Or build back safer, away from the coast or inland flood zones.
intercst
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It’s the “battle of the protected free speech”. Who wins? The developers, or the companies who insure what the developers build?
Sticks in my mind that, some years ago, a hurricane blew through Florida. Houses built by Habitat for Humanity, which were fully in compliance with those “intrusive, burdensome, big gummit” building codes, and maybe a bit more, withstood the storm pretty well. While neighboring houses, built by for-profit developers, blew away.
But, we have been told, for 45 years, that government doesn’t know anything. Only the “JCs” know what is best for us. But what happens, when it’s JC vs JC?
Steve
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They both win. JC = Just Cash vs Just Cash.
https://www.politico.com/news/2024/10/09/hurricane-milton-congress-flood-insurance-00183017
The first coolly appraising article on the political/financial aftermath of this hurricane season I have see. Helene and Milton are going to confront USA politicos with an opportunity to confront reality about property insurance and Real Estate industry, and especially Floridian denialism and fantasies.
I believe denialism will prevail, the mal-investment bubble will become even more catastrophically inflated, Florida and vulnerable neighbors politics will become crazier, until ultimately a total political/financial collapse comes “out of the blue”.
Reminds me, horribly, of this famous climatic water scene:
We have a long way of zillions of flying monkeys to go before we reach melting time.
d fb
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Mutually exclusive: builder maximizes profit = insurance maximum payout. Insurance minimizes payout = builder minimized profit.
Steve
1 Like
Builder profit maximized in all instances. “Value” not tied to reality. Good house–high margin. Cheap house --higher margin.
Yeah, well that’s not gonna happen. Waterfront property has always been the most desirable, priciest, most sought after real estate - and that won’t change because a few rich people get their homes washed away in the occasional hurricane. Increasing insurance rates won’t even do it, it’ll just narrow the pool of people who want that property.
Regulations have a tendency to do that. Building codes mean builder can’t use cheap, insufficient wiring or lumber. Airline regulations mean planes have to be monitored, inspected, and maintained on a regular schedule. Fire codes mean you have to have a few exit for patrons to leave instead of filling every available inch with merchandise. Libertarians like to pretend that all this would be “self regulating” because builders won’t use cheap materials, airlines won’t skimp on maintenance, and stores will be set up with safety in mind except - it never works out that way.
Florida is a special case. Climate change does not apply there, it says so right in the law of the state.
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I think that FL’s denialism will go down as a bigger folly than when in the 19th century some Indiana legislators tried to change the value of Pi to 3.
Exactly! They’re already saying that the wealthy in Florida see their oceanfront homes as an expense (they may require total reconstruction after a storm on their own dime) rather than an investment.
The Florida high-rise condo market is cratering under the cost of the new structural safety inspections and multi-million dollar repairs to get up to code.
intercst
3 Likes
With a few hours to go, it looks like the track is south of Tampa Bay.
DB2
Meteorologists battle flood of misinformation as they report on Milton
Scientists say their efforts to inform the public about the threat of catastrophic storms are being hampered by “buffoonery” on social media.
I was just watching a live interview with the Mayor of Sarasota. She said that they’ve received no requests for emergency assistance. Apparently the fresh memories from Hurricane Helene 2 weeks ago are a real lifesaver, and everyone heeded the warnings to evacuate.
One INLAND shelter that had 1,600 “guests” 2 weeks ago, had 7,000 today.
intercst
1 Like
Read in NYT article that 116 known ( counted ) tornado’s spawned ahead of Milton, in all of the state of Florida. Is this a common occurrence, or a new(er) occurrence ? It’s pretty darn scary !
If the insurance pool can be maintained then the higher costs translate into higher skim percentages.
But most of the insurance in Florida is probably in run off companies. Meaning set amounts of coverage, premiums, premium increases, and a timeline and the business is over with entirely.
I worked for Cigna a long time ago. I studied the complexes of insurance corporations. The same people are on corporate charters across hundreds if not thousands of corporations for Cigna. A lot of that has to do with laws in different states. But much of it has to do with defunct insurance corporations that were marketing ideas outlasting their profitability. Legally those corporations can not just take the pool’s surplus. A run off account is created.
A pool surplus can be created. The law in a given state can change. The pool becomes a run off account because the law allows it. The pool’s surplus would not work with the new laws.
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Common and long recognized. Here is a paper from 1983:
DB2
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Did not know that. That is crazy scary.
The best thing about Milton was that it could have been worse.
https://www.washingtonpost.com/weather/2024/10/10/hurricane-milton-damage-florida/
DrBob2 is correct on this. The modeling shows that by end of the century the frequency of Atlantic cyclones will decline a bit while the frequency of category 4 and 5 hurricanes will increase. This means that the trends probably won’t achieve statistical significance until the end of the century.
Nice summary that is a few years old but still generally accurate:
This is also correct. Here is the data from the EPA:
However, the trend for Atlantic storm intensification can be seen from 1950 to the present (chart begins when wind speed data from airplane and satellites became broadly available). This will likely become statistically significant in a few decades if it continues.
I think insurance rates do matter. Florida has a lot of coastline. As the pool of customers generally decline because of insurance expense, so will demand and the value of the property. Sure, some particularly picturesque locations will retain value but I suspect that most of the coastline will face serious economic difficulties.
The rise in Florida homeowners insurance rates is pretty spectacular:
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Chan et al. write in the introduction to their paper that “Historical records show substantial multidecadal variations in Atlantic hurricane activity that co-vary with sea surface temperature (SST) differences between the Atlantic main development region and the remainder of the tropics.”
Upthread, bt included this graph:
The work by Chan which notes the “substantial multidecadal variability” looks back to 1880:
Vecchi et al. found a similar pattern:
Researchers found no evidence on the timeline of larger than normal numbers of hurricanes forming over the past few decades—instead, it showed that the numbers were on par with prior spikes in the late 1940s and early 1880s. They also found no evidence indicating that modern hurricanes are any more powerful than those in the past.
https://www.science.org/doi/10.1126/sciadv.abg6931
DB2