Subject: Re: OT: Hurricane Strength and Damage
I thought this USA article on expected damage versus hurricane strength was worth sharing. The graphics mid-way the article are pretty clear - from mild to total destruction. Recovery periods from days to months.

https://www.aol.com/uninhabita......

Of course, this is not off topic with respect to BRK insurance and reinsurance operations.

There has been a spate of media reports lately about approaching headwinds, or maybe crosswinds, in the worlds of insurance and reinsurance due to the increasing frequency and severity of extreme weather events related to climate change.

U.S. Sen. Sheldon Whitehouse, chairman of the Senate Budget Committee, warns that what insurers and reinsurers call pricing power and consumers call inflation is escalating at a rate that will cause upheaval in the industry as fewer ordinary people are able to afford the cost, forgoing insurance altogether and leaving a smaller base to underwrite growing risks.

Whenever I travel to Miami, I am baffled by the continuing massive investment in new construction by the water's edge. Perhaps I am being alarmist, but I just don't see how that ends well.


Climate change tests the insurance industry and could lead to the 'next big economic shock' for the U.S.
(Yahoo News)

Earlier this month, Senate Budget Committee Chairman Sheldon Whitehouse of Rhode Island held a series of meetings in Florida on the topic of skyrocketing insurance rates. At a panel discussion in Hollywood, he issued a dire warning about what he called “the next big economic shock that is going to clobber the U.S. economy.”

With insurance becoming unaffordable or unavailable, Whitehouse said, the next shoe to drop is “the mortgage market going into crisis, because if a property is uninsurable, that property is unmortgageable. And then that mortgage crisis cascades into a property values crash.”

No state has been hit harder by the unfolding insurance crisis than Florida, a peninsular bullseye consisting of 8,436 miles of heavily developed coastline that each year tempts hurricanes and tropical storms. Residents in Florida pay four times the national average for homeowners insurance, and the cost of premiums has risen there by more than 40% over the past year and a half. That’s no real surprise given that in 2022, a single storm, Hurricane Ian, killed 150 people and caused a record $112 billion in damages when it made landfall on the Gulf Coast.

https://www.yahoo.com/news/cli...


Rise Of The Insurance Apocalypse
How climate change is breaking down the global safety net for handling life’s risks.
(The Lever)

But as climate change intensifies extreme weather and claims pile up, this system has been thrown into disarray. Insured losses from natural disasters in the United States now routinely approach $100 billion a year, compared to $4.6 billion in 2000. As a result, the average homeowner has seen their premiums spike 21 percent since 2015. Perhaps unsurprisingly, the states most likely to have disasters — like Texas and Florida — have some of the most expensive insurance rates. That means ever more people are forgoing coverage, leaving them vulnerable and driving prices even higher as the number of people paying premiums and sharing risk shrinks.

This vicious cycle also increases reinsurers’ rates. Reinsurers globally raised prices for property insurers by 37 percent in 2023, contributing to insurance companies pulling back from risky states like California and Florida. “As events are getting bigger and more costly, that has raised the prices of reinsurance in those areas,” said Carolyn Kousky, the associate vice president for economics and policy at the Environmental Defense Fund, who studies insurance. “It’s called the hardening of the market.”

In a worse-case scenario, this all leads to a massive stranded asset problem: Premiums get so high that property values plummet, families’ investments dissipate, and banks are stuck holding what’s left.

More simply, the global process for handling life’s risks is breaking down, leaving those who can least afford it unprotected.

https://www.levernews.com/rise...


It is only fair to point out that this second article comes from The Lever, an online publication founded by David Sirota, a left-leaning investigative journalist who co-produced the satiric climate film "Don't Look Up" and once wrote speeches for Bernie Sanders. A 21% increase in homeowner rates since 2015 seems quite moderate compared to, say, the price of eggs. The $4.6 billion figure for insured losses from natural disasters in 2000 is cherry-picked from a variable list of annual totals to make the change to today seem more extreme:

https://www.iii.org/table-arch...

That said, there does seem to be an extraordinary amount of investment in and migration to coastal areas on the front lines of sea level rise and fiercer hurricanes.

I remember asking an insurance investor some years ago what the effects of climate change-related extreme weather events were likely to be on property and casualty insurers. He told me the purely economic effect would be to harden pricing, a good thing for investors. Back then, he did not envision a point at which large swaths of people would no longer be able to afford insurance at all.