Huff Post Explains the Insurance Business to Warren Buffett

By Mark Hirschey - Work of Mark Hirschey, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=2581999

By Mark Hirschey – Work of Mark Hirschey, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=2581999

Guest essay by Eric Worrall

Warren Buffett doesn’t understand the insurance industry; Or so suggests the Huffington Post, in a rather hysterical critique of Buffett’s lukewarm acceptance of climate dogma.

Buffett’s case against the resolution boils down to this: “Thinking only as a shareholder of a major insurer, climate change should not be on your list of worries.”

First, he said, his company can handle any possible losses thanks to rising premiums. Because insurance policies are typically written for one year and repriced annually, Buffett’s company can hike premiums to better account for the heightened risk of climate change-driven losses.

Second, Buffett asserts that climate change has produced neither “more frequent nor more costly hurricanes nor other weather-related events covered by insurance.”

But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute. Nine of the 10 costliest floods in U.S. history, when measured by payouts from the federal government’s National Flood Insurance Program, also have occurred since 2000, according to the insurance group.

He [Mark Carney, Governor of the Bank of England] also warned about potential losses from claims on policies written by insurers. For example, insurance companies could be forced to make massive payouts if victims of climate change successfully hold accountable companies that contributed to it. He likened the situation to the one faced by U.S. insurers stung by tens of billions of dollars in losses from asbestos claims.

In fact, Carney said that as a result of recent weather trends, some now estimate that insurers are undervaluing their potential losses by as much as 50 percent.

Insurance companies caught unprepared for the effects of climate change could cause problems for government officials and put taxpayers at risk.

Read more: http://www.huffingtonpost.com.au/entry/warren-buffett-climate-change_us_56d36cade4b03260bf773563

Huffington Post is upset, because Buffett claimed that insurance losses have not increased to date due to climate change. It does not matter to the Huffington Post, that Buffett thinks climate change is a serious issue. It doesn’t matter that Buffett is a world renowned expert at correctly pricing insurance risk, and has repeatedly demonstrated that expertise, with a long track record of business success. What matters is that Buffett dared to contradict a tenet of the alarmist viewpoint; Buffett suggested that to date, there has not been an increase in extreme weather events, due to Climate Change. To true believers, this divergence from climate dogma is intolerable; in their minds, Buffett must be wrong.

When the evidence contradicts green dogma, climate alarmists discard the evidence.

103 thoughts on “Huff Post Explains the Insurance Business to Warren Buffett

  1. ..OMG Eric, you actually had the stomach to read the Huffington Post without vomitting ?..I lay, in awe, at your feet !

    • Here is what the Insurance Information Institute actually said:

      “Catastrophes appear to be growing more destructive, but insured losses are also rising because of inflation and increasing development in areas subject to natural disasters. ”

      http://www.iii.org/issue-update/climate-change-insurance-issues

      “Disaster losses along the coast are likely to escalate in the coming years, in part because of huge increases in development. One catastrophe modeling company predicts that catastrophe losses will double every decade or so due to growing residential and commercial density and more expensive buildings.”

      http://www.iii.org/issue-update/catastrophes-insurance-issues

      • Note that as there is more development there is a corresponding increase in the number of policies and therefore an appropriate increase in insurance company income. Note also that as the property increases in value so does the amount of the insurance and therefore the insurance company income also increases. And, of course the insurance company constantly evaluates the risks of development in certain areas and therefore, barring absurd government rules, can increase premiums. This is exactly what Buffett is saying and exactly what Huff ‘n’ Puff fails to understand. No surprise in that last fact.

      • Jim,
        Exactly my initial thoughts. twice as many claims with twice as many policy holders has a net ZERO change assuming degree of severity of damage per policy is constant. Is that math too difficult for progressives?
        Also rebuild construction is significantly more robust against Hurricanes with significantly elevated structures so that the number of claims per policy will fall down. Take a look at the number of and quality of rebuilds and raising on piles on NJ barrier islands and apply some common sense, they are almost bulletproof. % claims will fall!!!

    • eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000
      ———————–
      According to the Insurance Information Institute. there has only been 1 major hurricane loss in the past 10 years. At the time when CO2 is increasing the fastest in history.

      1 Aug. 25-30, 2005 Hurricane Katrina
      2 Aug. 24-26, 1992 Hurricane Andrew
      3 Oct. 28-31, 2012 Hurricane Sandy

      4 Sep. 12-14, 2008 Hurricane Ike
      5 Oct. 24, 2005 Hurricane Wilma
      6 Aug. 13-14, 2004 Hurricane Charley
      7 Sep. 15-21, 2004 Hurricane Ivan

      8 Sep. 17-22, 1989 Hurricane Hugo
      9 Sep. 20-26, 2005 Hurricane Rita
      10 Sep. 3-9, 2004 Hurricane Frances

      • Let’s not forget that much of the destruction in New Orleans was caused by poor design and management. Building a city not only below sea level but below the shores of a nearby huge lake is not the most intelligent way to proceed.

        I would also remind everyone that Sandy was not a hurricane when it caused most of the damage.

      • As for what type of storm Sandy was: It was a hurricane that had a nor’easter forming around it, which occasionally happens when a hurricane goes north especially in late season. Its core was still tropical until an hour before landfall, and as of an hour before landfall Sandy had already done a lot of damage in and near the NYC area. Its maximum sustained winds in its last hours offshore were analyzed as being hurricane force, but in an unusual region of the storm for a hurricane but typical for a peaking extratropical cyclone – south of the center. (North of the center was where wind was second-greatest, with analysis saying a close call to 74 MPH average being sustained for 1 minute anywhere within 10 meters of the surface over any land including barrier islands.) As a result of Sandy having had by usual determinations hurricane-qualifying winds and a tropical core until 1 hour before landfall, it was officially a hurricane at a time it was doing much of its damage.

        Officially, Sandy was a post-tropical/extratropical cyclone cyclone at landfall, with analyzed maximum sustained winds (maximum 1-minute average anywhere up to 10 meters above the surface according to analysis) to the nearest 5 knots and then converted to the nearest multiple of 5 MPH was 75 MPH. This has been the way the NHC reported the maximum sustained wind of storms since before 2004.

      • Why are they only going back 15 years? They have continuously said climate is a minimum of 30 years. Are they intentionally cherry picking a short timeframe? What are the inflation adjusted numbers per capita going back to 1980 or 1950?

        The number of hurricanes over the last 45 years shows no trend up or down. The number of major hurricanes has increased during this El Nino and may be at the highest level, but the energy associated with them is not.

    • The Trump campaign is showing us that Big Media (and that includes Puff Ho) is becoming irrelevant at breathtaking speed. Smart people are now doing their own fact checking–and most importantly, making up their own minds. The group who accept arguments from media “authority” are now about 4% of the public and falling.

  2. “But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute.”

    Why is it that alarmists seem so incapable of understanding that correlation does not imply causation?

    • Hi Guy,
      I don’t think “…alarmists seem so incapable of understanding that correlation does not imply causation?” is the right question. The right question to make of this claim is “so what?”.
      The key words in the claim are “…costliest hurricanes…in terms of insured losses…”. So whether or not the weather is more or less extreme doesn’t matter, if you build more expensive property in a hurricane risk area, and choose to insure it, the damages bill will become more costly all other things being equal. This if the green blob doing what it always does and creating a distracting straw-man.

      • Simply put, we have accumulated more wealth around hurricane zones AND the effects of inflation will make,on average, hurricanes from the successor decade more expensive than the previous. I would expect claims to go up 60% every ten years based on an average 3% inflation and 2% annual growth (admittedly the last 16 years inflation has been a bit lower, same with growth -/but halve it and it still is up 30% every 10 years.

      • “we have accumulated more wealth around hurricane zones…”

        And that whole building a city a few feet below sea level thing.
        Watts up with that?

      • Most costly disaster have occurred since 2000. These yahoos never heard of inflation??? Compare the mean property value of 2000 through 2015 to say 1984 through 1999. Gee wiz, even without more building in flood zones and hurricane zones, there is three times plus the value. And that Buffett fellow, well somehow if property value is higher, he charges more to cover that higher value. HP is a bad joke, and a sincere HP reader should not be allowed to vote!

      • It’s the same with their constant claims that there is no pause because X of the Y warmest years have occurred in the last Z years. (I don’t use actual numbers because every warmista has a different, but similar mantra.)

        Since there has been no drop in temperatures yet, obviously temperatures are still at the same high level that they were at when the pause started. Basic math, yet beyond the abilities of most of them.

      • Marque..
        You fail to point out the the newer and rebuilt structures have been significantly upgraded and with time most of the vulnerable old structures will be weeded out. Claims adjusted for inflation and more structures will likely reduce.
        Finally for private homes, the insurance limit is $250,000 plus something for contents. That has not been raised.

    • This is a fossil fueled catastrophe. Without fossil fuels people wouldn’t have all that valuable stuff for hurricanes to destroy!

      Once the Warmists succeed in taking the world back to the stone age, hurricanes will be affordable again!

      • Put it this way. If a hurricane destroys your Lamborghini, it means you had the money to buy a Lamborghini, and you probably have an insurance. If a hurricane destroys your slum hut, it does less damage in terms of money, but I’m sure you won’t be much happier.

      • Very remarkable map. When some alarmist claims these super storm and hurricanes are causing more damage, I say no way. I look at it this way: Did the storm drastically change the geological land, like streams, rivers, lakes, or make it forever unlivable, etc.. Usually they say no, and I point out that generally the vegetation & wild life comes back just as much as it was. So therefore these storms are not too much for nature – just too much for unprepared humans who are moving in larger numbers, into more riskier areas to dwell.

      • Hmmm … “1990 $”. I.e. not in “real dollars”, and not adjusted for inflation. Hence the impressive (to the impressionable) “hockey stick”.

      • Brians356

        your statement: “…Hence the impressive (to the impressionable) “hockey stick…”

        Actually, given the current world economy of roughly 75 Trillion, and a world population of 7 billion, the current per capita GDP is a little north of $10,000 (not the graph’s roughly $7,000+).

      • Affordable for whom? The average lifespan will again be around 30 years of age as it was during the Stone Age. Hurricanes would then be the least of peoples’ concerns.

      • “Hmmm … “1990 $”. I.e. not in “real dollars”, and not adjusted for inflation.”

        1990 $ means it IS adjusted for inflation. New dollars are worth less due to inflation, older dollars are worth more. See Chip’s point. 1990 money is the set point against which all other years are adjusted.

    • Erny and marque: Both correct. I actually took it for granted that any reasonable person would see your logic right away. I guess the problem is that logic doesn’t seem to matter to these people. They have thier talking points and will use them for emotional impact.

    • “Costliest”. What that means is that with a depreciated dollar, more people, more homes and businesses, storms will always be seen as becoming more costly. That has zero to do with the severity or frequency of storms. Buffett knows this well and it is factual. Fewer storms but they have been costlier. The average Huff Post reader cannot discern the difference.

    • Exactly. I’m still waiting for someone to blot average baseball player salary to CO2.

      I’ve never understood the “cost” argument when it comes to damage from storms, of course it’s getting more expensive, everything is.

      • Not everything. Notably, personal computers and peripherals are much cheaper than they were 20 or 30 years ago. My first 1gb hard drive in the early 90s cost $2500. A year later the same model was a thousand dollars less. now I can buy a 5tb drive for a little over $100 (Might even be under $100, I haven’t looked for a few months). Monitors, printers, they’re all much cheaper.

      • Sometime in the late 80’s, I was looking to upgrade my desktop from 640K to 1M. When the cost came back as a bit over $400, we decided against it.

      • Doug, your post made me curious, so I checked. BB player salaries have been growing much faster. I could only plot on a limited number of data points (every 10 years since 1970), but the trend is much faster for the jocks. WUWT or WordPress won’t let me paste my chart here, though.

        If you want to do it yourself, I got the carbon data from here, and the BB player data from here.

        Admittedly, not the most scientific, but then, I’m not going to publish.

  3. If you continue to place more people in the path of natural disasters, then it’s not to difficult understand a rise in casualties and colateral damage.
    Floods being a classic example of how water courses are mismanaged.

      • Mike, I probably should have said it a little clearer, it’s actually construction in them (flood plains) that I was alluding to.
        It’s fine to say after the event, that was a one in one hundred year event but the problem being natural disasters don’t run like clock work.
        Here in Australia we’re are finding after the event that it’s ignoring history and allowing people to settle on what we know to be flood plains.
        Alterations to those water courses and the like might appear to be fine from season to season. But when the “biggy” hits those “alterations” tend to amplify the affect.
        And no it isn’t as the alarmists would have you believe that it’s global warming.
        Records dating back a hundred years or more in domevplaces indicate higher levels, the big difference being there was less in the way, people included.

    • And the first folks to settle a given area would have taken the best, convenient but least flood prone sites. In the end only the flood prone sites are left

  4. Re “Why is it that alarmists seem so incapable of understanding that correlation does not imply causation?”

    I’m sure they do understand that; but ignore it as the people they are preaching too are the ones who have trouble with critical thinking on this issue.

    • rms

      I’m not so sure guys like Lewandowsky understand “correlation does not imply causation” – there is little evidence he understands anything about statistics.

    • The day we stop trying to fit meaningless “trends” to every climate variable over arbitrary / cherrypicked intervals will be the day we start trying to understand climate.

    • Because growth and inflation which averages about 6% but is closer to 3% for the last ten years the value of property in the current decade is 30 – 70% more. If the same strength hurricane took the same exact path – of course the damage would be much higher now than say 10 years ago. Saying stuff like that is stupid and is designed to influence the stupid who can’t figure this out.

      • Well they compared the cost to since 2000, not this decade. So the same building or house in flood plains and hurricane zones is likely 300 percent or more above the mean 1990s value.

  5. …Hmmm, why do people living in “Flood Zones” have more floods..? Why do people living in “Tornado Alley” have more tornadoes ? These are just a few of the questions that liberals cannot figure out !

  6. Thought there is some close correlation between N. Atl SST and cyclone energy ( ACE ), there has been a marked drop since 2005:

    http://climategrog.wordpress.com/2016/01/10/on-the-relationship-of-ace-and-sst/

    This drop is similar to what happened following 1935. It seems that cyclones don’t like the warmest part of the circa 60y N. Atlantic cycle.

    It would seem that insurance companies benefit from the unusually LOW numbers of storms over the last decade , despite a small number of notably strong events.

    It should also be noted that much of the flooding from Sandy was because of poorly maintained sea defences, as was the New Orleans disaster.

    Not that facts have much to do with the warmist wailing of HuffPuff.

    • Part of the problem is that is was more difficult to detect hurricanes before 1940, also since then we used to have to fly airplanes into the eye and measure the pressure, so the plane had to be there at a lucky moment for tropical storms that just barely passe the threshold. Now we have satellites that instantaneously detect that pressure moment so we get a lot more, what was formally tropical storms classified as hurricanes. This explains at least some of the rise in the 1980’s. There is a similar situation with tornadoes, where we once had to look for evidence on the ground, now Doppler radar detects them all, so many more small ones are reported and then AL Gore will claim it is all due to global warming, rather than better equipment.

      • Those issues are discussed in the linked article , should you care to read it.

        The N Atl. basin has been well researched and with the exception of the war years is probably consistent.

        The drop before WWII was similar to the current drop in similar circumstances. Chris Landsea agreed that this may well be a real climatic effect.

        The current drop during the warmest part of the record is certain. Hurricanes don’t like constant warm periods.

    • Upstate NY: We had HUGE flooding from Sandy!!!

      It rained cats and dogs. All the rivers and streams shot over their banks.

  7. Warren,

    You simply cannot lose. Raise your premiums. At the end-Holocene, not a single prognostication of AGW trumps what actually has happened, anyway, at a post-MPT end extreme interglacial. And they would be “Acts of God”, or whatever nowadays. How are we to tell a +0.6 meter rise in sea level (AR4), or a +0.8 meter rise (AR5) from a +6.0 to +52 meter rise that happened anyway during the climatic madhouse of glacial inception at the end of the last interglacial?

    I say “Raise your rates! The stupid should hurt….”

    -William

  8. Eric Worrall:

    You report the Huffington Post as saying

    Buffett’s case against the resolution boils down to this: “Thinking only as a shareholder of a major insurer, climate change should not be on your list of worries.”

    First, he said, his company can handle any possible losses thanks to rising premiums. Because insurance policies are typically written for one year and repriced annually, Buffett’s company can hike premiums to better account for the heightened risk of climate change-driven losses.

    Buffett was addressing the insurance industry and his first point alone is adequate to demonstrate his “case” is correct.

    Indeed, his first point applies the principle of adaptation which I and others have been stating for decades. And that principle applies to ALL aspects of climate change because the change is a gradual process. Not only insurance premiums but also everything else can be – and is – adjusted in accordance with usual assessments. For example, sea defences need maintenance and amending them to deal with global seal level rise is a trivial addition to their maintenance costs. Farmers grow the crops that are best suited to the weather in their localities. And etc..

    The example I most often cite is that here in Cornwall we don’t have equipment and systems to deal with snow because it is cheaper for us to accept the costs of coping with the rare occurrence of snow in Cornwall (e.g. helicopter extraction of people trapped by snow on Bodmin Moor). But snow is a common winter occurrence further north in Yorkshire where they do have equipment and systems to deal with snow because that is cheaper for them than the costs of coping with the frequent occurrence of snow in Yorkshire. If the frequency of snow increased in Cornwall then we would need to buy equipment and systems to deal with it, and if the frequency of snow reduced in Yorkshire then they would no longer need equipment and systems to deal with it.

    All organisations and people – i.e. Insurance Companies, local governments and all others – are required to consider what they need when making their annual budgets.

    Richard

  9. Perhaps a stupid comment, but the amounts individuals and corporations insure may have risen at a much faster rate than combined GDP growth and inflation.

    Speaking personally, I know this to be the case.

    • That is largely due to our low growth environment. The insurance companies used to collect your money, put it in a safe investment at 5% a year. Their earnings were from the investment income. Now because they can only get 2% – if that – they need to charge higher premiums to make up the difference. 3% difference on their huge reserve holdings is very significant.

    • In 1990 the average cost of new car was $16,000.00; in 2010 – about $29,000.
      Yes, there was inflation but my 1990s car did not have all-wheel-drive, a continuously variable transmission, backup camera, turn lights on the mirrors, a fancy sound system, . . ., and on and on. One needs an advanced degree in cars just to peek under the hood. Compare that to a model from 1950!

  10. The recent Queensland Floods were said to cause more damage than any others on record. The water was actually over a metre lower than the 1970,s Floods but back then few people were silly enough to build on the rivers floodplain. It was probabally illegal .

    • And those floods weren’t because of climate change, the flood was man made.

    • Here in Western Canada we had serious flooding 3 years ago. I read later about damage claims for 250 houses in a village in the south east where my dad kept bees back in the 70’s when they had bad flooding. Back then there were only about 25 houses there, so 225 built on the flood plain since the previous flooding. Gov’t assistance? You bet!

  11. Insurance companies! They changed their policy (excuse no pun intended) a while back, certainly over here in the provincial state of the Eurpoean Onion, formaerly known as the UK. I think I have said this before so forgive me. They changed to instead of covering part of an item, thus leaving the home owner responsible for covering the remainder of the cost, to a replacement policy on a like for like new for old basis. That is where the increased costs have occurred, not from more intense storms & or floods!

    • “…They changed to instead of covering part of an item, thus leaving the home owner responsible for covering the remainder of the cost, to a replacement policy on a like for like new for old basis…”

      What the heck does the sentence mean?

      • In the ‘old days’,if you were under insured for an item, the insurance company just paid out a pro rata amount.
        Say your wigit was insured for $ 10 and you only paid for half of its value in insurance, you got $5 when it got stolen.
        I recall this happened when an insurance broker was selling ‘cheap ‘insurance.
        When the claim was made after the stadium burned down the insured got half the replacement cost as the insured value was half the real replacement value.
        Hence the ‘cheap’ insurance.
        Now with ‘new for old’ the whole value of the wiget must be insured for and you get a replacement wiget like your old one when your wiget is stolen.
        The insurer insists on full value or agreed value contracts.
        If you over insure, that’s your bad luck.
        If you under insure and and you are found out, that’s your bad luck too, as the insurer either voids the contract or pays you less pro rata.

      • Thanks Lewis – I genuinely didn’t understand the sentence.

        I’m not an insurance guru (retired brokerage CFO), but I question people “under insuring” and blaming 100% of the problem on nasty insurance companies.

        The state of Florida stepped in to “correct” home insurance issues from hurricane damage. The fix was the state attempted to force insurance companies to provide impossible financial coverage – and the companies left the state. Then the state creates a cosmetic insurance solution that would be criminal if a private insurer had attempted to implement it (i.e. material reserve underfunding).

  12. I note that trillions of dollars of infrastructure and living space have been built along the coasts over the past 3 centuries. I suggest huffpo take that into account when claiming the most costly storms and floods have been since 2000.

    Huffpo should advocate that we withdraw from the coasts, NOW, in order to prevent further such losses.

    • Huff post should advocate that poor people short Berkshire stock. That should fix everything!

  13. As people age, their automobile insurance premiums rise because older people (statistically speaking) have more accidents. Many stop driving because they can’t afford the premiums or because the cost exceeds the utility of driving — Uber is cheaper.

    If “climate change” makes buildings in Miami Beach more likely to suffer weather damage, insurance rates will go up until insuring such buildings makes them economically unsound. Then they will be torn down and not replaced.

    One of Buffet’s long standing stories is that after several years of little or no hurricane activity, more insurers jump into the business, rates start go down and Berkshire stops writing policies.

  14. But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute. Nine of the 10 costliest floods in U.S. history, when measured by payouts from the federal government’s National Flood Insurance Program, also have occurred since 2000, according to the insurance group.

    Insurance provided by the federal National Flood Insurance Program is sold at rates no private insurance company would offer. In other words, it’s subsidized. How many private insurance companies went bankrupt as a result of these losses? That is the measure of unanticipated risk.

    You could probably make the same statements regarding 8 of the 10 costliest bridges per mile have been built since 2000. And 9 of the 10 costliest public transit system, public schools, etc., etc. Inflation, regulation, and lax oversight spending federal money pretty much guarantee it. Don’t blame climate change.

    The most expensive high school in US history was built in 2007 at a cost was $578 million, or $137,619 per pupil. No climate change footprint there either, just plenty of old-fashioned graft, corruption and incompetence.

  15. Hurricanes getting more costly?

    Does anybody remember Hurricane Frances, that blew a few trees down in Florida in 1974? I do, as I was there.

    Even under Roger Pielke Jnr’s normalisation methodology, taking into account changes in inflation and wealth at the national level and changes in population and housing units at the coastal county level, Frances still ranks 28th most expensive since 1900.

    From what I saw of it, it was no worse than a run of the mill Cat 2.

    The full account is here:

    https://notalotofpeopleknowthat.wordpress.com/2013/03/21/was-hurricane-frances-really-so-costly/

    But it is hard to avoid the conclusion that even Pielke’s methodology does not take full account of changes over time.

  16. From AON 2014 Annual Global Climate and Catastrophe Report:

    “Global natural disasters in 2014 combined to cause economic losses of USD132 billion, 37 percent below the ten-year average of USD211 billion. The losses were attributed to 258 separate events, compared to the ten-year average of 260. The disasters caused insured losses of USD39 billion, 38 percent below the ten-year average of USD63 billion and was the lowest insured loss total since 2009. This was the second consecutive year with below normal catastrophe losses…”

    And the report shows that 2014 was part of a trend going down, but I guess Huff Post refer to a hitherto unknown category of non-natural disasters!

  17. The Huff has wheeled out Mark Carney, the Govenor of The Bank of England, to counter Buffett’s remarks with words of wisdom.

    The man is a fool. On arriving at the BOE he introduced advanced guidance on future interest rate moves and events have proved every piece of his guidance wrong. But he is an absolute wiz at forecasting the financial impacts of Man made climate change. LOL.

  18. What the climateers haven’t been able to accomplish through legislation and international treaties they’re going to try to accomplish through lawsuits and the concomitant increase in insurance rates. I may be wrong but I believe it was Ralph Nader who first introduced this method.

    Fighting against the desire of some to control others is a never ending chore of humanity.

  19. This claim is useless unless it’s shown next to graphs showing the rapid growth of populations on the coasts. More people = more property = more damage in hurricanes. Mystery solved.

  20. “Only when the tide goes out do you discover who’s been swimming naked.” Warren Buffett

  21. Has anyone from HuffPo visited the eastern coastline recently and compared the increase in development to what it was 10, 20, 30 years ago? A wild guess on my part estimates that the number of waterfront homes has doubled every ten years since the 70’s or so (and probably before then).Noe look at the pictures of the “cabins” campers, and trailers that were on areas like Hilton Head Island and now those have been eradicated and replaced with homes selling for $500,000 up (and really UP).
    If the dollars of damage had not gone up we would really have much larger problems.

  22. HuffPo? Really?
    I have never been there. I don’t intend to. They’re ridiculously biased.
    What’s next,
    Salon.com?
    HuffPo being referred to here at WUWT must make their day.
    “Hey look we’re legit.”

  23. It may also be the case that the courts have forced insurance companies, over time, to be more generous with their payouts. And that homeowners have become more willing to file claims, and less willing to stoically suck it up.

  24. The headline:

    Huff Post Explains the Insurance Business to Warren Buffett

    is wrong. I’m pretty sure they don’t expect Buffett to waste his time on their article. At best the job will be done by some very junior minion. The title should be:

    HuffPo is frustrated because Warren Buffett won’t do what they think he should.

    I seldom make an argument from authority but I make an exception in this case. Geez, who’s the billionaire renowned for his business acumen? Who’s the penurious scribbler? Who’s advice should I take with regard to the insurance industry? LOL

    Warren Buffett has heard more sophisticated BS business proposals than most of us realize is possible for one human in one lifetime. He knows crap when he smells it.

  25. If Warren Buffet has one failing, it’s his inability to demonstrate chutzpah, a trait with which HufPo is so generously endowed.

  26. This is why the workers at Huff Po unionized. It’s tough work making up fantasy and attacking the facts and subject experts day in and day out.

  27. HuffPo is totally ignoring the part where Buffett (referring to automotive insurance) said “Think back to 1951 when I first became enthused about GEICO. The company’s average loss-per-policy was then about $30 annually. Imagine your reaction if I had predicted then that in 2015 the loss costs would increase to about $1,000 per policy.” and ” …inflation has caused a huge increase in the cost of repairing both the cars and the humans involved in accidents. But these increased costs have been promptly matched by increased premiums. So, paradoxically, the upward march in loss costs has made insurance companies far more valuable. If costs had remained unchanged, Berkshire would now own an auto insurer doing $600 million of business annually rather than one doing $23 billion.”
    In short, the increases in insured losses are due to inflation, and he has the numbers to prove it.

  28. “But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute. Nine of the 10 costliest floods in U.S. history, when measured by payouts from the federal government’s National Flood Insurance Program, also have occurred since 2000, according to the insurance group.”

    Well gee whizz HuffPost, I reckon that 10/10 of the most expensive accumulated capital investment in coastal areas have occurred in those years so whaddya reckon the insurance losses would have increased. I also reckon that the total insurance premiums paid by asset owners in those areas in those years would be relatively high compared to previous years.

    Honestly, these people must get breathless just going to the toilet.

    • Another way to frame this is that the risk of climate change is so obviously miniscule that people are climbing over each other to build on the coast.

  29. I would LOVE to see someone try and prove in court that any cost a person had due to a weather event was attributable to what some person or company did. If they showed any real data it would show exactly what Buffet is saying, the weather is not getting more dangerous. Or, better yet, have them show predictions from their climate models on what would happen with and without the influence of one company on the planet’s climate. They would have to show how their model predictions correlate to past data so the judge/jury believes their models. That is something they will not want to do. They’d get some slick looking lawyer up there pointing at a plot of model predictions versus real data that are no where CLOSE to being the same, trying to convince us the models are good by giving us his best Jim Carrey Pet Detective impression as he says “LLLLLLIKE A Glove!”

  30. He repeated it all to Joe Kernan on Squawk Box this morning, including there having been no serious hurricane landfall in a record amount of time.

  31. Seems to me, the acid test is how many Huffy Po dudes (who used to) own and have sold their BRK-A shares as a result of their fantastic insight.

    SWAG = 1 or 2.

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