Hurricanes and Homeowners Insurance

Well, I just got lucky. Vain as I am I went looking for my name on other blogs, and came right to David Rossmiller's latest post (I'm just kidding - I read his blog regularly), which in turn led me to a new blog he is reading out of Britain on reinsurance named ReRisk. And why did I get lucky, besides just the fact that it was instantly clear that ReRisk is a fun read? Because of this. I have talked in other posts about my preference for facts, for hard verifiable numbers, when analyzing arguments and problems, and I have a particular preference for this with regard to insurance pricing and availability issues, since much of the public discussion on that topic tends to be primarily posturing and not about a rational discussion of the economics of the matter (see this post here, for instance).

At the same time, both on this blog and elsewhere, there has been plenty of discussion about insurers repricing or not offering homeowners insurance in coastal areas based on hurricane prediction models, including some articles pointing out that the pricing changes are because hurricanes are becoming a bigger threat or were at least previously undervalued as a threat (see this post here, for instance). And yet I don't ever recall seeing much real data showing or instead disproving that statement. Until here, in ReRisk's post from a couple weeks back. I am not sure his chart answers the question of whether insurers are right that the threat is increasing (although quite clearly, even if the hurricanes themselves aren't increasing, the ever increasing construction on the coasts makes a modern hurricane far more risky fiscally than were hurricanes in the past), but it is certainly very entertaining food for thought on these issues.