The horizon is not so far as we can see, but as far as we can imagine

What Happens When Insurance Goes Away

Thomas Neuburger, one of my favorite bloggers, has an excellent post on the fact that swathes of types of insurance are going to go extinct because of climate change. Property, fire, home (except from theft, though that may get hit during collapse) and so on. It’s worth a read.

This has already started to happen. Insurance companies are refusing to write new fire insurance policies in parts of California, for example, and no one with sense wants to insure buildings against hurricane risk in Florida. But it will spread: rivers will swell during climate change before they shrink, for example. Acts of God will become more and more common everywhere. Crop insurance, for example, is something that will become more expensive.

But it might survive, because the government may consider it necessary. Insurance is people pooling together money to make sure that when occasional bad things happen, people can be made whole. It relies on three things to be viable:

  1. You can’ predict who will get hit; and,
  2. It happens often enough to be worth insuring against; and,
  3. It doesn’t happen so often it’s unaffordable; and,
  4. It’s big enough to matter to people.

If any of those four things break down, insurance doesn’t work. If you know who’ll be hit, other people won’t pay for it. Thus insurance companies won’t pay for pre-existing illnesses unless the government forces them to. If it is so rare no one is scared, no one will buy. If it happens too often, it becomes  unaffordable and if it’s too small, why bother?

Climate change violates “you can’t predict who will get hit” and “it doesn’t happen so often it’s unaffordable.” If there are so many fires or huge hurricanes or floods that it’s inevitable and everyone in a certain area will be hit, insurance makes no sense. At that point, leave or do something to make it less likely.

Since we’re not going to stop climate change (that decision point has passed) that would mean things like sea walls, creating swamps and wetlands, increasing the capacity of stormwater systems, getting rid of concrete roads and replacing them with material that absorbs water and so on. Homes could be protected from wildfires by various other measures.

There’s going to be a push to have government underwrite insurance in places where it’s no longer really viable, and sometimes that will happen. As with the absurd expansion of credit after the 2008 financial crisis, this will eventually run up against a simple problem: money can only buy what exists. If too many homes and too much property are being destroyed, society will at some point not be able to rebuild it all, or, if sensible, will decide that rebuilding where you know another flood or disaster is coming is stupid.

Insurance was originally fraternal. People would join together and deposit into a pot and in some cases promise to physically help rebuild. Re-raising a barn, for example, with communal labor. In places where insurance is still viable, I would suspect that much of this will come back. (This also used to be how medical insurance worked. A fraternal organization would hire a doctor and a couple nurses and they would care for sick people. A fraternity would have some small apartments or rooms for members rendered homeless, too.)

As government fails, we will be pushed back on what we can do for ourselves, and for that to work we’ll have to be realistic: “what can our group actually do?” Can we source medicines? Can we rebuild? If we can, will it have to be rammed earth or trees we can cut ourselves? How can we get wiring?

We’ve lived in the era of big government and big companies: the era of the cornucopia, where money was the same as having access to almost anything we wanted.

That era is ending.

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Iran’s Likely Response To The Attack On Their Embassy


Open Thread


  1. someofpartsr

    Well, my selfish little concern here is that I am in Atlanta and we share a border with Florida. Of course I did not like it when this place was a Jim Crow backwater, and I am old enough to dimly remember those days from my childhood. In the decades since then, enough new people have moved here to give us a decent amount of diversity. We now have large, heavily populated counties in the metro area that are majority Asian and Hispanic. That said, I still worry about the volume of people that will settle here as climate change accelerates.

  2. Willy

    Losing insurance for no good reason (if you ignore corporate max-profit ‘reasons’ forced onto their underwriters), is no joke. Deregulation means the personal responsibility of retaining lawyers just to get your irresponsible insurers to payout per their own agreements, falls onto the individual consumer. I’d like to think that outfits like J.D. Power is gonna help you divine the difference between reasonable insurance companies and those that’re full of shit. But we see so much distrust in organizations these days.

  3. Flaser

    Another thing people will try is live *with* these changes.
    It’s not altogether impossible to build houses on “legs” that can weather floods.
    Same goes for tornadoes, build out of something more durable than wood.

    All of these are often seen in Europe, especially in older housing built before late 20th century “investment housing” that was built to last and built as a home for people to live in.

    It’s only the insistence to build as cheaply – in terms of material and labor – why most American housing is so “flimsy”.

    Another fun fact: adobe can be actually quite sturdy and if kept dry last for centuries. It also has good insulation properties, keeping rooms cold in summer, warm in winter.

    There are a lot of methods, materials and solutions out there that we simply ceased to consider in the name of treating housing as investment and optimizing first and foremost for cost alone.

  4. different clue

    About farm insurance . . . there is a farmer named Gabe Brown ( with a roughtly 5,000 acre operation in North Dakota which he calls a “ranch”) who is becoming famous in alterna-parallel regenerative farming circles for spending the last 20 years making a decent living on his ranch while increasing the stored soil-carbon level and soil-water storage capacity and soil-borne bioactivity every year.

    He has attributed part of his success due to his rigid refusal to ever sign up for any Farm Insurance program whatsoever. He has written a little article about why his rigidly-maintained shunning of Farm Insurance is what allowed and allows him to make an actual living by farming while improving all aspects of his farm’s soil. Here is the link to his little article about that which he titled ” The Real Cost of Subsidies: Your Freedom To Farm”.

    (I hope that Acres USA and other publications write up progress reports on how he has done compared to his conventional Farm Insurance participating neighbors during the last few-couple drought years in North Dakota, so we can see how his approach has been holding up).

    There is another farmer named Gary Zimmer who is also famous in alterna-parallel farming circles, who runs a 1,000 acre certified organic farm in Wisconsin called Otter Creek Research Farm. I don’t know for a fact because I have never heard anyone ask him about it, but I almost bet that he too shuns Farm Insurance.

    There is another farmer ( actually a husband-wife pair) named Klass and Mary Howell-Martens. They have a somewhat-over-1,000 acre certified organic multiple grains-growing operation in Upper State New York. I don’t know for a fact because I have never heard anyone ask them about it, but I would suspect that they shun Farm Insurance too.

    There is a much smaller scale Permaculture Farmer named Mark Shephard whom I beLIEVE is also certified organic on close to 200 acres or so. I suspect that he also shuns Farm Insurance.

    ( I sometimes go to farmology/agronomy conferences as a mere interested layman, and if I see any of these people at any of those conferences, I will try to remember to ask them what they think about Farm Insurance. If indeed they shun Farm Insurance, they will proudly say so and that is how I will find out).

  5. bruce wilder

    Insurance has already become vastly more usurious, often designed more as scams or debt-traps than a mechanism to socialize risks that otherwise destroy individuals.

    Ultimately, we cannot “insure” against something adverse that happens globally as opposed to locally or to individuals. There might be ways that we could store some reserve of common resilience, but the bias will be strongly against doing enough.

  6. sbt42

    I second that (very brief) editorial by Gabe Brown, along with Mark Shepard’s work and his book, “Restoration Agriculture.” They provide both big-picture and anecdotal “how-to” advice and suggestions for those interested in creating sustainable, regenerative food and land systems. Can’t speak on the Farm Insurance topic, but Brown’s perspective seems to hold a lot of weight in this subject as well.

  7. different clue


    There is a place where one can find all sorts of books like this. And that place is the Acres USA Bookstore.

  8. mago

    Building on the flood plain/flood plain
    It happens all the time
    Waiting for the hundred year burst
    When chinook hits Arapaho mountain snow pack and raging waters destroy Boulder “Creek” and all the prime real estate lying in the floodplain.

    Talking about Boulder, Colorado and land between CU and Naropa University, both residential and recreational in their use.
    Everybody knew, nobody cares.
    100 years only comes around every hundred years, after all.
    In this case the hundred year mark has long since passed. Waiting on the big one now.
    It’s the only example I know, but multiply it, square it and amplify it.
    Building on the floodplain. . .

  9. capelin

    Insurance has become part of the scam triad of constraint – banking/lending, insurance, and the rise in complexity and cost of everyday living.

    I remember my dad pricing a new pickup truck in the early ’70’s. It was a bit over 3k (base model, probably no am radio, etc). Today a 90-100k pickup is common. Grocery-getter’s, my friend calls them.

    I also remember people saving cash till they could buy a vehicle – or dwelling – outright, and frowning on anyone “living on credit”. One could actually do that back then, but it done got taken away.

    @ Flaser. Good point. People may also dump insurance (as they can), even in lass drastic situations, like the farmer mentioned by @dc.

  10. Paul Kobulnicky

    I hate myself when I call upon the ‘good ole days’ but I am old enough to remember when health insurance was called “Hospitalization” and/or “Major Medical”. It was intended, as this article implies, to protect the insured against the unusual and the exceptionally costly medical procedure. For other occasions, cash was the norm. It worked for all except those who were determined to reap riches from the health care process. And don’t tell me that health care is so much better now. Those old enough to compare will tell you that health care was just as good in effect and much better in terms of caring practitioners and locally responsive institutions.

  11. Adam Eran

    One additional note: California does offer an alternative to privately underwritten insurance (I believe it’s called “FAIR”). It’s roughly twice as expensive as the private stuff, but sometimes it’s the only insurance available, and real estate lenders absolutely require insurance.

    Personally, I’m surprised insurers aren’t making a bigger fuss about global warming, but I suppose the short-term-profit-ism taught their MBAs forbids such long term thinking.

  12. Jorge

    Re-insurance is basically wholesale insurance- your insurance company bundles up a bunch of policies and sells that bundle to the Re company, sends the premiums to Re, and gets a check.

    The financial world is: stocks are dumb money, bonds are mid money, insurance is smart money, and reinsurance is genius money. Re started doing global warming modeling around 1990.

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