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It might not be. There is already a huge surge in demand so materials will be incredibly expensive if they can get them. Even the US struggle with this. Take into account that this has been a very bad year for hurricanes, severe convective storms (tornadoes, huge hailstorms, straightline wind), floods etc
Tradesmen will be on the phone 90% of the time and not actually working and restoring properties.
Theyll end up bringing in cheaper labour from Mexico to get through this surge of building. I'm sure Trump will be delighted, or block it.
Another factor is that those with insurance might be stuck as insured amounts may not cover the full cost of rebuild due to increased prices.
Another factor is that those with insurance might be stuck as insured amounts may not cover the full cost of rebuild due to increased prices.
By coincidence, I’ve just finished reading an in-depth article on precisely that subject! And the prospect isn’t good. It being America, everything is profit driven with lots of people seeking to make as much money as they can without actually doing anything to help the people in need. It’s complicated, but worth reading, and it might be an indicator of how the situation may change here. Insurance premiums are rising now, it’s unlikely to change for the better.
That is a good article. Insurance in the US is a basket case. Florida has very similar problems to California based on crazy legislation, practices and increases in hurricane and flooding risk. Also the NFIP flood program is not fit for purpose and the appetite to provide solutions isn't there even at State level Dept of Insurance.
Add climate change to the heady mix and it's not looking good. It matters as insurance increases societal resilience to bad stuff, if the sector is declining then that resiliency is being chipped away. Insurance is a global industry so it will have an impact across the globe if they fail in the US.
Add climate change to the heady mix and it’s not looking good. It matters as insurance increases societal resilience to bad stuff, if the sector is declining then that resiliency is being chipped away. Insurance is a global industry so it will have an impact across the globe if they fail in the US.
I was assuming that, I don’t understand how such financial institutions work, but I’d guessed that it isn’t just Californians who will be hit financially, the companies will be looking to claw back money to boost profits for their shareholders, so everyone else sees higher policy costs. *sigh* If it ain’t one damn thing it’s another!
On another note, here’s a nice little article showing the work of the water bombers from British Columbia who’ve been working so hard trying to control the fires - I hadn’t realised they mostly fly at night, about 70% of their runs are in the dark, if I understand correctly, which makes things even more dangerous.
There’s a short video of a Chinook doing a run with onboard cameras.
One of the biggest issues with the insurance sector is that they tend to write insurance policies on a one-year or multi-year basis. We are all familiar with the concept of home insurance or car insurance for one year. More forward thinking insurance companies will provide multi-year, as in three to five year policies, for commercial or industrial risks but they rarely do this for residential properties.
Perhaps the underlying issue is that in large insurers it is the underwriters who express their appetite for risk in the way they cover certain policies. The underwriters are often remunerated via commission based on total premium, so they will often take on extra risks hidden underneath the urge to diversify the portfolio of risk, however these risks can back fire at times. As the underwriters are basically hedging their bets and some years it's okay but in other years. They often move from one company to another company every couple of years therefore they could be actually taking on toxic risks but nobody finds out until it's too late by which time they've made lots of money and left/moved to another company continuing their short-sighted practices.
Fortunately the mortgage industry is a much larger part of the financial sector and within the mortgage industry they are now starting to take things like climate change very seriously as the risk could change over the 25-30-40 year lifespan of that mortgage and they do not want to be caught with their pants down. We are all aware of the toxic subprime loan scandal which was the catalyst for the 2008 global financial crisis. There is a possible future where climate change can have a similar impact due to misplaced hedging on risks which are relatively safe today but will become toxic in the future.
It's not all doom and gloom though many large organizations and banks and insurers have a chief risk officer - it is within their duties to determine the risk to which the company is exposed to on a holistic basis not just simple nuts and bolts things but big picture stuff. Their job is not day to day cashflow risks but the big stuff that affects solvency of their organisation or the sectors.
subprime loan scandal which was the catalyst for the 2008 global financial crisis
ironically, the main subprime lender had offices along the I101 in Calabassas, Agoura Hills, Thousand Oaks, Simi Valley.