NYT had an article about homeowners insurance this morning. It let you check to see how home insurers are doing in your state. I was surprised to see that insurers in my state of Michigan went deeply into the red last year, after being in the green in previous years. And that seems to be due to one set of storms with tornadoes that hit mid-Michigan (around Lansing) last summer. And I thought we were pretty insulated from disasters here! I'm wondering what my new rate will be when my policy renews in a couple months.
Thank you Andrew - inc. for flagging Hamilton's piece, realy useful!
I enjoyed the Stiglitz oped, but couldn't help think he was a bit naïve when saying that neoliberals "believe firms should maximize shareholder value, doing whatever they can get away with, *because bigger profits serve the common good*".
I would contend these people have proven time and time again that they don't give a damn about the common good or about "growing the pie" for everyone. They care about their getting ahead of others, ie, increasing their share of the pie, and NOTHING ELSE.
They will even wilfully make the pie shrink if it means their share gets bigger (in absolute terms) - and indeed that's precisely what they're doing when they keep investing in fossil fuels and other high-emission industries: they're stocking up climate impacts on the poor and vulnerable (and increasingly on the middle class) and betting they can shield themselves from climate impacts thanks to their wealth...
But the short take is that hazard insurance has traditionally be based on past "experience," not experience to make predictions, just "experience." Climate molders have been telling us for decades that the emission of CO2 into the atmosphere caused harm, some of it the the form of more extreme weather, but this has not been used for setting insurance premia. [How much of this is the fault of regulators and how much ordinary business mistakes by insurers is not clear.] Owners os assets exposed to climate risks did not receive the correct information about the risks they faced from this mispricing of insurance. Consequently assets were located in more vulnerable places and without mitigating investments than there would have been with better risk premia setting.
Not both insurance companies and asset owners are facing the consequences of these mistakes. What is worse, all have not yet been corrected.
"Let’s take a possible scenario as to what might happen in South Florida. According to Renaissance RE, another re-insurance company, the average Florida house’s mortgage is subsidized to the tune of $72,000 – by the National Flood Insurance Program as well as Florida’s state-run Citizens Insurance program. Two changes are possible or likely in the insurance market. Typically, the federal flood insurance program subsidizes insurance for private homes up to a value of $250,000 as well as small businesses. Private companies insure home values above $250,000 and large commercial enterprises.
Two storm clouds are brewing on the horizon. First, in response to the federal flood insurance program racking up a debt of $24 billion, Congress recently passed two acts designed to try and financially stabilize the program. The exact implementation of the laws is still being worked out, but some properties will see increases in insurance rates up to 18 percent per year until non-subsidized rates are achieved.
Secondly, the insurance companies have traditionally determined rates based on actuarial data. In other words they look back at past costs to determine future rates. That of course assumes that future conditions will be similar to past conditions. With sea level rise that is not the case, and insurance companies may have to start charging premiums based on predicted future losses."
Thanks for that link, really good article. I would add: recently, insurance companies have become some of the most forward looking w.r.t. climate impacts. They're hiring a huge number of Ph.D. atmospheric scientists and carefully analyzing how climate might change in the future when pricing risk.
We interviewed James White not long after (also a great interview) but the Climate Central piece has always stuck in my mind because of the subway entrance graphic. The Achilles' heel of NYC. Ours is here:
In this excellent report from the engineering group UK FIRES at Cambridge, they propose financial instruments among other things. Broadly, favorable rates on insurance could be linked to our footprints.
I disagree on the last 40 years of capitalism comment. It was, and is, the political in our political economy that has been the disaster. While winning the returns game (US corporations today are 5/8 of global stock market capitalization) we put in place the first cap & trade system for pollution permits (SO2 and NOx) which was then used to create the ETS for GHGs. Had we simply joined the ETS would China now be predominant in PV & EVs? No. Would US Oil & Gas still have had the recent spike in production? Yes - models all showed coal-fired power being most impacted early on. Would we be relying on ESG to slow fossil's still high capex? No - the compliance price path would be kicking in (ETS began in 2005) and constraining it. Would CBMs be hurting global trade or just be normal course, like duties? The latter, for sure. Churchill was right that the US always makes the right choice, after trying all the others. There is still hope we do so on climate. But climate forcing won't wait for a new US economic system. It's carbon pricing, stupid.
Trade without personal responsibility is a recipe for disaster. The most pernicious form of regulation is the limited liability corporation. Deregulation should begin with its abolition. The origins may appear to be to protect the small investor but that is false. It was to protect the wealthy. Limited liability is incoherent. In any given set of circumstances the risk of adverse outcome is, say, 100. That is a constant. What varies is the allocation of the risk when it comes to fruition. If the limit for those with control is 20 that means tort victims and other powerless creditors will suffer 80. All the upside belongs to the investors. The downside to everybody else. Looked at objectively that’s madness.
"The consequences of this credit-rating box-checking will be felt far beyond Florida. In the subprime mortgage crisis, the problem was that the borrowers weren't credit-worthy. Now the problem is that the properties aren't credit-worthy, but it is in no one's interest to blow the whistle."...
I've just read the article about Joseph Stiglitz and it's claptrap - lots of unsupported claims that conveniently ignore facts. Stiglitz blames Thatcher and Reagan for all the evils of today but says nothing about the many huge improvements in health, human longevity around the world and the relative lack of warfare between nations. He clearly also suffers from Trump Derangement Syndrome and refuses to acknowledge the positives to arise from his presidency in spite of Trump's many significant personal failings. America's current and economic political problems have nothing to do with neoliberalism but everything to do with the failures of the two major parties combined with a left wing media that fails to hold either party to account.
Just curious—and I ask the same question to Obama and Clinton fans—what do you see as Trump’s positive achievements? (Not trying to start anything, my reply will simply be “thank you”)
Trump was the most powerful person in the entire world while president of the USA from 2016 to 2020, during which time: he did not start a new war, he announced the end of the war in Afghanistan, he reduced tensions with North Korea, he kick-started the US economy which resulted in the highest employment rate for African Americans in US history and he foresaw the problems posed by uncontrolled immigration into the US via the Mexican border, something that his successor (Biden) wants to solve by building a wall.
Just as well you admire Trump because if he's elected, which looks likely, he's the last elected president you'll ever see.
You're correct about being the most powerful person in the entire world, although General Miley more or less said he would ignore Trump's instructions to start a war.
That said Trump did give reason for Putin to decide the West was weak and useless, and most Americans completely mad, and Biden gave him permission to invade Ukraine: "We won't fight the Russians". Until that point Putin had not decided to invade.
But not starting a war is a low bar, observed even by his "fake" successor. Biden of course is responsible for the annihilation of the Gaza Strip, the continuing invasion by Jewish "settlers" of the West Bank, and the denial of a state for Palestinians.
On the bright side, it seems China can now claim to have the highest historical GHG emissions, moving the US into second place. :)
I don't admire Trump - he's a sleaze and probably a criminal as well - and would never vote for him if I was a US citizen. But the condition known as Trump Derangement Syndrome means that people affected by this illness refuse to see the difference between the man (who is truly objectionable) and the president (who achieved quite a lot in his 4 years). I don't agree that Trump gave Putin permission to invade Ukraine. Obama was president in 2014 and Biden in 2022 when Russia twice invaded, so I don't see any link between Trump and the invasions.
"... and Biden gave him permission to invade Ukraine: "We won't fight the Russians". Until that point Putin had not decided to invade."
Not American? Never mind, a few unarmed (nudge nudge wink wink) American nuclear submarines should save Australia from the worst effects of climate change - hordes arriving on the beaches.
Ironic that you argue that the economy of the last 40 years is marked by the emergence of deregulation and "neoliberal capitalism" and then complain about government stepping in to regulate insurance rates.
NYT had an article about homeowners insurance this morning. It let you check to see how home insurers are doing in your state. I was surprised to see that insurers in my state of Michigan went deeply into the red last year, after being in the green in previous years. And that seems to be due to one set of storms with tornadoes that hit mid-Michigan (around Lansing) last summer. And I thought we were pretty insulated from disasters here! I'm wondering what my new rate will be when my policy renews in a couple months.
Thank you Andrew - inc. for flagging Hamilton's piece, realy useful!
I enjoyed the Stiglitz oped, but couldn't help think he was a bit naïve when saying that neoliberals "believe firms should maximize shareholder value, doing whatever they can get away with, *because bigger profits serve the common good*".
I would contend these people have proven time and time again that they don't give a damn about the common good or about "growing the pie" for everyone. They care about their getting ahead of others, ie, increasing their share of the pie, and NOTHING ELSE.
They will even wilfully make the pie shrink if it means their share gets bigger (in absolute terms) - and indeed that's precisely what they're doing when they keep investing in fossil fuels and other high-emission industries: they're stocking up climate impacts on the poor and vulnerable (and increasingly on the middle class) and betting they can shield themselves from climate impacts thanks to their wealth...
Climate and insurance.
My longer take it here:
https://thomaslhutcheson.substack.com/publish
But the short take is that hazard insurance has traditionally be based on past "experience," not experience to make predictions, just "experience." Climate molders have been telling us for decades that the emission of CO2 into the atmosphere caused harm, some of it the the form of more extreme weather, but this has not been used for setting insurance premia. [How much of this is the fault of regulators and how much ordinary business mistakes by insurers is not clear.] Owners os assets exposed to climate risks did not receive the correct information about the risks they faced from this mispricing of insurance. Consequently assets were located in more vulnerable places and without mitigating investments than there would have been with better risk premia setting.
Not both insurance companies and asset owners are facing the consequences of these mistakes. What is worse, all have not yet been corrected.
A classic from 10 years ago, via Rob Motta and James White:
https://www.climatecentral.org/news/sea-level-rise-miami-new-york-17925
"Let’s take a possible scenario as to what might happen in South Florida. According to Renaissance RE, another re-insurance company, the average Florida house’s mortgage is subsidized to the tune of $72,000 – by the National Flood Insurance Program as well as Florida’s state-run Citizens Insurance program. Two changes are possible or likely in the insurance market. Typically, the federal flood insurance program subsidizes insurance for private homes up to a value of $250,000 as well as small businesses. Private companies insure home values above $250,000 and large commercial enterprises.
Two storm clouds are brewing on the horizon. First, in response to the federal flood insurance program racking up a debt of $24 billion, Congress recently passed two acts designed to try and financially stabilize the program. The exact implementation of the laws is still being worked out, but some properties will see increases in insurance rates up to 18 percent per year until non-subsidized rates are achieved.
Secondly, the insurance companies have traditionally determined rates based on actuarial data. In other words they look back at past costs to determine future rates. That of course assumes that future conditions will be similar to past conditions. With sea level rise that is not the case, and insurance companies may have to start charging premiums based on predicted future losses."
Thanks for that link, really good article. I would add: recently, insurance companies have become some of the most forward looking w.r.t. climate impacts. They're hiring a huge number of Ph.D. atmospheric scientists and carefully analyzing how climate might change in the future when pricing risk.
We interviewed James White not long after (also a great interview) but the Climate Central piece has always stuck in my mind because of the subway entrance graphic. The Achilles' heel of NYC. Ours is here:
https://newyork.thecityatlas.org/people/james-white/
In this excellent report from the engineering group UK FIRES at Cambridge, they propose financial instruments among other things. Broadly, favorable rates on insurance could be linked to our footprints.
https://ukfires.org/impact/publications/reports/reports-entrepreneurs-not-emissions/
I disagree on the last 40 years of capitalism comment. It was, and is, the political in our political economy that has been the disaster. While winning the returns game (US corporations today are 5/8 of global stock market capitalization) we put in place the first cap & trade system for pollution permits (SO2 and NOx) which was then used to create the ETS for GHGs. Had we simply joined the ETS would China now be predominant in PV & EVs? No. Would US Oil & Gas still have had the recent spike in production? Yes - models all showed coal-fired power being most impacted early on. Would we be relying on ESG to slow fossil's still high capex? No - the compliance price path would be kicking in (ETS began in 2005) and constraining it. Would CBMs be hurting global trade or just be normal course, like duties? The latter, for sure. Churchill was right that the US always makes the right choice, after trying all the others. There is still hope we do so on climate. But climate forcing won't wait for a new US economic system. It's carbon pricing, stupid.
Trade without personal responsibility is a recipe for disaster. The most pernicious form of regulation is the limited liability corporation. Deregulation should begin with its abolition. The origins may appear to be to protect the small investor but that is false. It was to protect the wealthy. Limited liability is incoherent. In any given set of circumstances the risk of adverse outcome is, say, 100. That is a constant. What varies is the allocation of the risk when it comes to fruition. If the limit for those with control is 20 that means tort victims and other powerless creditors will suffer 80. All the upside belongs to the investors. The downside to everybody else. Looked at objectively that’s madness.
About the brewing home insurance and mortgage disaster, another very useful piece is https://susanpcrawford.substack.com/p/the-fragility-of-florida
"The consequences of this credit-rating box-checking will be felt far beyond Florida. In the subprime mortgage crisis, the problem was that the borrowers weren't credit-worthy. Now the problem is that the properties aren't credit-worthy, but it is in no one's interest to blow the whistle."...
(and the academic paper it quotes: https://www.hbs.edu/faculty/Pages/item.aspx?num=65216)
Those are both really good! So good, in fact, that I cross-posted that here: https://www.theclimatebrink.com/cp/143670571
Mention was made of analyses of La Nina in 2024 by the University of Colorado; here is the link to an essay by Prof. Pedro DiNezio: https://lzed.substack.com/p/el-nino-is-on-his-way-out-la-nina?utm_source=post-email-title&publication_id=1821887&post_id=144484874&utm_campaign=email-post-title&isFreemail=false&r=14el6v&triedRedirect=true&utm_medium=email
I've just read the article about Joseph Stiglitz and it's claptrap - lots of unsupported claims that conveniently ignore facts. Stiglitz blames Thatcher and Reagan for all the evils of today but says nothing about the many huge improvements in health, human longevity around the world and the relative lack of warfare between nations. He clearly also suffers from Trump Derangement Syndrome and refuses to acknowledge the positives to arise from his presidency in spite of Trump's many significant personal failings. America's current and economic political problems have nothing to do with neoliberalism but everything to do with the failures of the two major parties combined with a left wing media that fails to hold either party to account.
Just curious—and I ask the same question to Obama and Clinton fans—what do you see as Trump’s positive achievements? (Not trying to start anything, my reply will simply be “thank you”)
Trump was the most powerful person in the entire world while president of the USA from 2016 to 2020, during which time: he did not start a new war, he announced the end of the war in Afghanistan, he reduced tensions with North Korea, he kick-started the US economy which resulted in the highest employment rate for African Americans in US history and he foresaw the problems posed by uncontrolled immigration into the US via the Mexican border, something that his successor (Biden) wants to solve by building a wall.
Just as well you admire Trump because if he's elected, which looks likely, he's the last elected president you'll ever see.
You're correct about being the most powerful person in the entire world, although General Miley more or less said he would ignore Trump's instructions to start a war.
That said Trump did give reason for Putin to decide the West was weak and useless, and most Americans completely mad, and Biden gave him permission to invade Ukraine: "We won't fight the Russians". Until that point Putin had not decided to invade.
But not starting a war is a low bar, observed even by his "fake" successor. Biden of course is responsible for the annihilation of the Gaza Strip, the continuing invasion by Jewish "settlers" of the West Bank, and the denial of a state for Palestinians.
On the bright side, it seems China can now claim to have the highest historical GHG emissions, moving the US into second place. :)
I don't admire Trump - he's a sleaze and probably a criminal as well - and would never vote for him if I was a US citizen. But the condition known as Trump Derangement Syndrome means that people affected by this illness refuse to see the difference between the man (who is truly objectionable) and the president (who achieved quite a lot in his 4 years). I don't agree that Trump gave Putin permission to invade Ukraine. Obama was president in 2014 and Biden in 2022 when Russia twice invaded, so I don't see any link between Trump and the invasions.
Bernie, did you read what I wrote?
"... and Biden gave him permission to invade Ukraine: "We won't fight the Russians". Until that point Putin had not decided to invade."
Not American? Never mind, a few unarmed (nudge nudge wink wink) American nuclear submarines should save Australia from the worst effects of climate change - hordes arriving on the beaches.
Thank you!
Bruce Sterling warned us this was going to happen, more than twenty-five years ago.
http://www.viridiandesign.org/notes/1-25/Note%2000023.txt
Ironic that you argue that the economy of the last 40 years is marked by the emergence of deregulation and "neoliberal capitalism" and then complain about government stepping in to regulate insurance rates.
??? There has been deregulation and "free market capitalism" in the last 40 years? In the United States?