"Catastrophe Exposure" is Getting a Lot of Exposure

Ron DeSantis probably doesn't want too many people to know this, but he just signed a new law that brings sweeping regulation and oversight — two words to which Republicans are known to be allergic — to Florida's insurance industry.

Yes, you read that right. Florida insurance carriers are used to having their own way in Tallahassee, which has allowed them to get away with an assortment of consumer-hostile practices over the years, including restrictions on the right of policyholders to sue over claims.

But thanks to a March exposé in The Washington Post — the same journal I was bashing just two weeks ago — even dimwit Florida legislators had to sit up and take notice.

Too many Floridians were furious, and it wasn't about drag queens or wokeness or banning books their kids can't read anyway. It was about Hurricane Ian having destroyed their homes, and their insurance carriers having chiseled them on the claim payments. This was a clear call from real people in real trouble, a call for government to get off its ass and do something useful, which is not something red-state governments are good at.

The insurance carriers — themselves facing a deluge of hurricane-related claims — were hoping to stay solvent by falsifying the damage estimates submitted by independent adjustors. They were basically ignoring the adjustors, paying out, in some cases, ten cents on the dollar. They were screwing people who had already lost everything, counting on even the most desperate victims to shut up and take the money, knowing full well that few could afford to sue. Nowhere have I read that this is illegal.

Republicans don't generally respond to the needs of their constituents, especially in Florida. Not as long as there are big business interests they can suck up to. But once in a while, they do react to adverse publicity. The follow-ups to the Post story made them look especially bad, and blaming Democrats was not, in this case, productive. A lot of homeowners — who are also, presumably, voters — were seeing and reacting to the story, making it hard for even a Republican to ignore.

Moreover, a good chunk of those sucked-up-to Florida business interests are in real estate, and since the folks getting screwed were consumers of real estate, and since everyone involved knows someone whose real estate has been destroyed by one hurricane or another, the Florida legislature finally figured out that they had cut the insurance industry way too much slack over the years. Which Democrats had been telling them for at least a decade, and which homeowners were now, quite visibly, paying for.

So here was a rare confluence of Republican and Democratic interests. In the words of one GOP legislator — words upon which he surely must have choked:

“We want more transparency, oversight and accountability of bad actors. If carriers are purposefully hurting the insured, we want to know about it.”

Sounds almost like a Democrat.

I bring this up, not for the irony of Republicans advocating regulation. Or of them wanting accountability for bad actors who aren't personal friends. Or of them biting the industry they're sucking up to.

Rather, it's because the insurance industry has gotten an unusual amount of bad press lately, much of it deserved, but some of it not.

The very subject of insurance provokes yawns from most of us, and seeing insurance companies in trouble tends not to move us to tears. But in many ways, insurance makes the world go 'round. Especially in our hyper-litigious nation, there are few businesses that would dream of going to market without all sorts of insurance against all sorts of risks. And there are few, if any, banks that will write a mortgage for a home that's not insured.

Which means, among other things, that the insurance industry is at the epicenter of the global climate crisis.

These are the people who charge you to manage your risk, and with the risks they're managing getting ever more dicey, what they charge you will be going up a lot. Hurricane Ian alone drove at least a dozen insurance carriers into insolvency, leaving hundreds of thousands of homeowners — including many unaffected by the storm — scrambling to find new coverage.

Between the hurricanes of Florida and the wildfires of California, the insurance business is experiencing what they call "rapidly growing catastrophe exposure." Just how exposed, and how rapidly, was vividly illustrated last week, when State Farm, the largest home insurer in California, announced that it would stop writing new homeowner policies in the state. Allstate did the same a few days later. Both companies had already pulled out of Florida.

This is no small thing, and it will have deep effects on the economies of both states. You can't remove two whales from any marketplace and expect minnows to make up the difference. But at this point, Florida is almost all minnows — small carriers just one hurricane away from bankruptcy. They all have no choice but to jack up their premiums by several multiples.

All over the country, in fact, insurers are raising prices, restricting coverage, or dropping out of the market altogether. Kentucky homeowners saw their premiums quadruple following recent floods. And Louisiana's insurance market has been a basket case ever since Katrina, about five major hurricanes ago. Nothing about the situation is getting better.

Catastrophe exposure will continue to make writing policies riskier and riskier. The cost of insuring homeowners — against hurricanes, wildfires, floods, droughts, tornados, monster snowstorms, and other mega-disasters — is compounded by the very climate problems that Republicans have convinced their electorates do not exist.

Yes, there are government programs in place — even in states like Florida — where the state becomes, in effect, the insurer of last resort. Which is great, but those prices are hefty as well. And how many more hurricanes before that particular drain on the state treasury becomes itself unsustainable?

Insurance problems tend to ripple through the economy. They add significant cost to construction materials, to new-home development, and to all the businesses that subcontract to the real estate and insurance industries. Many will go under from one too many catastrophes they couldn't pay for. Leaving millions uncovered, and possibly uncoverable.

I'm guessing we'll soon see exploding insurance premiums being bundled into the cost of a new home. This will not solve the problem, but might mask it behind monthly payments.

Most people won't ask why it's all so expensive. Most will never make the connection between the escalating hardships being imposed on them, and the idiots they've elected to office.

So if you think I'm just blaming this on Republicans, I assure you I am. They've spent forty years doing the corrupt and rapacious bidding of the energy interests, forty years ignoring the alarm bells of environmental disasters that were heading right at us, and forty years fiercely obstructing any attempt to mitigate them.

And now that those disasters are upon us, now that they're starting to cascade, now that thousand-year climate events are happening every summer, these fools have no clue how much damage they've done, let alone what to do about it.

I'm growing attached to the term 'catastrophe exposure.' Something about it seems so Republican, so utterly in keeping with the GOP brand. Think of it as a slogan or mission statement.

Think of it as a distillation — in a mere seven syllables — of everything they stand for.