State Farm General’s rate filings “raise serious questions” – Lara  July 2nd 2024

Swiss Re: Home insurance still priced too low for climate risk

This has been a year of insurance sticker shock in the U.S. But one man who provides insurance to insurers thinks maybe the shock still isn't enough to steer people away from risk in a changing climate.

"There is not a lot of action yet, not enough," Jacques de Vaucleroy, chairman of Swiss Re, said in a recent interview at the company's Manhattan offices. Homes are still being built in places they shouldn't be, he noted, and often grandly at that. Premiums relative to the potential payout for a claim are still acceptable for many consumers, he added.

Such a view might infuriate homeowners in Florida, where the average premium has topped $5,000 and where more than 1 million residents have turned to the state-backed insurer of last resort because they can't find or afford a policy on the private market. But reinsurers like Swiss Re have a more global view.

So perhaps it's understandable that de Vaucleroy believes more expensive insurance will have beneficial effects.

"My hope is that when it starts to bite, we will see that the traditional responses are not working," he said. "Then there will be way more money, way more interest" in steps to mitigate and adapt to climate impacts, and even in informed retreat from risky areas.

Getting granular information on U.S. home insurance costs is difficult because insurers have fought efforts to systematically collect ZIP-code-level data on premiums. However, researchers Benjamin Keys and Philip Mulder recently tried a new approach of gathering data through mortgage escrow payment servicers. In a National Bureau of Economic Research working paper published in June, they write that average nominal home insurance premiums across the U.S. increased by 33% between 2020 and 2023, from $1,902 to $2,530. That represents a 13% real increase.

Home insurance shock hitting housing market has landlords concerned - Fast Company

80% of landlords in ResiClub’s latest survey say they’re concerned about future home insurance increases.

Earlier this year, a friend of mine saw the monthly home insurance and property taxes on his Fort Lauderdale, Florida, rental property, which he bought during the pandemic frenzy, increase by $500 per month. It cut his cash flow in half.

He isn’t alone: The average U.S. home insurance premium rate rose 11.3% in 2023, according to S&P Global. That was double the 6.6% increase in 2022 and far above the pre-pandemic increases in 2018 (+3.2%) and 2019 (+2.5%).

Among the landlords polled in the ResiClub-Groundfloor Housing Investor Survey conducted this month, 80% said they’re concerned about future increases in home insurance. Of those, 37% are “very concerned.”

Home insurance premiums have been increasing faster in coastal states, particularly around the Gulf, with the average Texas homeowner experiencing one of the largest increases last year (+20.3%). That said, these increases are happening far beyond the coast. According to ResiClub’s reporting, the rise in home insurance premiums is due not only to climate risk but also to housing and construction inflation. Replacement and repair costs have soared, and insurers are trying to keep up, although some state insurance commissions are slowing the process.

Even homeowners in Indiana and Iowa saw their average home insurance premium rates rise by 12.2% and 13.5%, respectively, in 2023.

Lance Lambert

Your car is your worst asset for privacy. Here's why.

Two out of every three cars sold feature embedded connectivity, according to Counterpoint Research.

Mozilla Privacy Not Included leader Jen Caltrider joins Wealth! to discuss the state of privacy in modern cars.

"Every car that people buy these days is bad for privacy. There are no good options for new cars for privacy," Caltrider explains. She points to Tesla (TSLA), Nissan, and Kia's privacy policies as particularly striking, as they seek to collect very personal data.

"When you think about privacy, we're going to have to give up data in our connected world. It's just how it works. And what you want to see is a product that only collects the data it needs to give you the service. So for a car, you want it to collect only the data it needs to get you from point A to point B safely and then use it only for that," she says. However, most cars today collect much more data to sell to advertisers, data brokers, and insurance companies. Modern cars are equipped with microphones, cameras, and sensors that all collect information to make inferences about users.