensee is as well. Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
Highmark is non profit:
https://projects.propublica.org/nonprofits/organizations/821...
Wellmark is a mutual insurance company (profits go back to policyholders, seems not comparable to a for profit insurance business, and for this discussion, is not going to have a profit margin that results in higher costs to policyholders):
https://en.wikipedia.org/wiki/Wellmark_Blue_Cross_Blue_Shiel...
https://en.wikipedia.org/wiki/Mutual_insurance
>Mind you a few of the "non-profit" BCBS licensees have been sued over claims that they ought not be considered not-for-profit.
I see no successful lawsuits, though. Still seems like Elevance is the only for profit BCBS licensee.
>In 2014, BC/BS of Illinois (Health Care Service Corporation) was sued over its nonprofit status. The lawsuit was dismissed, with prejudice, and the dismissal ruling was upheld on appeal.[62] Similar suits occurred with similar results in other states such as Oregon.[63]
To be clear if Elevance is the only remaining for-profit BCBS licensee it's because they bought the others.
Highmark got labeled as for-profit on its Wikipedia entry likely because they own a variety of for-profit companies including e.g. Highmark BCBSD Inc. and Celtic Hospice LLC.
https://projects.propublica.org/nonprofits/organizations/453...
But Highmark, the parent organization, is still a non profit. Based on their revenue and expenses on their 990 going back a decade, the entire organization is not delivering profit to any owners, it’s just spending money earned in its for profit subsidiaries elsewhere in its org.
Specifics aside, I think it is conclusively shown that no health insurance / managed care organization earns a ton of profit margin. No one is going to become billionaire rich by starting up a managed care organization, because they will spend almost all they earn.
It’s such a low profit margin business, that Buffett, Dimon, and Bezos abandoned it:
https://www.healthcarefinancenews.com/news/haven-disbands-en...
But Highmark, the parent organization, is still a non profit.
> They're delivering profit
To who? Are there shareholders profiting? Employees on the take?
> Unlike the non-profit Mozilla Foundation, and the Mozilla open source project, founded by the now defunct Netscape Communications Corporation, the Mozilla Corporation is a taxable entity. The Mozilla Corporation reinvests all of its profits back into the Mozilla projects.
https://en.wikipedia.org/wiki/Mozilla_Corporation
It’s the same with Highmark, assuming there isn’t massive fraud happening.
You can literally read the 10-K statement from any of several publicly traded medical insurance companies. Average industry profit margin is about 3%. There are also some non-profit insurers but their fees generally aren't any lower.
When you point out that, for example, health insurance profits are low
single digit percentage of overall healthcare costs they just don’t
believe it.
You ever think it's curious that for-profit insurance companies pay out 2–3x what Medicare does for the same procedures?
> Or they see that as a cute bit of misdirection. Profits are capped as a percentage of healthcare costs, sure. [...]
You know what else is "a cute bit of misdirection"? Mentioning that profits are capped without mentioning why it's that way in the first place.
>You ever think it's curious that for-profit insurance companies pay out 2–3x what Medicare does for the same procedures?
...because the government low-balls healthcare providers?
...because the government low-balls healthcare providers?
You do realize health insurers have federally mandated caps on their profits, which simply incentivizes creative accounting to make money in more oblique ways, right?
>When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it.
It's not that I don't believe it, it's that this figure is completely unrelated to the damage and waste caused by the system of healthcare and health insurance we have in the US.
I mean, in a system of chattel slavery, you see above-normal profits competed away, but that in no way means the system isn't exploiting anyone, because that's not how the harm shows up! And yet still we'd see that argument get batted around in comments like yours:
"No, your owner can't possibly be exploiting you because, when you consider your purchase cost, he doesn't actually make much profit!"
Health Insurance IS a huge racket. Insurance profits are only a small slice. Executive compensation isn't part of profits. The profits of the required sole source medical supplies company isn't part of insurance profits. The contracts, salaries, benefit packages, overpayments, and waste of healthcare systems and pharmaceutical companies aren't reflected in insurance profits. Just looking at the raw profit percentages returned to shareholders is absolutely meaningless.
You have to look at the entire healthcare picture and realize that insurance is the system driving the exorbitant costs. There is no legitimate reason for healthcare prices to be so insane.
> There is no legitimate reason for healthcare prices to be so insane.
these profit margins are why some people claim that the US is actually subsidizing the rest of the world's low cost health outcomes.
These companies make money in the US, at high margins, which enables them to operate at low margins in other more regulated countries.
This might apply to Pharma, which actually operates in international markets, but not to US health insurers, PBMs, or for-profit Healthcare providers.
>Health Insurance IS a huge racket. Insurance profits are only a small slice. Executive compensation isn't part of profits.
"Executive compensation" is even a "smaller slice" than profits, orders of magnitude smaller.
> I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks
Its not just the insurance costs either. My neighbor is an architect who now does planning/consultation with the RFS (rural fire service, australia). Its basically de rigueur for people to try and avoid or evade fire sensitive planning controls. Just the most basic concepts like defensible space, eve guards, or nonflammable finishes, let alone adequate on site water storage or site access. People are intentionally building in bushland because they want to be “in trees”, unless they block the view of course.
Even if they understand the concepts and remember black saturday, or a few years back!, it doesnt apply to them. Theres no concept of personal risk & consequences, and theyre right. They will probably get bailed out by volunteers and socialized losses. Just like new developments along riverine flood ways.
At some level, insurance is about spreading out financial risk. Insurance companies would love for every policy to be profitable, but if we let it go that far, it's merely a savings account with negative interest rates. At another level, insurance is about analyzing risk and making it more expensive to take bigger risks. Where do we want the tradeoff between these things? Whatever we choose, we have to have some ability to predict / evaluate risk.
In the face of climate change, places that have been safe for a very long time are becoming unsafe. But I don't see a reason these shifts won't happen over and over as climate change unfolds. It might be worse than mass migrations... migrations to locations which later become dangerous, turning into recurring mass migrations.
How well can we predict where it will be safe in the coming decades and where it won't. Coastal land at or below current sea level (plus storm surge) is fairly predictable, especially where there isn't the population density (and money) to support building sea walls. But with things like rivers changing course (e.g., https://en.wikipedia.org/wiki/Alsek_River), it might become very difficult to predict what's going to be safe down the road. Today we talk about things like 100-year flood plains, but how will we establish flood probabilities when the river that might flood in 10 or 20 years doesn't even exist today?
Are the people who get unlucky with predictions just screwed because their home equity is gone? Or are we going to decide to shoulder the burden together? We're going to find out a lot about humanity, the role of government, etc. as we go through all of this.
Soon, people will realize that the entire economic system that caused climate change in the first place will not save us. Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
>Soon, people will realize that the entire economic system that caused climate change in the first place will not save us.
Disagree. "the entire economic system that caused climate change in the first place" is also responsible for the green transition, including cheap electric cars and renewable energy.
>Once we stop sacrificing our lives in the name of Almighty Profit, then maybe we can move forward and come up with solutions that aren't just "lol stop living in LA".
Alright, what's your solution to "the entire economic system that caused climate change in the first place" that aren't just "lol just stop capitalism"?
The issue is not that people believe that insurance companies are not pricing risk correctly. It's that because there is so little competition in the market, people are aware that insurance companies can charge higher premiums because they operate as an oligopoly.
Your statements contradict each other, don't they?
In the many many complaints I have heard about the insurance industry, nobody has complained about them acting as an oligopoly or about a lack of competition.
Further, pricing is extremely regulated in terms of what can be factored in, so being an oligopoly doesn't have much impact on that.
Insurance should not be for profit, and things like e.g. State Farm suddenly cancelling people's renters/fire insurance just two weeks before the fires (I am one of those people) are what people hate about insurance. No one is arguing that insurance is bad at risk assessment, but rather how they wield their proficiency with it.
Why does State Farm in particular have a moral obligation to insure you against fire if it’s not profitable for them to do so?
To pick random examples of unrelated companies, McDonalds or SpaceX would also refuse to insure you against fire. Why should people hate State Farm for this reason, but not McDonalds or SpaceX?
If State Farm didn’t exist and the state ran insurance instead, and were willing to insure all comers, they’d be subsidizing people who can’t be insured profitably. That’s not crazy on its face (the state subsidizes lots of different things), but it’s at least worth asking why we should be paying for people to live in high-fire-risk areas rather than any number of other things the state could be spending those resources on.
State Farm is a mutual insurance company, so it's owned by its policy holders. It's not quite non-profit, but it's in the same ballpark. I've gotten money back from State Farm one year when they (we, I guess) made too much money.
If you only had two weeks notification, you should file a complaint with the commissioner here:
https://www.insurance.ca.gov/01-consumers/101-help/index.cfm
It's likely that you are not alone, but I've not heard of anybody not getting notification, despite a lot of people not getting renewed.
State Farm notified its customers in August of its non-renewal (not cancelling) of policies, plenty of time for homeowners to get new policies or fall back to the state fund.
And what is fire insurance? Is that something unique to CA?
My insurance was cancelled but I don’t blame the insurer at all.
CA regulation basically capped their premium increase and my insurer did calculations that said “this is a net negative business”.
If I had a business making a loss I would get out, so why would I blame my insurer for doing the same?