Quote:
Originally Posted by Rainger99
According to the Office of Coastal Management, the U.S. has an average of 18 weather and climate disasters annually.
In 2023, there were 28 weather and climate disasters with losses exceeding $1 billion. The combined total cost of these 2023 disasters was $93.1 billion.
I do not see insurance companies lowering rates.
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These data are not nearly sufficient to support any reasonable estimate of what insurance
rates would be in the future. They don't even mention the amounts covered by insurance.
Property insurance is a financial business that sells contingent claims contracts to owners looking to put a cap on potential losses on their assets over some time period, typically one year. In that simplified model, the companies must achieve a higher return than the roughly 5.4% available just by purchasing 1 year US Treasury Bills.
The contracts specify the contingencies that may be used to trigger the option to make a claim. The "rate" really is not just set by the gross amount of expected claims.
It should not be a surprise that weather losses are increasing. Even if weather were not getting any worse, the total property capital increases annually from new assets and inflation of replacement costs on previously existing real property.