The climate crisis will illustrate a nice tipping point as weather goes to hell in a handbag much faster than most people expected. Outrageous storms, floods, heatwaves, freezes, etc. Insurance companies will get pounded.
Correction: Insurers will increase rates to account for the cost of loss. Insureds will get pounded by the cost of storms, etc.
They can try but they are already finding homeowners simply won't pay. Floridians are starting to go without insurance.
Florida is a disaster for both auto and home. The drivers are the absolute worst and the insurance rates reflect it. And storms make it almost impossible to make money on HO policies. The state has had their own massive property insurer of last resort for a long time, and the taxpayer is the backstop. You don’t want to be living there when that shit hits the fan. I understand Lloyds even pulled out, or are pulling out, of commercial property.
Can you imagine what Florida will look like if a good percentage of property owners, with half their net worth in the house, get blown away uninsured?
Perhaps the tipping point is for something different than we initially think.
For example, Floridians who refuse to pay sky-high prices for insurance are not a problem for insurance companies, because they reduce the insurance company's exposure to risk, enabling them to stay in Florida earning sky-high premiums from those who are willing to pay. So half the state being uninsured could be a stable system.
The tipping point might be that entire neighborhoods where people went without insurance (or were undercompensated by the collapsed state insurance scheme) become ghost towns of abandoned water damaged houses after a hurricane. This ghettoization might push down property values or it might increase scarcity. I predict the US government eventually pays when Fannie Mae and Freddy Mac guaranteed mortgages default, as people just walk away from their financially and physically underwater homes. Another Hurricane Andrew, for example, might lead to the collapse of the state insurance scheme and hundreds of thousands of foreclosed homes that must be scrapped.
The other tipping point might be the end of our practice of building grade-level stick homes with asphalt shingle roofs in hurricane vulnerable areas. The process described above might lead to people building houses that
don't have to be insured by simply changing building materials and techniques in favor of how they do things in the Caribbean. That means more solid concrete houses, strong metal shutters, and concrete slab roofs.
WRT the poor economics of car ownership in Florida, that could easily be resolved right now if people were willing to buy smaller, cheaper cars. The fact that they aren't suggests that automotive costs are nowhere near a tipping point. Or maybe the culture prioritizes cars to the point people are willing to sacrifice indefinitely to live that certain way, which would be a stable state. If the economics or the culture changed, one might see more demand for cheaper cars, taxis, public transit, and work-from-home. So far there is no sign of any significant pressure for change. Perhaps if real incomes dropped 25% we'd hear about alternatives to car culture.
