Guest Post by Willis Eschenbach
Well, we had the Senate hearing on the climate. Dr. Roy Spencer and Dr. Roger Pielke gave excellent talks. There’s a discussion of it here on WUWT and Dr. Judith Curry has a post on it at her blog.
I wanted to discuss the silver fox in the science house, the testimony of Mr. Frank Nutter, Esq. He represented the insurance and reinsurance industries, and presented their recommendations with an insurance company’s usual honesty and plain square dealing, combined with a lawyer’s well-known transparency and clarity.
Mr. Nutter’s bio from when he was a Moderator for an AGU conference includes …
Mr. Nutter currently serves on the Board of the International Hurricane Research Center … He recently served on the Council of the American Meteorological Society; the Board of the University Center for Atmospheric Research, a consortium of universities managing the National Center for Atmospheric Research sponsored by the National Science Foundation; and the Board of the Bermuda Institute for Ocean Sciences.
When I read that, I thought dang, they got an insurance guy who is actually a climate scientist? That’s a surprise. So I wondered, what are his qualifications for being on all of those climate-related boards?
Well … it turns out he has a law degree, which his bio spells out in full, a “Juris Doctorate”. And he has a winning smile. And presumably lots of money.
In any case, Mr. Nutter Esq. put a bunch of insurance company recommendations before the good Congresspersonages, and I busted out laughing when I read the first one.
Congressional Action
As Congress considers the impact of climate change, the RAA [Reinsurance Association of America] suggests the following legislative principles or actions to consider:
• Provide tax credits to individuals for specified mitigation and resiliency actions associated with extreme weather and climate change.
Now, what’s not to like in that? He’s interested in adaptation to evil CO2, and not in a carbon tax to mitigate CO2. He wants to upgrade our infrastructure to make America less vulnerable to the oft-rumored climate catastrophe, strengthen our resiliency and ability to weather the oft-foretold and oft-delayed climate catastrophe, or even just do a better job of surviving the next big storm … you almost want to congratulate him for his community spirit.
Almost …
Here’s the deal with insurance companies. They are in business to make money, and more power to them—insurance is a needed and useful service, and if they can’t make a profit everyone suffers. However, we need to keep in mind a few very important things.
The first one is that the more that people are scared of the future, the more insurance they will buy. So as you might imagine, the insurance companies have been the allies of climate alarmists from day one. Munich Re has been strongly pro-alarm since the early days. So has Swiss Re, and so has every insurer with half a brain. Climate alarmism is the insurer’s perfect storm, people will have to insure against all the foretold dooms—they have to protect themselves from flood, fire, famine, drought, sea level, storms, insect-borne diseases, and all of the thermally-induced biblical curses that were supposed to appear a decade ago. (We’re earnestly assured their appearance has only been postponed, not cancelled, so I guess there’s still hope for the rain of frogs.) Every time James Hansen or another of the terminally alarmist folks talks up the future climate terrors, the insurance industry applauds them all the way to the bank.
The second one is that like any business, insurers want to increase their income and cut their costs, or in other words, increase their profits. The best, of course, is if they can increase their incomes with no increase in costs or overheads. Then it’s all profit, of which more anon.
The third is that, despite all of Mr. Nutter’s hype and his charts, there is no evidence that extreme weather events are increasing. Even the IPCC has been dragged kicking and screaming to admit this. The land has been warming for a couple hundred years, but nowhere in there are any thermal catastrophes, or any increase in the extremes of wind, water, and weather.
Now with those three things in mind, let’s look at the insurers’ first prescription for the Congressfolk. They want tax credits for people to strengthen their houses … and that means that when the next inevitable weather calamity hits, Mr. Nutter, Esq. and his merry men will make even more money. Fewer claims for loss means more money in the bank.
I mean, that is a work of genius—in the name of green caution, convince Congress to give special tax breaks to a subsection of all taxpayers, that is to say homeowners. But not just any homeowners, a special subclass of homeowners, those who get their roofs blown off and such. They are a special subclass because they’re the ones costing the insurance companies money. So we give those folks tax breaks for strengthening their buildings. As a result, tax revenues go down, a small percentage of the taxpayers get a special tax break, the poor get nothing, and the insurance companies’ revenues go up … and this is supposed to be a good thing? The brilliant arrogance of the plan is stunning.
If nothing else, you gotta admire the gall of the thief proposing that we pay him to rob people … not that the insurers need the money, they’ve already made billions off of the climate scam, and they’ll make billions more before the lunacy has run its course.
Of course, once the houses are strengthened, I assume most folks reading this know enough not to expect the insurance rates to drop—after all, James Hansen has assured the insurers that a major calamity is inevitable, Thermageddon is just around the corner. So the insurers can’t possibly reduce their rates, that wouldn’t be fiscally responsible in the face of grave imaginary danger …
So the rates will remain the same, or even go up to match the prophesied thermal meltdown, and the losses will go down, and the insurers will make more money on both ends.
Remind me again why this lucre-driven jackanapes has been invited to speak on the same platform with climate scientists? Mr. Nutter may be an excellent lawyer, but in front of Congress with his insurance hat on he is just a wallet with a mouth, crying “Feed me! Feed me!”.
Now that you understand how the game is played, lets look at the other insurance company proposals, and I’ll translate them one by one, although you could likely do it yourselves. I will list their points in bold type, verbatim.
• Incent communities to develop and implement mitigation and resiliency initiatives.
English is such a great language. We’re going to “incent” communities to implement initiatives that will reduce the costs to the insurance companies. How to “incent” them is not specified, but I assume it involves “incenting” them with taxpayers money.
I don’t have to assume it will increase the insurers’ profits, however, that’s a given. Any “mitigation and resiliency initiatives” will put money directly into the insurers’ Swiss bank accounts. That’s the pure gravy I mentioned above. No additional expenses. No associated costs. No increases in overheads. Just a pure reduction in claims for loss, and that’s 100% profit.
• Reform the National Flood Insurance Program to reflect extreme weather and climate risk in its rates.
In other words, reducing the insurers costs from claims for loss is not enough—the insurance companies also want to be able to increase the rates at the same time. Note that the clever Mr. Nutter doesn’t mention the word “increase”, as in “increase the rates”. After all, “increase” is such an ugly term, don’t you think? No, they merely want to “reflect extreme weather and climate risk” by appropriately embiggening the premiums required under the Program, but they are not increasing the rates, oh, no, don’t say that.
Never mind that there is no evidence of an increase in extreme weather, despite 200 years of warming. Never mind that “climate risk” is undefined as befits its ethereal nature. They want to be able to increase the rates, so truth is not on the list of necessary ingredients.
• Apply Federal standards to state/local building codes and incorporate climate and extreme weather risk into these standards.
This is the same as their first proposal, just another way to get the buildings stronger to reduce the insurance companies’ costs. It will not be matched with a commensurate reduction in rates, so it is pure profit to the industry. Money for jam, as they say.
Next, “climate and extreme weather risk” are already in the standards. The standards involve engineers, not insurance lawyers. Do they think extreme wind and weather are not considered by every structural engineer?
Let me note one other profit stream for the insurance industries. Every time any standard is increased, whether for real or for imagined risks, the costs (and thus the value) of the building go up. And from the moment that construction starts until it is demolished, the building is insured. Finally, the premium paid to the insurers is some percentage of the insured value … I’m sure you can do the math.
• Purchase or relocate properties near coastal or river areas at repeat risk.
This one translates as “we’re tired of being forced to insure losers, so the US Government should buy them out using taxpayers’ money.”
Why doesn’t the Government ever do things like that for me? I mean, why don’t they solve some big business problem that is costing me money? And more to the point, if people insist on building on flood plains and barrier islands and below sea level, why should you and I or the US Government have to pay for their foolishness?
• Use nature to mitigate risk before and after extreme events.
Noble, green, and low-cost, nature is just the ticket … plus it puts money in the insurers’ pockets. Gotta love nature.
I could go on, but I’m sure you get the point. Once you look past the coat after coat of green paint on this pile of most cleverly worded proposals, it is nothing but a greed-driven, highly disguised push to have Congress do the insurers’ dirty work, and to have the taxpayers pay for it.
In my opinion, the insurance companies do not belong on the same dais with the scientists. Mr. Nutter’s proposed actions, one and all, increase the profits of the insurers. If we implemented all of his ideas they’d make billions more than otherwise. If scientists need to declare their conflicts of interest, then it should be noted that the insurance companies make more money out of climate alarmism than James Hansen ever made, even with his salary, his pension, and his awards. Not to mention the generous gifts he accepted … but all of that pales before money made by the insurers. They started stoking the climate hysteria early and often, and have kept pushing the hype right up to the present. And during that time, they have made billions out of the madness of crowds, they are looking to jack their profits even more … and someone thinks we should listen to a single word they say on the subject?
I mean, think about it. The insurance companies have it made. They have hordes of otherwise reasonable people who have drunk the koolaid and go around spouting doomsday prophecies about the Thermal End Times, and about simultaneous droughts and floods, and about meters and meter of sea level rise … it’s an insurer’s wet dream to have suckers of all stripes sounding every alarm bell like that, it’s golden.
Because to an insurance company, alarm bells and frightened people are money in the bank.
So no, they should not get a say at the highest levels. They should not get a special hearing in front of Congress. We know what they will say, duh, no mystery there. They will say that the taxpayers should pay for repairs and changes and mitigations that will make the insurers more money. In a way I don’t blame them for saying that, although I don’t like the deception, it’s a businesses’ job to sell their product.
But I do blame anyone who pays the slightest attention to Munich Re and Swiss Re and Frank Nutter and the rest of the insurance folks on the subject of climate. They are not your friends. Their advice is 100% self-serving. Their proposed benefits are measured in dollars, and not your dollars—dollars in their Swiss bank accounts.
Global warming supporters say that the science is all on their side … so who did the global warming folks send to plead their case to Congress?
An insurance company lawyer who says “fill our pockets with money, suckers, it’s all ever so green, and oh, you’re picking up the tab for lunch” …
I must say, however, that if Heidi Cullen and Frank Nutter are part of the global warming supporters “A-Team”, that we skeptical folk must be winning. That’s a pretty pathetic lineup.
w.
People do not buy insurance because of what ‘they know will happen’ but because of what they fear ‘may happen ‘ its a product that relies on fear to sell in the first place. Keep that in mind when dealing with such people , no fear no bucks .
“He represented the insurance and reinsurance industries, and presented their recommendations with an insurance company’s usual honesty and plain square dealing, combined with a lawyer’s well-known transparency and clarity.”
Willis, you certainly have a way with words.
Does the name ‘Nutter’ have the same meaning in the US, as in the UK? As the collective noun ‘nutters’ would be a very apt one for ‘climate scientists’.
My father used to be an underwriter at Lloyds of London and was almost wiped out by Hurricane Betsy (Category 4-5 on landfall). The insurance industry does not like Hurricane Betsys and if they can figure out a way to make themselves immune from such catastrophes, and better still to make the government pay for all the damage, they will do it.
The concept of global warming/climate change/whatever must be a godsend for the insurance industry, as this allows it – as you quite rightly say – the golden opportunity to seek government approval to charge higher premiums for lower risk.
Does implementing pointless actions against the non-problem of global waming/climate change/whatever ever do anything other than increase the cost of living for the average person, while giving him/her absolutely nothing in return?
IAG logo
IAG flags FY13 reported insurance margin of 16.8-17.2%
IAG logo
You are receiving this email because you registered on the IAG website to receive alerts when we post news announcements to the site.
IAG today announced that it expects to report an insurance margin of between 16.8% and 17.2% for the financial year ended 30 June 2013 (FY13). This compares to previous guidance of 12.5-14.5%. IAG Managing Director and CEO, Mr Mike Wilkins, said the Group’s financial performance in FY13 has been favourably impacted by natural peril, reserve release and credit spread outcomes.
‘favourably impacted by natural peril’ a great use of the English language.
At least this company does not blame anthropogenic global warming, and its share price has recovered.Its Australian.
It still remains that all the predictions and assertions by the ‘angry weather’ alarmists in Australia have helped insurance companies no end as people are prepared to pay more for the same risk.
As an aside my local telephone exchange was taken out by a lightening strike for five days.
Looking up the Telstra website to find out how long my business would be compromised I was told that Telstra wanted to claim force majeur because of its losses in Queensland and so not fix the exchange with due diligence as it is contracted to do.
Because of its privatisation and downsizing this organisation has sacked a lot of its workers and so cannot respond to the usual climate change we are all beset with, but uses the prop of angry weather to get out of its corporate liability to give telecom service.
Premium related to insured value would be a nice graph to see for the past two decennia. It might show that it has decreased. Maybe that’s why he wants the government to lower potential losses.
As always … follow the money … it invariably leeds to the truth.
“………insurance is a needed and useful service, and if they can’t make a profit everyone suffers. ”
I don’t know about elsewhere, but here in the UK for ‘flood’ insurance, the paradox is that Insurance Companies won’t offer it if your home is ‘at risk’.
i.e. They’ll only take the premiums of those at no ‘risk’.
His name says it all!
‘Incent’ is not a word used over here in the UK. It’s American English. In the UK, we might say that people will be ‘offered incentives’, or perhaps ‘encouraged to’.
As ’embiggening’ – ugh! Please, please, tell me that this isn’t in general use in the USA.
Externalize the cost while privatizing the profit. Mr. Eschenbach points out that the green movement, represented by the insurance industry, is engaging in exactly the same tactics they use as a hammer to assault every non-green capitalistic enterprise in existence.
Kettle meet Pot; Pot meet Kettle.
Here in New Zealand we have had a series of destructive earthquakes in Christchurch, a city in the South Island, because of this the global re-insurance and consequently our local insurance companies have doubled their rates in other NZ cities without there being any increased risk in those cities. Our apartment complex insurance in Wellington has doubled this year. The driver behind this is to recover the payments the Insurance companies have paid out in Christchurch. Now admittedly Wellington is at risk from earthquakes, we had a 5.7 yesterday that was close and relatively shallow so shook quite spectacularly, and a fault line similar to the San Andreas runs through the city, but this in no way increases the risk from what it was previously.
Unfortunately there is not much we can do, we have to insure and eventually premiums will come down and at least we have the comfort of knowing we are contributing to the financial well being of companies like Munich re.
Thanks again, Willis. You are a national treasure. I saw one of these insurance jerks on CNBC Squawk Box a few months ago. He tried to spout his rhetoric, but Joe Kernen shredded him on much the same points as you. Expect to see more of these weasels…
Since us skeptics are losing the climate battle with the general public, your article doubles as an equity investing guide. Neat.
Oops…make that an “international” treasure.
You said, “…people will have to insure against all the foretold dooms”. But your list omitted the next Carrington Event which is (a) inevitable, (b) probably hugely destructive (no electricity for year – a decade – who knows), and (c) nothing to do with Earth’s climate.
Nice one Willis; it always pays to look beyong the surface as things; as the man said: ‘Follow the money” – advice which rarely if ever fails.
Meanwhile I was walking yesterday where I’ve not for a year (due to broken bones) and noticed that a south-facing hillside has been planted as a vineyard. Here on the Suffolk borders we always have a have very cold snap lasting at least a fortnight with a minimum foot of snow and temps below freezing. Given most commentators I respect are warming of severe cooling in the coming years, I wondered instantly if the owners had taken out insurance against a LIA!
As for the man’s language…. I assume for ‘incent’ he meant to say ‘incentivize’ – bad enough; but this is from the country which brought us ‘to burglarize’ in place of the perfectly serviceable verb ‘to burgle’. ‘Embiggening’ is just unspeakable
Warning, not warming – we all have warming on the brain.
And apologies for the extra ‘have’.
NB When posting a comment just after making one, we are often trying to make a correction, hence ‘posting too quickly’; oh for an edit facility on here!
• Apply Federal standards to state/local building codes and incorporate climate and extreme weather risk into these standards.
I have just renewed my home insurance and part of the procedure is to confirm the construction methods used for the property. The premium for insuring the property therefore already includes an allowance for how resilient the building is to damage. It is safe to bet that if you overstated the strength of the building then any claim you put in would not be treated favourably.
On the following page of the United Nations Framework Convention on Climate Change you will find the good fellow in bed with climate alarmists and NGOs. What’s not to like.
Now, you can see WHY the weather / climate MUST get worse. Too much has been invested in this con job, it’s too big to fail. What a bunch of climate jokers.
[Munich Climate Insurance Initiative (MCII)]
Munich Re
German Watch
IIASA
Potsdam Institute (PIK)
TERI
Tyndall Centre
World Bank
https://unfccc.int/adaptation/knowledge_resources/databases/partners_action_pledges/items/5005.php?nwp=org&turn=n&detail=j&id=93
Notrickszone – 19 October 2012
‘The Local’: Munich RE “Profiteering From Climate Change Scare Stories Based On Quasi Scientific Reports”
In the news here recently there was a story of how some insurers had got out of paying out for flood damage by saying thing stipulated in the small print hadn’t been complied with… and what were these terrible failures on the part of those whose homes had been flooded by rising water? They had not re grouted the bathroom tiles each year. This obviously left there homes at greater risk from the rising water!!!
http://www.bbc.co.uk/news/business-23304567
James Bull
Excellent points, Willis, and very well stated.
Carbon500 says:
July 20, 2013 at 2:50 am
Cool screen-name! Kind of like “Indy-500”, as if we are in a race to get to 500ppm! I like it.
Spot on as usual Willis. But you make no mention of the worry wart perched at the other end whose demeanour and opening pitch (sleepless nights and daughterly references) make her prime chow for the predatory nutters of this world. Glum is not the word, reminded me of a Rhode Island Red – lots of endearing gravelly moans and an occasional “cluck-blink” one-two alarm while squeezing out the next infertile egg. Fox, parakeet and industrial hen – wattle Josh make of it all?
Back in June we had the alarmists at PIK pushing in the GRL about future Indian monsoon variability based on ’20 state-of-the-art climate models’ simulations. In a press release one of their own called for “intelligent insurance schemes”. Now we know why.
How much more variable do they think Indian monsoons will get?
Good article Willis, only one thing wrong:
” As a result, tax revenues go down, a small percentage of the taxpayers get a special tax break, the poor get nothing, and the insurance companies’ revenues go up … and this is supposed to be a good thing? ”
The poor don’t get nothing, they should be so lucky as to get nothing. They hit to pay the increased insurance premiums and increased taxes that are necessary to pay someone else’s tax-breaks.
With whose money? Oh yeah, our money. Taxpayer money. Hey, do we get to drop by and visit our beach-front property someday?
You can always tell a natural-born leftist, and it really has nothing to do with party politics, and certainly nothing to do with Science. It is all about the instinctual compulsion to sit back and spend other people’s money. The subject matter varies but the common denominator remains, taking people’s money and spending it. There is not even a pretense any longer of fiscal sense or accountability. There is no concept even of red ink. All actions grow the bureaucracy and all roads lead to Government.
Look at all the points Willis highlighted. Each one is about Government power, and taxpayer money. It’s all they got.
Nutter he is not. This is a good presentation on behalf of his clients who, I assume , are paying him hansomely.
Joe Public: not only do they offer flood insurance only where there is no flood possible; they keep increasing motor insurance premiums despite the fact both the accident rate and accident-related payouts have been on a steady decline in the UK for many years.
I was under the impression that the UK business overall — not just insurance — was dishonest from the first days of my sojourn in this country. The motor insurance business is just one of the most blatantly dishonest. Here I have to pay 10x the rate I paid in Illinois, while knowing full well that none of it is based on actual risks.
Mr. Nutter’s bio from when he was a Moderator for an AGU conference includes …
Mr. Nutter currently serves on the Board of the International Hurricane Research Center … He recently served on the Council of the American Meteorological Society; the Board of the University Center for Atmospheric Research, a consortium of universities managing the National Center for Atmospheric Research sponsored by the National Science Foundation; and the Board of the Bermuda Institute for Ocean Sciences.
===
So he’s got himself well placed to steer where research money gets allocated and hence what research gets done and hence what gets published. Then he gets invited to give “evidence” to a senate hearing.
Just remind me, was that the same AMS that was making dogmatic declarations about global warming on behalf of its members that members were not allowed to vote on or challenge??
Seems our canny lawyer freind knows how to stack the cards in his favour.
“… silver fox …? No, just a regular fox with scabies …
Lawrence Solomon notes in the Financial Post back in 2011 that the insurance companies have been pushing climate alarmism as far back as 1973.
More slick oil salesmanship at Munich Re | Spiegel: “Scientists are outraged”
http://notrickszone.com/2012/10/18/spiegel-slams-munich-re-distortions-of-weather-extremes-are-suspicious-and-irresponsible-hype/
Dead on as usual Willis!
We shouldn’t forget that the U.S. “National Flood Insurance” program only insures against loss of the structure, not the loss of the contents. Since a lot of regular policies exclude flooding, this leaves the insurance companies covered on the buildings, and covered (no payment) on the contents, while the homeowner can still wind up with just an empty shell. Such a deal.
Over time the insurance industry has done something marvelous, they’ve turned a modified Ponzi Scheme into a “legitimate” business. They even tell you up front the only special planetary alignments which will get you any of your money back.
What part of “flood plain” is so hard for people to understand? Not “if” but “when”.
Price of insurance against cold weather induced calamities has surely gone down, has it?
I’ll make it even easier for you. It’s called hunkering down–also avoidance behavior, also denial of a larger reality than you would like to deal with, also throwing the weaker ones off the back of the wagon to the “insurance” wolves, who after all are a beloved establishment institution, to all those with the money to spend on insurance–and it is what everyone in the world is doing now, more or less, rather than spurning the easy dogmas, and opening up to and learning the truth that is on offer in any situation (especially, in the context of climate “science”, all those, alarmist or lukewarmer, who believe in the Greenhouse Effect–patent still pending after all these years–of increasing atmospheric temperature with increasing atmospheric carbon dioxide, even a “little bit”. There is no such greenhouse effect, but don’t try to tell the experts.) Insurance is what rich people do to protect their wealth (in any form, including health); to the poor folks, who want to be left alone (it’s an unalienable, individual right), it’s a scam, and taxation without representation, and a few choice curses every time the subject comes up.
Dear Willis, I like “embiggening”. It makes me laugh and I know exactly what you mean.
Appropriately named.
Still, I think there are valid points to hardening structures near coasts.
I believe people near the coasts should build to modern wind resistant standards. Even my barn/workshop is built to 140 mph coastal residential standards. We have twice in recent years survived +125 mph winds and twice +90 mph winds with no damage, . That’s a good deal for all of us.
With a little bit of calculating, I could do an estimate of the additional cost incurred when we built my house and 800 sqf workshop. I suspect it is in the area of $5000. Most of the stuff is simple modifications of what you are doing when you build a structure anyway (like gluing the plywood to the rafters with construction adhesive as well as nailing it).
Maybe it’s the engineer in me, or maybe I just enjoy that all my stuff is not all over three counties after these storms. There’s something really convenient about that which makes me not miss the $5000.
And when you look at the fact that government has to help clean up some of that mess after the inevitable storms, I think it’s the responsible thing to do- if you want to live near the coast.
Gerry Parker
Willis, well done as usual.
But taking on lawyers representing insurance companies makes shooting fish in a barrel look like the height of sportsmanship.
And I speak as someone currently in dispute with my insurance company. They seem to think that they can get around the whole contract thingy. Not with me they can’t. But I suspect it works with a lot of people, unfortunately.
Conflict of Interest:
James Hansen
Al Gore
Michael Mann
Richard Muller
Heidi Cullen
Frank Nutter
All warmists who in some way using the AGW pseudoscience and scaremongering to get rich.
Curiouos graphic on page 16 of the PDF of his testimony, which I’m struggling to see why he included. From Munich RE, under the title of “What if they hit today?” it appears to show the estimated (insured) cost if historical storms happened with current development in place. Allowing for the fact that it’s necessarily heavily based on modelling, that would seem to be a reasonable measure of whether or not changing climate is really making things worse for the industry.
On that basis, only 3 of the 12 most costly have happened in the past 40 years. Which surely suggests that – if anything – recent climate has actually reduced the risk?
No doubt, Mr. Nutter had a large jar of palm grease in his brief case, the fragrance of which is irresistible to and draws politicians like blow flies. No wonder he has such a nice smile.
Willis – once again we have a demonstration that the internet does not convey irony, especially to those who would not recognise it if it hit them with a Mack truck. That said, I quite like “embiggen” and think that it adds a useful word to the English language.
As for the insurance industry (especially Munich Re) and its links to global catastrophe alarmism, Steve Milloy over at junkscience.com has been all over this issue for years. Good on you for pointing out this latest example of egregious self-interest, highlighting a long standing con on consumers and taxpayers.
Exactly on target. The reinsurance industry is basically unregulated as to what they charge. Since all insurance companies depend on reinsurance policies to secure themselves against massive losses, the reinsurance industry premiums are passed on as part of the premium. Regulators regulate premium pricing, not so much the costs insurance companies face. Reinsurance costs are seldom if ever questioned. According to outside studies, reinsurance costs for hurricanes are 500% of the actual risks.
And who has paid for the studies that the reinsurance industry uses to justify the cost?
The reinsurance industry.
“Embiggen” is a great neologism – originating here: http://en.wikipedia.org/wiki/Lisa_the_Iconoclast
– as was “Cromulent” which perfectly defines the scheme presented by the “Craptacuarly” named Frank Nutter. (see also http://www.cracked.com/article_15269_from-cromulent-to-craptacular-top-12-simpsons-created-words.html)
As for the verb to “incent” all I can say is “meh.”
Thanks for the excellent article.
One gripe …
“insurance is a needed and useful service”
No it isn’t, at least not needed. It may be useful on occasion (health insurance for your kids), but definitely not needed. The rates are set so that you are likely to pay more with insurance than without. If you are a millionaire, it makes absolutely no sense to have insurance for most things. It’s designed to take advantage of the less affluent. I’m sure you know this. It bears pointing out.
wsbriggs,
You are incorrect.
The National Flood Insurance Program offers up to $100,000 in contents coverage on their home owners policy.
I write those policies and I know what I am talking about.
Eric Barnes, since most people are not rich enough to cope with a catastrophic event, insurance is very necessary. If someone backs up a truck to my house while I am away and empties it of everything of value, or it burns down ditto, please explain why insurance is evil (I am not rich).
My view is that while the cost of insurance is debatable, the need for it is not. My personal hope is that I never have to claim on my home insurance policies – and if my premiums go toward helping someone whose house has been robbed or burned down, that is the whole point – plus – there but for the grace of God, go I.
“So as you might imagine, the insurance companies have been the allies of climate alarmists from day one. Munich Re has been strongly pro-alarm since the early days.”
Profits are taxable. If an insurance regulator requires an insurance company to retain a portion of profits to pay out potential future losses then those profits become ‘non-taxable’ loss reserves.
Now that the insurance companies have convinced the regulators that they need massive reserves in order to avoid taxes they now want homeonwers to get tax credits so that those massive losses never happen.
As usual Willis, you expose the charlatans of spin and propaganda. The obvious incentive is for insurance companies to offer huge premium discounts for people who live in defined areas that need “special” construction :”hardening” against known risk. As an example years ago all insurers would offer a discount on their premiums if I fitted an approved fire extinguisher in my automobile, but in the cockeyed world “discount” is a dirty word for them. At any pretext and Global warming is one oft quoted premiums just keep rising.
Here in Australia the high fire insurance premiums meant that many houses that were built in fire prone areas were left uninsured or under insured, and risks increased by green tree huggers (tree changers and environmentalists) who moved from urban areas to country locations took control of local councils mandating that that no one was permitted to remove undergrowth from forests, and if you tried to cut a firebreak around your property, sanctioned/recommended by the local fire brigade, you could be heavily fined thousands of dollars by way of regulatory controls for removing trees or undergrowth, hence our regular bushfires have increased in intensity due to these dumb acts.
With so many choosing NOT to insure for flood and fire due to the high cost, we now have huge public appeals to mitigate the total loss of uninsured properties and the State of Queensland allowed houses to be built on known flood plains, but they then failed to take out any state major disaster insurance (cost saving).
Australians are very generous in coming to the aid of people wiped out in natural disasters and many insurance companies tried to dodge their obligations by petty adherence to fine print in policies. (after all their customers could access appeal funding!!)
All of these issues (nothing to do with climate change) and petty local over regulation of green environmental laws, like prevention of past practices of burning off dry grass and reducing fire fuel loads in forests and permitting building in inappropriate bush locations, has meant more pressure on Insurance companies to be sympathetic and rely less on fine print to reject the claims of the ones that DID insure.
In the State of Victoria insurance has now been included as a component of municipal rates so all properties contribute to a fire service levy as an extension of the old principals of shared risk and risk reduction. But it remains to be seen if there will be any real reduction as already insurance costs and services, fees are rising.
The insurance industries have a few other cute profit protection ideas in the pipeline that rely on regulation and enforcement for safety and other reasons to shift costs away from their responsibility to inspect for risk.
A few years back public event insurers put such high premium cost on public events, that many community events could not be protected or be conducted due to costs and special conditions (wriggle room), they eventually negotiated a “satisfactory to them” settlement with the government that avoided them opening their books to state authorities so their actual, not their spun, claimed cost strategies, were kept away from public scrutiny. A nice skilled politician/industry arrangement to permit high event fee insurance, but not much less than the industry had demanded.
So yes, the question to ask them is show me your confidential claim histories and profit levels to justify your claim/spin before we grant you anything. Where business seeks concessions from statutory authorities that shift costs or require padding to profit margins it pays to be sceptical and ask for the proof.
Inevitably, trade factions introduce public choice complications and the long history of insurance industry dalliance with warmist policies deserves skepticism if not outright cyncism. To an extent this is a problem that needs to be cleaned up from within as Nutters testimony completely ignores industry tools for dealing with these problems.
to speak of premiums or the cost of insurance as one monolithic concept is equally silly. rates have risen dramatically for those in coastal locations subject to storm damage (as flood insurance itself is virtually unavailable in the private market having been displaced by earlier reactionary public insurance policy.)
but just as farm association policies favoring ethanol should make one cynical, they don’t represent the outlook of individual farmers. While the universe of insurance companies is a bit more attenuated than that of farmers, and economic response to these phenomenon are complicated by barriers to entry in the industry and complex state and federal laws with vast unintended consequences, you are simply flat wrong to suggest that premiums will not go down if risk of loss goes down. They will. Look at life insurance rates for non-smokers. But in our infinite wisdom health insurance companies can’t do the same thing.
If there is a large disparity between premiums and risks, capital will flow into the insurance industry and seek business by discounting against that spread in one way or another — premium or underwriting or some combination.
Insurance company suggestions for tax credits to harden threatened property come in a context where the kneejerk proposition has been for insurance policy (sorry) to be set by legislation rather than by simple economics where the insurance company offers a significant discount and/or underwriting consideration against recently inflated rates or refusal to write coverage in consequence of homeowners undertaking such retrofitting.
To an extent the public policy apparatus has already been captured because codes for new construction impose many of these requirements. I’m not suggesting Gerry Parker is wrong in seeing these as sensible but this could be done privately by the establishment of codes by insurance companies to meet underwriting guidelines. If you can’t get insurance you can’t get a mortgage.
There is a degree of public interest in that the government is essentially the disaster insurer of last resort and local government has property tax revenues and local economic functions at stake. But if we really allowed the market to function instead of imagining the least ripple was ‘market failure’ requiring legislation these risks would be better attenuated and more widely covered by private action.
But someone would no doubt call this all discrimination against people who don’t have the money to make those repairs. Then this would result in maybe a tax on insurance premiums for those who did make the repairs to create some grant pogrom for those who didn’t which either would fund repairs or subsidize insurance. The government knows no end of this kind of reactionary legislation and there is little wonder that the Wesley Mouches of our day working for the insurance companies are simply hellbent on getting theirs.
Yes it is reasonable to object to that proposal, but it is of the same species as tax credits for owning homes in the first place, a government gift to realtors, banks, homebuilders, etc.
Or the many state govt. rules against prepayment penalties on loans, one of the most dislocating economic policies we have in that arena.
I simply don’t buy the fear thing. You have to get insurance to get a mortgage. The only people to whom the fear rationale would apply are folks who have built value with sweat instead of bank equity or have paid off their mortgages. So I don’t buy that the insurance industry participation in the extreme weather pogram is to make a few retirees who have had their mortgage burning party buy insurance who wouldn’t.
First of all, the only time you are required to have wind and flood insurance on a building is if there is a mortgage on the property. That requirement is imposed by the lender to protect their investment. If you do not want to pay insurance, pay off the loan.
Second, insurance is a pool of money from which an insured can be paid for a claim. It is set up to protect the insured from great financial loss. Each of us has our own perception of the amount of financial loss we would be willing to suffer and we insure ourselves accordingly; lenders do not want to suffer any financial loss so you must insure for the amount of the loan balance as a minimum.
Third, in the US, insurers are regulated by the States (a very, very good idea contrary to what you hear but that is another discussion). In Florida most of the major insurance companies wanted to be selective in what areas they would provide wind insurance so Florida made the decision to require them to provide coverage for anyone seeking coverage (with appropriate premiums) but they still did not want to do this. So they were kicked out of Florida. Florida then set up a State insurance for property holders to get wind insurance, Citizens Insurance. It is for those who cannot find a private wind insurer for their property. I am one such property owner. Because my property is about a mile from the Gulf of Mexico, there was no private insurance company that would write so I am with Citizens. Recent upgrades to my property have lowered my premiums by almost 50%. Those included new roof with extra waterproofing, upgraded shingles, new windows with steel hurricane shutters and new doors that are hurricane rated. Now it probably cost much more in improvements than I am saving in premiums however, I have the security of knowing I will most likely not have to suffer serious damage to my property and all the trouble that brings. Plus the improvements added value to the house. At this time the State of Florida is trying to get people to obtain private insurance to reduce the liability to Citizens by lowering the requirements for the amount of cash on hand a company must have to operate in Florida. Every one of the new companies that have sprouted up under this lower requirement are Florida based companies that have no A.M.Best rating. The are under funded and have no ability to pay off major claims but have obtained the required reinsurance so they are technically legal. After researching these companies, I find that they are a bad risk to do business with. So once again, it is the level of risk I am comfortable with that dictates my decision. I am willing to pay a little more with Citizens knowing any claim will surely be paid.
Finally, our representatives grant insurance premium increases based on faulty climate scenarios and information. That is a very good reason to keep up the fight.
When you are running a grift, when the scam is in full swing, you must never, ever show any doubt.
Best send in the slick lawyer instead of a real scientist to argue the case. Lawyers are far more experienced liars, professionals in fact at deception and accumulating a series of partial truths in order to create a deception.
Actually, that description describes a lot of the stuff coming out of The Team, CRU, NASA GISS, Greenpeace, the WWF, The Goreacle etc.
Inevitably, trade factions introduce public choice complications and the long history of insurance industry dalliance with warmist policies deserves skepticism if not outright cyncism. To an extent this is a problem that needs to be cleaned up from within as Nutters testimony completely ignores industry tools for dealing with these problems.
to speak of premiums or the cost of insurance as one monolithic concept is equally silly. rates have risen dramatically for those in coastal locations subject to storm damage (as flood insurance itself is virtually unavailable in the private market having been displaced by earlier reactionary public insurance policy.)
but just as farm association policies favoring ethanol should make one cynical, they don’t represent the outlook of individual farmers. While the universe of insurance companies is a bit more attenuated than that of farmers, and economic response to these phenomenon are complicated by barriers to entry in the industry and complex state and federal laws with vast unintended consequences, you are simply flat wrong to suggest that premiums will not go down if risk of loss goes down. They will. Look at life insurance rates for non-smokers. But in our infinite wisdom health insurance companies can’t do the same thing.
If there is a large disparity between premiums and risks, capital will flow into the insurance industry and seek business by discounting against that spread in one way or another — premium or underwriting or some combination.
Insurance company suggestions for tax credits to harden threatened property come in a context where the kneejerk proposition has been for insurance policy (sorry) to be set by legislation rather than by simple economics where the insurance company offers a significant discount and/or underwriting consideration against recently inflated rates or refusal to write coverage in consequence of homeowners undertaking such retrofitting.
To an extent the public policy apparatus has already been captured because codes for new construction impose many of these requirements. I’m not suggesting Gerry Parker is wrong in seeing these as sensible but this could be done privately by the establishment of codes by insurance companies to meet underwriting guidelines. If you can’t get insurance you can’t get a mortgage.
There is a degree of public interest in that the government is essentially the disaster insurer of last resort and local government has property tax revenues and local economic functions at stake. But if we really allowed the market to function instead of imagining the least ripple was ‘market failure’ requiring legislation these risks would be better attenuated and more widely covered by private action.
But someone would no doubt call this all discrimination against people who don’t have the money to make those repairs. Then this would result in maybe a tax on insurance premiums for those who did make the repairs to create some grant pogrom for those who didn’t which either would fund repairs or subsidize insurance. The government knows no end of this kind of reactionary legislation and there is little wonder that the Wesley Mouches of our day working for the insurance companies are simply hellbent on getting theirs.
There is a free rider complication given government disaster aid — see obamacare and the individual mandate — but if insurance is more widely available for a wider range of perils with the main regulatory oversight being monitoring of reserves if those fire and flood insurance rates in Australia are really out of line they’ll come down, because their are few barriers to entry into a lucrative business. If they aren’t out of line then governments have to tailor disaster assistance for perverse incentives.
Yes it is reasonable to object to the proposal for tax credits for weather hardening, but it is of the same species as tax credits for owning homes in the first place, a government gift to realtors, banks, homebuilders, etc.
Or the many state govt. rules against prepayment penalties on loans, one of the most dislocating economic policies we have in that arena.
I simply don’t buy the fear thing. You have to get insurance to get a mortgage. The only people to whom the fear rationale would apply are folks who have built value with sweat instead of bank equity or have paid off their mortgages. So I don’t buy that the insurance industry participation in the extreme weather pogram is to make a few retirees who have had their mortgage burning party buy insurance who wouldn’t.
Willis,
I very much enjoy and appreciate your posts and this one is no exception.
However, my sense of things is that we are losing this battle insofar as congress is likely to take many actions consistent with the ringing alarm bells.
knr says:
July 20, 2013 at 2:04 am
People do not buy insurance because of what ‘they know will happen’ but because of what they fear ‘may happen ‘ its a product that relies on fear to sell in the first place. Keep that in mind when dealing with such people , no fear no bucks .
True. Additionally, the insurance industry has lobbied law makers to force us to purchase insurance. There are those of us who are not interested in purchasing insurance. For example, assume I have been driving for 40 years. My average cost of auto insurance has been $700 annually. So far, that is approximately $28,000 of unnecessary fear protection. No accidents or claims. Similarly with house insurance. How many homes in your neighborhood have had weather related damage? The root of the issue is acceptable risk. Just like getting on those spam in a can airline flying coffins. The risk is real, but the perception is it is safe, yet there is a presence of venders who will sell you “additional insurance.” The bottom line is insurance is a national fraud of fear mongering. Sound familiar? CAGW?
The notion is implanted and made into law that “you need it because I say you need it.” Now we all have to have it. One less freedom. Such hearings in congress only lead to more regulation and more control. You want to live on the beach? Go for it, but it is your risk, not mine. We are forced to pay insurance to cover those who milk the insurance industry.
“Provide tax credits to individuals for specified mitigation and resiliency actions associated with extreme weather and climate change.”
Or “penalize” those who do not, tomato tomahtoe.
Thanks Willis.
On the front end, the small comfort in all of this is that our retirement account includes a little slice of an S&P 500 index fund. A search of same claims (nice word choice, huh?) to have 17 insurance related entries. The rear end view is that a tiny bit of what we pay for insurance on house and property must help pay for the Juris Doctorate with the Cheshire Cat smile. Why do I suddenly feel the need for a shower?
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Blade says:
July 20, 2013 at 4:23 am
“You can always tell a natural-born leftist, and it really has nothing to do with party politics, and certainly nothing to do with Science. It is all about the instinctual compulsion to sit back and spend other people’s money.”
Bingo! “instinctual compulsion” .. but not just OPM; I know a few of these folks. They believe they are more enlightened. Our money is just one of the things they are instinctually compelled to control.
OY but Mann is able to proceed with defamation case. against the newspaper etc check
I live in Florida on the Gulf coast in a concrete and steel condo on the beach. Many of the proposals made by Mr Nutter have been implemented by the state of Florida. Apparently he is attempting to make some of these nation wide. I do not understand the objective of your post and where you got all this information since you live in California. If you live on the coast, you need insurance and it is often hard to find. Mr Nutter is using the global warming scare to advance to advance his proposals; but I see nothing wrong with his proposals.
Not only that, they become available to use for investment in stocks and bonds, with the profits skimmed off. This is how Buffett has made his fortune, via Berkshire Hathaway, which owns one of those European Reinsurance outfits.
” … the insurance companies do not belong on the same dias with the scientists.”
dais
[Buenos días … fixed, thanks. -w.]
The odd thing is that the weather is variable enough and capable of enough without having to bang a co2 AGW gong. If you want to live near a beach, on a flood plains or where tornadoes and antelope roam, weather happens. Come to think of it, it happens every where. The insurance companies don’t need climate change propaganda to hype weather, it is naturally capable of it. What is horrible is the agw missive that is shutting down the economy.
I wonder how anyone is going to pay a premium, if they are not working?
Thanks, Willis. Another excellent article.
The multiple adverse consequences of the global warming scam!
Archibald Tuttle says:
July 20, 2013 at 6:42 am
Depends on who is measuring the “risk”, doesn’t it?
In this case, the measurement of risk by the insurance companies is the same as the measurements made by the alarmists. They claim that global warming results in AIDS, Afghan poppies being destroyed, African holocaust, aged deaths, Afghan poppies being more potent, Africa devastated, Africa in conflict, African aid threatened, aggressive weeds, Air France crash, air pockets, air pressure changes, airport farewells virtual, airport malaria, Agulhas current, Alaskan towns slowly destroyed, Al Qaeda and Taliban Being Helped, allergy increase, allergy season longer, alligators in the Thames, Alps melting, Amazon a desert, American dream end, amphibians breeding earlier (or not), anaphylactic reactions to bee stings, ancient forests dramatically changed, animals head for the hills, animals shrink, Antarctic grass flourishes, Antarctic ice grows, Antarctic ice shrinks, Antarctic sea life at risk, anxiety treatment, algal blooms, archaeological sites threatened, Arctic bogs melt, Arctic in bloom, Arctic ice free, Arctic ice melt faster, Arctic lakes disappear, Arctic tundra lost, Arctic warming (or not), asteroid strike risk, asthma, Atlantic less salty, Atlantic more salty, atmospheric circulation modified, attack of the killer jellyfish, avalanches reduced, avalanches increased … and that’s just the “A”s out of the complete list of things resulting from increased CO2.
So whether I want to insure against catching malaria in the airport or being caught by an alligator in the Thames, the risk is going up, not down.
In addition, any such improvements to the homes and any of the actions for mitigation will be geographically spread out, will not affect all homeowners, and will come into being over time. This will result in an equally gradual decrease in losses for the companies. There will be nothing to trigger a drop in rates.
And even if this is eventually were to be rebalanced by a change in rates, that change will after a number of years … during which time they will be raking in the shekels.
Best regards,
w.
Well, there needs to be a little more thought behind this. The real intent is governmental takeover of your property. The insurance companies true motive is to lobby the feds to regulate you off your beach front, river front, lake front, etc. Eventually removing the insurance industry from the expense they carry on those risks. It’s all in the name of saving you from yourself. It is no different than the road improvements with bicycle lanes, pretty trees and shrubs, with fewer lanes for evil SUV owners. Mark my words, property owners such as “Retired Engineer John” will eventually lose their property rights, their property, their investment, their ability to purchase insurance: which means no living on that property. It is pretty simple to see the long term motive.
(Why do I get a message “Sorry, unable to post…)
One of your best, Willis. As Truthseeker and Sam the First, said earlier: “Follow the Money.” When business is in front of Congress, half the time it is to get some advantage for themselves. When businesses are behind Congress, 99% of the time it is to get the same thing.
Tom in Florida says:
July 20, 2013 at 6:46 am
In the US, you’re not rich until you owe a million. Since having a mortgage is the case for most buildings in the US, not sure what your point is here. Only 30% of private homes are mortgage-free.
Also, while you are not required to insure a public building if you own it free and clear, that’s not common either.
But in the suit-happy US you’d be insane not to insure a public building you own free and clear in a wind and flood zone, so it is a practical requirement rather than a legal requirement for most of those who have no mortgage. No corporation would stand for that kind of exposure, the stockholders would fire the board if they tried that.
Next, after many years my home is mortgage free. However, that took decades, and I am far from wealthy enough to have it rebuilt. So as a practical matter, insurance is not optional for me either. Is it insured against flood? Dangbetcha, it’s on top of a hill, best flood insurance there is.
To recap, 70% of private homes have a mortgage and require insurance. I’m sure the number would be higher for second homes. Of the 30% of homeowners who like myself do not have a mortgage, it is a practical necessity. And for any public buildings or structures in wind and flood zones, you could be sacked for lack of fiscal responsibility if you left them uninsured. Do you think it’s an option for General Motors or Apple Computer to have their structures insured? (Unless they self-insure, of course … we should all be so lucky.)
So I fear that your very first point, upon which your argument depends, is simply not true for the overwhelming majority of structures in the US. They are required to have insurance either by contract or by practical necessity, it’s not optional.
w.
Retired Engineer John says:
July 20, 2013 at 8:40 am
John, first, why should I pay, as Mr. Nutter proposes, if you choose to build your house on a flood plain or a barrier island?
Next, is strengthening our houses as Mr. Nutter suggests a good plan? Of course it is, it’s the right and correct plan … but why should the taxpayer pay for it?
So I agree with the underlying concepts. He advocates building strong houses, out of the flood plains and barrier islands, using natural and man-made mitigation measures. That’s a no-brainer.
But in all cases he’sasking that the taxpayer be forced to foot the bill for people to fix up their own dang houses, and for people who insist on living on flood plains and barrier islands and below sea level. Why should I pay for someone to live on the beach on a geologically unstable, shifting barrier island? That’s their business. And there’s no reason that the taxpayer should be forced to pay me to strap down my own freakin’ roof, that’s crazy. But that’s what he proposes.
So while I appreciate your invitation for me to help pay for people’s beach condos on barrier islands, John, I think I’ll pass …
w.
Joseph Bastardi says: @ July 20, 2013 at 9:26 am
……. What is horrible is the agw missive that is shutting down the economy.
I wonder how anyone is going to pay a premium, if they are not working?
>>>>>>>>>>>>>>>>>>>>>>>>
One has to wonder what in heck is going through the heads of all these numskull politicians. The USA already has a 22% unemployment rate and they want to toss modern first world citizens back into the world of the 1800’s without any of the life skills needed to survive and with ten times the population. There were 38,555,983 individuals in 1870 in the USA, 53% of whom were farmers and now there are 316,285,000 with 82% residing in cities and suburbs. Permanently turning off the electricity in US cities and Sandy will look like a pleasant dream and Detroit the Emerald City of Oz.
MemoryVault and and TonyfromOz and a few others over at Joanne Nova go into why solar and wind ABSOLUTELY CAN NOT serve as “the Primary.” One single stable source, which is used to establish the phase and runs at a set, steady output. Keep mucking about adding more and more intermittent supplies from roof top solar and wind farms and we are going to see blackouts becoming very common. Heck we just had three today and one took my computer off-line (It is nice and sunny and 86F)
Now picture trying to run a bank or a business or worse a factory with the power going up and down like a yoyo. Two companies I worked for in the 1980’s had their own power because they couldn’t put up with 10 outages a year from the public supply.
And in case anybody missed my comments here at WUWT about Frank Nutter from this past Tuesday and last October, about his early-on ties to Gore / Greenpeace / Gelbspan:
http://wattsupwiththat.com/2013/07/16/climate-change-showdown-coming-to-the-senate-thursday/#comment-1365064
http://wattsupwiththat.com/2012/10/09/now-alarmists-are-making-the-public-believe-in-the-extreme-weather-boogeyman/#comment-1105242
Russell, very well spotted. I hadn’t seen (or perhaps saw but didn’t notice) those links to Al Gore and to Greenpeace … I hate it that the big environmental NGOs have been hijacked by CO2 nutters, it’s a modern tragedy.
Thanks,
w.
Russel Cook: Enviro-activists are all just one big happy family. No surprise that Frank Nutter shows up at their various reunions……
Exactly!
It is a path of government eminent domain: Government take over of YOUR propety. The most common uses of property taken by eminent domain are for government buildings and other facilities, public utilities, highways, and railroads; BIG HOWEVER, YOUR PROPERTY may also be taken for reasons of public safety. As in beach dwelling. Or nortoriously for big auto in Detroit. This unconstitutional case delivered to us by a crooked on the take judge really gave big government the green light to steal your property. It’s for your own good and welfare!!!
Big insurance owns congress. You don’t have a chance or a voice.
S/B … with BIG GOVERNMENT, HOWEVER, YOUR PROPERTY… (funky typing)
More soap box: Just as fuel cost increases have sucked disposable income, so has and will the insurance industry. Hundreds of billions from the economy that otherwise went into our “toys” has been rerouted to … oil. Don’t get me wrong, I love by SUVs, that is why I keep paying for the fuel. However, those dollars on fuel and insurance are not purchasing addtional personal property, electronics and $100 bottles of my favorite scotch, wine, etc.There is good reason for this post. The AGW crowd is working all the angles.
Mr. Bastardi is right on. Weather is everywhere; why pick on the shorelines? Paint the picture. 🙂
Willis Eschenbach says:
July 20, 2013 at 10:03 am
re: Tom in Florida says: July 20, 2013 at 6:46 am: First of all, the only time you are required to have wind and flood insurance on a building is if there is a mortgage on the property.
“In the US, you’re not rich until you owe a million. Since having a mortgage is the case for most buildings in the US, not sure what your point is here. ”
The point was nothing more than to make sure everyone knows that insurance is not required for everyone. There are many folks that have paid off their mortgages who are not millionaires. Apparently living in Kalifornia gives people a warped view of property values elsewhere in the U.S
Willis also says:
“Next, after many years my home is mortgage free. However, that took decades, and I am far from wealthy enough to have it rebuilt. So as a practical matter, insurance is not optional for me either. Is it insured against flood? Dangbetcha, it’s on top of a hill, best flood insurance there is. ”
As I stated insurance is used to prevent great financial loss and that it is an individual choice as to how much each person is willing to risk so you really do have an option. Your choice is to guard against the cost of rebuilding so you purchase insurance to cover that potential loss. My point being is that insurance is a good thing and we do have choices as to how much insurance we need and what we will pay for that insurance. You do not insure against flood, obviously being high on a hill you see very little risk in not having flood insurance. I on the other hand know that even though i am not in a designated flood zone, flooding can happen at any time any where in Florida so I choose to purchase flood insurance. Again, choices as to risk and that is the true basis for insurance. By the way that also applies to health insurance but people have been brainwashed into believing it is a must have. We really need to do a much better job of teaching the masses about the reasons for insurance and how to evaluate and manage the costs. That would save a whole lot of money!
Willis said, “… there is no evidence that extreme weather events are increasing”
Allow me to observe that saying, “There is no evidence of extreme weather events increasing.” may not be definitive to some people.
I believe it is more definitive to say, “ The evidence shows that extreme weather events are not increasing.“. We have evidence. Saying there is no evidence of something does not mean that there is not evidence of something else. Or, something like that.
Hmmm, it sounds like I’ve been nipping a bit early in the day.
Willis
Thanks for another fine posting, exposing the lies of the warmists.
On aspect not mentioned is the change by FEMA in the flood zone maps which will have dramatic impact of the flood insurance premiums as least along the Atlantic coast.
My Lagoon front property in Nj off a Bay, which is about 4 miles from the ocean has be reclassified two times since Sandy although it did not see any flood damage. Of course Sandy was not a Hurricane when it passed through NJ, but did occur in combination with a lingering severe NE storm and a period of high tides so the impact was extremely unusual.
My flood classification has been changed from requiring 6 feet above the reference level to first 8feet then corrected to 7 feet while the reference level has been increased by a foot leaving me with 6″ below level from a previous classification of 1.5′ above the old reference level.
The impact of Sandy did expose lots of vulnerably along the NJ shoreline; however areas with low risk (like my property) have been reclassified to higher risk seemingly to markedly increase the premium collections. This house has never had a flood claim including from Sandy but will be exposed to onerous insurance rates.
It should be noted that Flood insurance is mandatory for homes with a Mortgage.
I don’t know who wins since US flood insurance is Gov. backed, and they control the classifications.
nutter than thou.
Sounds like investing in insurance company stock might be a smart move.
johanna says:
July 20, 2013 at 6:25 am
Eric Barnes, since most people are not rich enough to cope with a catastrophic event, insurance is very necessary. If someone backs up a truck to my house while I am away and empties it of everything of value, or it burns down ditto, please explain why insurance is evil (I am not rich).
My view is that while the cost of insurance is debatable, the need for it is not. My personal hope is that I never have to claim on my home insurance policies – and if my premiums go toward helping someone whose house has been robbed or burned down, that is the whole point – plus – there but for the grace of God, go I.
Hi Johanna, I never said insurance was evil, just that it is far from necessary, and often makes no sense financially. You have a risk averse lifestyle it would appear. Good for you. Others may have very different factors at play.
My mother is almost 70, lives on a fixed income w/ a tight budget in a house that is fully paid off and drives a mid 90’s sedan that is probably not worth more than 2k. Does comprehensive auto insurance make sense for her? Absolutely not. Liability probably doesn’t make sense, but it’s the law (she is getting to the point where it probably doesn’t make sense for her to drive much). Home insurance makes sense because she couldn’t afford replacement value for the home. If she could replace the home, home insurance is questionable. Life insurance? I can’t even keep a straight face thinking about that one.
In many cases insurance makes no sense for people. I realize that insurance agents and neurotics are aghast at these thoughts. I’d prefer that people think it through and find what makes sense for them. Many times insurance makes no sense.
Willis
I made a brief comment on a post the other day pointing out the gross conflict of interest that the insurance sector has. But you have fleshed that out brilliantly, as expected. These people are shameless.
I’d also point out that this is a great example of critical thinking that is given much lip service these days, but is really very much discouraged by the powers that be, and their hand servants. Well done.
‘English is such a great language. We’re going to “incent” communities to implement initiatives that will reduce the costs to the insurance companies.’
It is a great language, isn’t it? For English to evolve, a change need only become popular, e.g. the idiom “five times smaller than”, which is literally meaningless, has pretty much replaced “one-fifth the size of” or “20% the size of” just because people like it and use it commonly. The “grammar Nazis” have no power over such a fluid language.
In this case “incent” threatens to replace the more common “incentivize”, which in our remarkably flexible language replaced such obsolete phrases as “provide incentive to”, or “encourage” or “subsidize”. As our government grows and crony capitalism grows with it, no doubt slick bureaucratese such as “incent” will become more pervasive. With luck, even Ebonics will make a comeback. 🙂
‘After all, “increase” is such an ugly term, don’t you think? No, they merely want to “reflect extreme weather and climate risk” by appropriately embiggening the premiums required under the Program…”
Can’t wait for “embiggen” to catch on. 🙂
Spookily, I was talking to a journalist only the other day about the issue of insurers, reinsurers and their role in promoting alarmism about climate change. Indeed there is something of a contradiction.
Some of the comments above are true but some are also wide of the mark. As I work in the insurance profession in London as a broker, I think I can give a different perspective.
1 Hurricane Betsy in 1965 nearly wiped out Lloyd’s because the individual underwriters had not managed their accumulation risks. I think in old money it cost around $1 bn and revalued somewhere around $20 bn. Today, underwriters, both Lloyd’s and Insuranc companies monitor their accumulation risk much more carefully – they have to otherwise they go bankrupt.
2 Betsy did not stop the market for hurricane, indeed it is as active today as it was in 1965
3 The inexplicable nature of MRe’s, SRe’s and all the rest’s behavior is that in practice, it has had no impact on the market, either in the US or London – that is if we set aside the continuing issues for the US in providing full cover for wind, storm and flood for coastal property and flood in the UK for exposed property. Rates go up and down according to market forces not claptrap about MMCC. For example, following Katrina, Wilma, Rita, rates for US hurricane quadrupled. But 2 years later, they had fallen back to levels before Katrina as the insurers made a packet for the two years afterward when there were no land-falling hurricanes. Indeed, it has been relatively “quiet” since Katrina
4 When pressed, the reinsurers will admit that after adjustment for inflation, growth and population changed (a la Pielke and Landsea), there is no trend! You also have to watch their trick of conflating earthquake with weather related claims!
5 Insurers are in business to make money. The problem for them with these weather risks, which is nothing to do with CC of any nature, is that values at risk have gone up and it is difficult for them to charge an economic rate that is acceptable to home owners and regulators.
6 In the UK, we have made the problem worse through the way we manage flood exposures – for example, there has been a trend to require conventional drainage for edge of town developments as opposed to the traditional soak away. This concentrates rainwater and directly increases the risk of river flooding. We have also allowed too much development on flood plains without adequate measures to protect the housing.
7 Most working underwriters are entirely cynical about MMCC.
8 I can only guess that the senior management of insurers and their representative organizations such as Climatewise in the UK, The ABI in the UK and the Geneva Association think they are doing good!?
9 Etc etc. Sorry to drone on but one day I will work out what is in their minds.
Cheers
Paul Maynard
re: Catcracking July 20, 2013 at 11:59 am
Check out the grandfather clause of flood insurance. I do not know if it still exists but in a nutshell it applies if you have a house built to code and it has been insured for flood continuously since you owned it, you may be able to keep your previous designation. Again, it used to be so but I am not sure if it is still available.
Eric Barnes says:
July 20, 2013 at 12:53 pm
“Life insurance? I can’t even keep a straight face thinking about that on”
People need to educate themselves about how to use insurance. Single premium life insurance is a great way to pass on cash to your relatives without going through probate. Life insurance proceeds are not taxable (unless you select pre-tax for your premiums but who in their right mind would do that with life insurance) and are usually paid out within 30 days of proof of death. For younger families, term insurance is a much better value and should be used for protection of the surviving family where a large amount of insurance is needed to replace lost income that would have enabled the children to live comfortably ( or to pay for their education) before they go out on their own as adults.
“…drives a mid 90′s sedan that is probably not worth more than 2k. Does comprehensive auto insurance make sense for her? Absolutely not. Liability probably doesn’t make sense, but it’s the law”
Auto liability insurance protects the victims where the driver at cause may not have the assets to compensate for the damages they have inflicted. That is why it is the law. If you don’t want to pay it, don’t drive.
Willis I have seen this movie before. Dupont made a bundle getting behind the effort to close the hole in the ozone layer and prevent the next ice age by banning CFCs.. Dupont was a big backer of the Montreal Protocol and they were also one of the very few companies with a patent on a non-CFC refrigerant. Any time I see a company backing major social policy my first question is how is this going to benefit their bottom line..
it was always about the Insurance Companies…
Wikipedia: Hubert Lamb
Climatic Research Unit
In 1971 Lamb decided to base his pioneering research at a university, and he became the first Director of the Climatic Research Unit established in 1972 in the School of Environmental Sciences at the University of East Anglia…
He gained the unit sponsorship from ***seven major insurance companies, who wanted to make use of the research of the unit when making their own studies of the implications of climate change for insurance against storm and flood damage…
http://en.wikipedia.org/wiki/Hubert_Lamb
***from Michael Sanderson (2002), The history of the University of East Anglia, Norwich, p. 285
Dec 2008: Uni of East Anglia: Norwich Union (Insurance) sponsors new university chair
Norwich Union and The University of East Anglia (UEA) have announced a new chair within the University’s School of Computing Sciences. The appointment, which is sponsored by the insurer, part of Aviva, will be the Aviva Chair in Insurance Statistics…
Professor Vic Rayward-Smith, Head of the University’s School of Computing Sciences, says: “We are delighted to receive this sponsorship. The funding of this chair will strengthen further the already strong relationship between two of Norwich’s most important organisations.
“Statistical techniques are a major research area within the School and for many years, we have worked with Norwich Union helping them to analyse their own customer databases and to develop accurate pricing and marketing strategies.
http://www.uea.ac.uk/mac/comm/media/press/2008/dec/Norwich+Union+sponsors+new+university+chair+
May 2003: Uni of East Anglia: Norwich Union signs up WeatherQuest
The market for insurance weather services sees a new player this month, as Norwich Union sign up WeatherQuest to provide their weather claims validation information and weather forecast support services.
WeatherQuest, with its headquarters at the University of East Anglia’s (UEA) School of Environmental Sciences, has been providing a pilot service to Norwich Union for the past six months, and following a successful review has now been signed up for a three-year service…
With weather and climate remaining high on insurance agendas, WeatherQuest benefits from close links with UEA’s internationally renowned climate expertise, with both the Climatic Research Unit and the Tyndall Centre for Climate Change Research also being based in UEA’s School of Environmental Sciences.
http://www.uea.ac.uk/mac/comm/media/press/2003/may/Norwich+Union+signs+up+WeatherQuest
Well, Mr Nutter should take a leaf out of King Canute’s book.
Hey dummy ! move your damn throne !
What Nutter’s RAA needs to do, is re-compute their insurance risk tables, and start charging people in high risk enterprises, like flying without an aero-plane; one of the latest crazes, a premium based on the chance of their survival.
I would guess that the average No-plane aviator, has about as much chance of completing, and surviving their 25th sortie, as a WW-II B-17 crewman.
For example, MY house in California’s central valley is required by law to carry flood insurance, and the mortgage holder insists on it.
Now you need to understand, that the central valley is agricultural; and the whole valley has been laser leveled. So you can flood the entire central valley, with just one inch of water. But I live on the shore of a lake; well my house does. Not just any lake, but the largest lake West of the Mississippi River, called Tulare Lake.
Now very few folks have ever been to Tulare lake, because back in the 1930s, they connected the lake to the San Joachin River, and drained the whole damn lake into San Francisco Bay, which of course caused sea levels to rise, and cut SF Bay area in half.
So now Tulare lake is actually a corn field, growing corn to feed cows.
But more to the point; you can never get to one inch of water, in the central valley. When anyone reports discovering wet ground in the central valley, or visible water, somebody lays claim to it, and they pump it into a canal, and ship it off to Palm Springs to water the golf course greens.
To boot, the floor of my house sits four feet up off the ground on a base wall.
So, I have to buy flood insurance from FEMA, as in “good job Brownie” FEMA, who bought the rights to all the Katrina water in nu orleens
It’s just a racket.
“””””…..Eric Barnes says:
July 20, 2013 at 12:53 pm ……””””””
Eric, I don’t know about where you live; but in California, you ARE NOT required to have ANY insurance on your car.
You don’t have to have, comprehensive, or collision or liability insurance on your car, in order to drive in California.
California, could care less if you want to beat your old clunker into a scrap metal artistic triumph of sculpture.
But you ARE required to do in California, is comply with the State’s Financial Responsibility Law, in order to register your car to drive it in California.
So you can simply put up a cash bond, with the DMV; currently it’s about $30,000 cash, to do that, or you can “self insure” it; whatever that means.
But most people find that buying any one of a horde of available liability insurance policies, is a convenient way to comply; but it is NOT required.
So if the Koch brothers were to take an equity stake in Munich Re would the entire universe explode in a pure energy conversion? Big Oil is on the “wrong” side of climate change and Big Insurance is on the “right” side, positive and negatives collide. Much like typing “google” into google .
[Do you need a /sarcasm with that? Mod]
Tom in Florida says:
July 20, 2013 at 2:13 pm
Eric Barnes says:
July 20, 2013 at 12:53 pm
“Life insurance? I can’t even keep a straight face thinking about that on”
“People need to educate themselves about how to use insurance. Single premium life insurance is a great way to pass on cash to your relatives without going through probate. Life insurance proceeds are not taxable (unless you select pre-tax for your premiums but who in their right mind would do that with life insurance) and are usually paid out within 30 days of proof of death. For younger families, term insurance is a much better value and should be used for protection of the surviving family where a large amount of insurance is needed to replace lost income that would have enabled the children to live comfortably ( or to pay for their education) before they go out on their own as adults.”
If you knew my mother’s budget and assets, you wouldn’t have bothered with that statement.
“…drives a mid 90′s sedan that is probably not worth more than 2k. Does comprehensive auto insurance make sense for her? Absolutely not. Liability probably doesn’t make sense, but it’s the law”
“Auto liability insurance protects the victims where the driver at cause may not have the assets to compensate for the damages they have inflicted. That is why it is the law. If you don’t want to pay it, don’t drive.”
That claim could be made about damned near any activity where risk is involved. Should hunters have to purchase liability insurance? Should skiers have to purchase liability insurance? Many get lost at the local ski hill and the county search and rescue has to go out searching for them at great expense (and sometimes they get hurt). What about bicyclists? They can cause accidents too, and they can be just as deadly as those with only cars involved. Why should kids have to purchase liability insurance? When I was a lad I clothes-lined a kid who was continually buzzing me with his bike. He broke his arm in the fall.
When a law is written, it doesn’t make something right or wrong. Your ancestors and mine got along fine w/o liability insurance and we could again.
george e. smith says:
July 20, 2013 at 12:53 pm ……””””””
Eric, I don’t know about where you live; but in California, you ARE NOT required to have ANY insurance on your car.
That makes a lot of sense to me. Thanks for filling me in.
Eric Barnes says:
July 20, 2013 at 5:38 pm
“If you knew my mother’s budget and assets, you wouldn’t have bothered with that statement.”
Just because it doesn’t fit your situation doesn’t make it bad.
” Your ancestors and mine got along fine w/o liability insurance and we could again.”
Yeah but there weren’t so many ambulance chasing lawyers back then.
Tom in Florida says:
July 20, 2013 at 5:45 pm
Eric Barnes says:
July 20, 2013 at 5:38 pm
“If you knew my mother’s budget and assets, you wouldn’t have bothered with that statement.”
Just because it doesn’t fit your situation doesn’t make it bad.
True. Just not necessary. 🙂
” Your ancestors and mine got along fine w/o liability insurance and we could again.”
Yeah but there weren’t so many ambulance chasing lawyers back then.
Yes. Things were a little more black and white. 🙂
Quote: Apply Federal standards to state/local building codes and incorporate climate and extreme weather risk into these standards.
Effectively nationalize local building codes. Isn’t this what the IPCC and the USGBC (a private entity) is trying to do. They pose as a government entity, yet they created LEED standards and blackmail entire industries into compliance. It’s basically Agenda 21 through Sustainable Development.
Astute.
I would also like fo mention earthquake insurance in San Francisco. I would assume that since California has probably the most regulated insurance business in the world, the cost of the risk is probably fairly calculated. And it is so high that only some 15% of the property is insured. But not to worry. THEY chose to risk living in San Francisco but they don’t want to pay for it. So, when the worst DOES happen, the Feds will give billions of our tax dollars to the Democrats who will steal most of it.(An estimated 80% in in the case of New Orleans/Katrina. By the way, there had been enough money spent to make the levees suitable for a cat. 5 hurrcane, but they stole the money.)
Thanks for the post, Willis.
Regards,
Steamboat Jack (JonJewett’s evil twin)
Art in Colorado,
Dupont made a bundle getting behind the effort to close the hole in the ozone layer and prevent the next ice age by banning CFCs..
= = = = =
That’s just a coincidence. In his last book “Billions and Billions,” from the chapter titled “A Piece of the Sky is Missing” (pp.92-97), the late Carl Sagan tells the story of how the Montreal Protocol came to be…
In 1987 Britain, France and Italy participate in the 1st Montreal Conference only begrudgingly, since,
– “They feared DuPont had a substitute up its sleeve that it had been preparing all the time it had been stonewalling about CFCs. The United States was pushing a ban on CFCs, they worried, in order to increase the global competitiveness of one of its major corporations.”
The United States signs on to the very protocol it had been pushing…be amazed!:
– “That this occurred during the antienvironmental spasm of the Late Reagan administration was truly unexpected (unless, of course, the fear of DuPont’s European competitors is true.)”
– “Substantial credit must be given to […] British Prime Minister Margaret Thatcher, who trained in chemistry and understood the issue.”
– “DuPont has become a leader in cutting back on CFCs, and has committed itself to a faster phaseout than many nations have.”
– “A substitute–or better, a stopgap measure–has been found. CFCs are temporarily being replaced by HCFCs; […] they still cause some damage to the ozone layer, but much less. […] HCFCs were developed by DuPont, but–the company swears–only after the discoveries at Halley Bay.”
“The Montreal Protocol and it’s amendments represent a triumph and a glory for the human species.”
The U.S. government implemented the first ban on the use of Freon in 1978, whereas DuPont’s patent on Freon was set to expire only much later … in 1979.
http://en.wikipedia.org/wiki/Chlorofluorocarbon#Regulation_and_DuPont
That’s just a coincidence too.
g.e.smith;
Canute was doing a DOH! demo for his vacuous court syncophants. Some versions of the story have him lashing one to the throne as it was about to be submerged.
The Montreal Protocol, it turns out, was pointless: the ozone hole closed 20 years before any possible change in CFCs could have affected it. They had nothing to do with its opening or closing.
Willis: As usually, you put forth yet another cogent missive. Thank you for helping me have a voice in all of this insanity.
Willis Eschenbach says:July 20, 2013 at 10:15 am
“So I agree with the underlying concepts. He advocates building strong houses, out of the flood plains and barrier islands, using natural and man-made mitigation measures. That’s a no-brainer.
But in all cases he’sasking that the taxpayer be forced to foot the bill for people to fix up their own dang houses, and for people who insist on living on flood plains and barrier islands and below sea level. Why should I pay for someone to live on the beach on a geologically unstable, shifting barrier island? That’s their business. And there’s no reason that the taxpayer should be forced to pay me to strap down my own freakin’ roof, that’s crazy. But that’s what he proposes.
So while I appreciate your invitation for me to help pay for people’s beach condos on barrier islands, John, I think I’ll pass ”
As I read your post, I don’t see where he is asking for the taxpayer to help pay for other people’s beach condos on barrier islands. Perhaps it was part of his presentation and it did not make it into your post. The condo owners are paying for sand berms, sea oats, and elevated walkways to limit damage from storms. The new construction near the beach is being built with concrete and steel per the new building codes. The people building the houses and condos have to pay the construction costs not the government. After Hurricane Dennis the insurance company paid for a concrete slab to be poured over the gravel tar roof of our condo to keep it from lifting and tearing open in a future hurricane; also they replaced the East wall that was steel studs with a stucco covering with a steel and concrete wall. Both the roof and the East wall had been damaged in three previous hurricanes. However, the insurance company paid for these remedial actions.
A good number of people are, at their own expense, replacing shingle roofs with wind resistant metal roofs. I believe this is the remedial action that he was proposing for tax credits.
The government has appropriated funds and has given money to uninsured people that have losses in hurricanes. I don’t know if you are aware of this.
The insurance companies have not made fortunes in Florida and many have left the state. It is often difficult to get insurance. I don’t know where you got your information, but it does not agree with my experience.
highflight56433 says: July 20, 2013 at 9:59 am
“Well, there needs to be a little more thought behind this. The real intent is governmental takeover of your property. The insurance companies true motive is to lobby the feds to regulate you off your beach front, river front, lake front, etc. Eventually removing the insurance industry from the expense they carry on those risks. It’s all in the name of saving you from yourself. It is no different than the road improvements with bicycle lanes, pretty trees and shrubs, with fewer lanes for evil SUV owners. Mark my words, property owners such as “Retired Engineer John” will eventually lose their property rights, their property, their investment, their ability to purchase insurance: which means no living on that property. It is pretty simple to see the long term motive.”
You sound a little paranoid. The tourist industry is big in Florida as it is in other costal states and being big it has a lot of political clout. If someone in the government tried to regulate part of that industry out of existence the backlash would be a political disaster for them. And if the government grows that unresponsive to its citizens, we have much more serious things to worry about other than the loss of some beach property.
Tsk Tsk says:
July 20, 2013 at 5:19 pm
So if the Koch brothers were to take an equity stake in Munich Re would the entire universe explode in a pure energy conversion? Big Oil is on the “wrong” side of climate change and Big Insurance is on the “right” side, positive and negatives collide. Much like typing “google” into google .
[Do you need a /sarcasm with that? Mod]
==========================================================================
Nah, let’s live dangerously. G-O-O-G-L-E. Oops!
Sorry to disappoint you Mr. Retired Engineer John, we are not talking about tourism. Nice diversion however. You say: “The insurance companies have not made fortunes in Florida and many have left the state. It is often difficult to get insurance.” Thanks for validating my point. …. enjoy. 🙂
Retired Engineer John says:
July 20, 2013 at 8:45 pm
John, please re-read the post, clearly you missed the point. What do you think it means when Nutter Esq.says:
He wants to use taxpayer money for the various ways to limit damage from storms. What do you think “specified mitigation and resiliency actions” means? How do you think he is suggesting to “incent communities” if not with taxpayer bucks? Read Nutter’s plan again, and if you still don’t see how he wants to use taxpayer money to help pay for strengthening sand berms and sea oats, then read it again until you do.
I can bring you the information, John. I can’t understand it for you.
w.
In one sense, you are correct, but in another you are being far too harsh on hapless Mr. Nutter. As you say, he’s an attorney in the pay of the insurance conglomerates – what do you think he’s being paid for? His job is to maximize the profit potential for his employers in as efficient a way as possible and to do it in a way that public relations are maximized – he did his job beautifully! It’s not his fault the system lets people game it for profit, that’s our fault. He just plays by the rules.
Look at it from another way – if the skeptical groups could find a way to pay him as much as the insurance groups – and remember, he’s probably on retainer for life, so we’re not talking one time checks here – then I’m sure he would be just as eloquent in attack of global warming as he has been in its defense. Don’t blame him – that’s what the practice of representational law is all about. If you don’t understand that, you don’t understand the system.
Everytime I hear a complaint like this, I think of Major Renaud: “I am shocked, shocked! to Find that Gambling is going on in this Establishment!” (here’s your winnings, sir)
You say it’s just about making money – newsflash: ALL legislation is about making money for someone and taking it away from someone else. All of the players know this, and lying to the fans about why you’re doing what you’re doing is one of the most fun parts of the game.
highflight56433 says: July 20, 2013 at 10:59 pm “Sorry to disappoint you Mr. Retired Engineer John, we are not talking about tourism. Nice diversion however.”
Most of the condos around me are in the tourist trade. The owners do this to defray the cost of having a condo on or near the beach. They use the condos briefly during the season and considerably during the off season.
A simple restatement of the bullet points would dramatically clarify Mr. Nutters comments:
1)”Provide tax credits to individuals for specified mitigation and resiliency actions(SMRA associated with extreme weather and climate change.)
to: Insurance companies offering coverage for damage from extreme weather or climate change must set up programs to pay 10% of all associated permiums to policy holders for specified mitigations and resiliency actions. These payments must fo first to the policy holders with the smallest absolute premiums.
1) “Incent communities to develop and implement mitigation and resiliency initiatives.”
to: Insurance companies will develop and pay for SMRA in geographichic where premiums are collected, in cooperation with local governing authorities in the most cost effective manner.
3) “Reform the National Flood Insurance Program to reflect extreme weather and climate risk in its rates.”
to: Insurance companies involved in the National Flood Insurance Program will commit 10% of the associated premiums to relocating owners of affected properties to less flood prone areas, starting with the lowest value properties.
4) Apply Federal standards to state/local building codes and incorporate climate and extreme weather risk into these standards.
to: this will be incorporated into point 1.
5) Use nature to mitigate risk before and after extreme events.
do not F! with nature.
I find this poster’s comments about Nutter’s academic degrees to be incredibly ironic. Talk about people in glass houses…
“Cullen and Nutter” what a dream team.
This is Off Topic. But I don’t know another way to bring it to Willis’ attention. Please forgive me and PLEASE don’t use it to “thread jack”. This is just to give Willis a bit more info.
Willis,
You had a post that is now closed to comments about electricity cost and mentioned the restrictions on hydro in California. Hydro isn’t the only reason to build dams. Note that southern CA is the biggest red spot on the maps.
http://growingblue.com/wp-content/uploads/2013/05/GB_CWC_whitepaper_climate-water-stress_final.pdf
wws says: July 21, 2013 at 8:11 am
I enjoyed your post. When I read you first two paragraphs, which you start by saying “In one sense, you are correct, but in another you are being far too harsh on hapless Mr. Nutter”, I am reminded of George Orwell’s description in his “1984” novel of the dynamics between two opposing groups having different “group sets” or industrial sponsors. He also describes the changes to the person when he leaves one group and joins the competition.
Your statement ” You say it’s just about making money – newsflash: ALL legislation is about making money for someone and taking it away from someone else. All of the players know this, and lying to the fans about why you’re doing what you’re doing is one of the most fun parts of the game.” reminds me of two things: My high school American teacher made this statement, “We are governed by the spoils system”. I did not understand what it meant at the time; but, I remembered it because it was so odd. After I got out in the world, I understood what it meant. The second thing is the golden rule, not the one that some quote, which says “He who holds the gold makes the rules”. We see the effects of this rule constantly.
===============================================================
Well, the last map.
And because, (A) the fears they emphasize are outrageous and (B) they often fail to pay up on valid claims, I usually think of them as protection racketeers… while wishing it were no so.
Sometimes the fox finds the pickings more hazardous to himself. Nutter may see the writing on the wall and want to maximize insurance incomes while he still can before people aren’t scared anymore. I had an organic farm for about 10 years while raising six kids (eight for a few years while we looked after two nieces that my brother-in-law couldn’t care for) and lost more than a few chickens to foxes and a weasel. When I came into possession of about two dozen free geese from a farm that was selling out, I put them in the henhouse. One morning, collecting eggs, I found an abundance of red fur thatches all over the henhouse and out to where he exited through a hastily enlarged hole in the chicken wire. There were no hens missing and no more taken over the next several years. Re the weasel, I discovered his existence when I found his body, laid out in front of the henhouse beside my three-legged cat called Rawls. Farmers in the district said no ordinary cat is likely to prevail over a weasel.
INSURING CHILDREN AGAINST MONSTERS UNDER BED
Nutter kept repeating: “Our industry needs ACCURATE evaluations of the climate risks.”
I am amazed by the fact that nobody at the hearing pointed out that the industry benefits strongly from EXAGGERATED evaluations of the climate risks.
Their dream scenario is to insure children against monsters under the bed.
That is, sadly for them, is illegal.
Their next best bet is to insure people against all the nutty things climatologists put forward…
Gary Pearse says:
July 21, 2013 at 1:32 pm
Gary, you have just solved my fox problem. One of my Australorps was taken by a quick brown fox three days ago, the CSI forensic of arterial blood spatter and feather trail ‘epithelials’ told its own story.
The fox proof shed did not help while the hen was truly free range.
By analogy the hen ventured into a domain where it was not covered by protection, next door.
But then it was not worthwhile for me, the insurer, to give 24hour fox protection in such an apparently safe place.
But then if I had insured, the excess would have meant I would not be able to claim.
Now the insurance I really need is catastrophe insurance, say on the house.
Since the chances of this are very low, why not have a big excess in exchange for a small recurrent premium.I self insure for the rest.
None of the local companies will offer me such cover.
@ Eric Barnes You said in this post:
July 20, 2013 at 6:02 am
“insurance is a needed and useful service”
“No it isn’t, at least not needed. It may be useful on occasion (health insurance for your kids), but definitely not needed. The rates are set so that you are likely to pay more with insurance than without. If you are a millionaire, it makes absolutely no sense to have insurance for most things. It’s designed to take advantage of the less affluent. I’m sure you know this. It bears pointing out.”
You are so far off base you are not even in reality.
Try going without insurance and tell us how it goes.
Your assertion reflects an ignorance of history and facts that would be more fitting of a Joe Romm screeching about climate doom than for any discussion of insurance industry and its purpose.
hunter says:
July 21, 2013 at 4:18 pm
@ Eric Barnes You said in this post:
July 20, 2013 at 6:02 am
“insurance is a needed and useful service”
You are so far off base you are not even in reality.
Try going without insurance and tell us how it goes.
Your assertion reflects an ignorance of history and facts that would be more fitting of a Joe Romm screeching about climate doom than for any discussion of insurance industry and its purpose.
LOL. Water Food, Shelter are needed, or necessary. Insurance isn’t even close. Let me go out on a limb and guess that you are an insurance agent? .
Well insuring the leg..
Lewis P Buckingham says (July 21, 2013 at 2:06 pm): “Now the insurance I really need is catastrophe insurance, say on the house. Since the chances of this are very low, why not have a big excess in exchange for a small recurrent premium. I self insure for the rest. None of the local companies will offer me such cover.”
Isn’t what you want essentially a “normal” insurance policy with a high deductible?
Retired Engineer John says:
July 20, 2013 at 9:01 pm
…..And if the government grows that unresponsive to its citizens, we have much more serious things to worry about other than the loss of some beach property.
>>>>>>>>>>>>>>>>>>>
What the heck century are you living in?
Ever heard of the Banker Bailouts? 68% Say Bank Bailout Money Went To Those Who Caused Meltdown
Remember Obamacare where Nancy Pelosi said, “But we have to pass the bill so that you can find out what is in it,? 54% Still View ObamaCare Unfavorably
Here is the explanation of why 1000 page bills get passed by our ‘Representatives’ before they bother to read them. I suggest you read it.
Oh and here are some real winners 35% Have Favorable Opinion of Federal Government, 60% Unfavorable and Voters Like Coal Industry More Than the EPA
That pretty much tells you the US government does not represent the interest of US citizens and they know it.
hunter says: @ July 21, 2013 at 4:18 pm
…..You are so far off base you are not even in reality.
Try going without insurance and tell us how it goes….
>>>>>>>>>>>>>>>>>>>>>>>
Depends completely on your income level. If I live in an apartment, keep no money in a bank, drive a twenty year old vehicle, work as at a burger flipper and run a small business on the side all in cash I have zero exposure. (I just put all my ‘savings’ into rare coins or gold jewelry.
Even better if I put ALL assets in a relative’s name I can engage in a risky business, such as screwing old folks out of the money for their standing timber and I am ‘Judgement proof’ It doesn’t matter if I get sued or how many times I get sued no one will get a red cent.
I will reframe from naming four ‘business men’ who use this method of running their businesses locally without insurance and who made $$$$
I was really hoping one of the Republican senators would realize and mention the hypocrisy of Boxer criticizing a partial source of funding for a few of the witnesses when one of her witnesses had a clear interest in the business of climate doom. Too late now but perhaps they will get their chance to frame one of these climate hearings, that would be interesting.
Gary Hladik says:
July 22, 2013 at 9:59 am Isn’t what you want essentially a “normal” insurance policy with a high deductible?
Well yes of course it is.So they offer a$1000 excess rather than $250 excess.
I’m thinking a$ 50000 excess with appropriate low premiums.
Then invest the $50000, if you have it and keep it against the risk.
If you know of a company in Australia that offers this I want to know.
This problem is across other types of insurance.Take pet insurance.
For small claims you might as well bank the premiums against the foreseeable costs.
Then get a catastrophe policy for a ‘big’ vet bill say a hit by car with intensive care.
There are two underwriters.Neither offers this.
Other commentators here have pointed out that they are forced into flood insurance for instance,but have to pay a high premium for full replacement when they perceive the risk is low.
‘No chance of a flood here.We don’t think global warming and sea rise will wipe this property out etc.’
The new ‘normal’ should be to offer catastrophe insurance in a catastrophe narrative.
Yet the insurance companies don’t do this.
One wonder’s—–why?
If Nutter pulls this off, I wonder how soon Loyd’s of London will charge a premium for ships sailing through “The Bermuda Triangle”?
Mr. Eschenbach makes interesting points, aided with
abundant rhetoric, but the rhetoric would be more
forceful if condensed to half its length.
HL Mencken
Thank you for this thread Willis. Reading the commentary has been quite eye-opening.
II must say that the level of hostility towards private enterprise expressed by many here is surprising.
There’s far too much to go into here, but I would much rather see the government offer tax credits for roof straps or foundation anchors in coastal areas than for insulation, thermal windows, solar panels, high efficiency furnaces, coal-burning cars, expensive hybrids or fancy appliances. The former might actually save someone’s life or mitigate emergency responder costs. The latter benefit mainly the perpetually guilty consciences of liberals.
And of course, the elephant in the room (literally) is the home mortgage interest deduction.
Of course, it is great fun to bash the insurance companies and everyone has a story about how they have been mistreated by these evil, greedy businesses. How about a little free market thinking on the problem? Suppose all these insurance companies know that the CAGW complex of woes is bogus. So they know that they will not have increased costs to pay for them. But they sneakily increase premiums anyway and profits go through the roof. Now in a real market, some company realizes it can get more for itself by undercutting the rest of the insurance cartel at no risk to itself because it will never have to pay for underwriting catastrophes that are not going to happen. Thus, over time, premiums will adjust to cover costs plus a reasonable profit. If you do not believe this, you should put your entire IRA into insurance stocks and get ready to retire early. Doesn’t it make more sense that these insurance guys really believe the CAGW BS, have drunk the Kool-Aid, and are worried they’ll lose their shirts when it hits?
It is also worth remembering before you draw and quarter those insurance company CEOs that none of them are elected to represent the public at large and balance the interests of its constituent parts. That is the job of our illustrious public servants. You can count on them to see through this insurance company scam and protect the rest of us with reasonable, beneficent laws and rules.
gregjxn,
Others may not agree, but IMHO you get a gold star for that post.
The free market works. Its critics use the natural impatience of people to demonize companies [and of course to present the government as a better alternative; as if]. But with a relatively level playing field, fair rules and a little patience, enormous good for the human race will result from letting companies compete, as in your example. The proof is all around us.
dbstealey: I also tend to agree with gregjxn, and you. However, there is a caveat. The media will (as they have done) claim that a storm or natural disaster is caused by “climate change” caused by man. And so perception becomes reality for some, or many. If this leads to others getting tax payers to fund better structures, it will take more of my money and redistribute it to whom will benefit –and that is at my expense. Pushing the CAGW agenda is plain bogus – and anti freedom. I am dead set against it.