Once a given geographic area has a minimum risk above a certain level, insurance there is going to become untenable, because, effectively, every single home is at high risk of being destroyed every year. At that point, in order to adequately supply the insurer's coffers, you need to charge premiums equivalent to...buying a new home.
Looking to insurers—and the market generally—to solve the climate crisis is a fool's errand. We need to actually fight the causes if we want real progress.
Of course, but there are some markets that are unsustainable from a cost perspective, to the consumer and the provider.
> And there is plenty that can be done to reduce the fire risk to bring premiums down.
Agreed, this should be the priority -- really my point is that it has nothing to do with regulation or lack of, not that I would be unsupportive of requiring that all homes in high-risk areas be built up to a more strict code.
Can a nuclear plant operator get insurance against the costs of a nuclear meltdown?
The costs of the Fukushima meltdown are reportedly $200 billion. Offering a policy with a downside that big would basically be gambling the entire company.
Arguably they should, there probably would be a (huge) price premium for that insurance to be worthwhile, and it would also represent the former externality that the nuclear lobby like to forget about when comparing apples & oranges of energy supply. If people want to pay (a huge premium) to have nuclear power rather than say renewables, let them, but let there be a level playing field and let the disaster-insurance and decommissioning cost be factored into that price.
Then see if there is any actual demand.
An insurance company can't pay out more money than they have.
Imagine I'm the CEO of an insurance company with $50 billion in assets, and you're a customer wanting to insure against a risk with a 0.1% chance of happening.
If you want the insurance to cover a payout $10 million, the expected value is $10k so if you're willing to pay a premium of $11k I'm happy to do business with you.
If you want the insurance to cover a payout of $100 billion, the expected value is $10 million. But it doesn't matter if you're willing to pay a premium of $11 million, $20 million, $100 million. Because I don't have $100 billion, I can't tell you I'll pay out $100 billion.
Sure, reinsurance exists - but that relies on there being some other insurance company around that can eat a $100 billion loss. Not many fools who'd take a gamble with that much downside.
There are impossibility proofs in many domains and I wouldn’t be surprised to discover that there are certain conditions that create circumstances that aren’t insurable.
I mean, if your house costs a million and gets destroyed by fire every year I can insure you for 100k per month, so it is insurable just. Not usefully.
That's not "uninsurable". That's "you can't afford it" or "the insurance isn't worth it". Both of those are already true for many cases where insurance exists and people buy it.
There's a difference between "you personally can't pay to insure it" and "it is not possible to insure". By your definition, a lot of very cheap cars are "uninsurable" because their owners are broke, which does not seem to be a useful definition.
