Let Me Play My Little Violin
For Insurance Rates on Coastal Homes
Why should American citizens subsidize coastal homes in hurricane-prone places?
Joshua Enloe has gone from home-insurance paragon to pariah in just three years. Since 2021, the 36-year-old Texan has been twice dropped by insurers, and his annual rate has almost tripled to $13,000 from $5,000, before ending up with a bare-bones state insurer of last resort.
His offense? Living in El Lago, a coastal suburb of Houston. The 1960s, 2,200-square-foot home Enloe shares with his wife and dogs is in Harris County, hammered by 2017’s Hurricane Harvey. Last week the city’s latest deadly storm swept through El Lago.
Shouldn’t the market dictate prices? One of the best things Trump did was end the write-off for property taxes on individual income taxes. Prior to that, the property taxes that were calculated and assessed locally were subsidized nationally by everyone.
Anyone who moves to a coastal city understands that there is an ocean out there and sometimes oceans get angry. That goes for the Left Coast too. If you build your house on a cliff overlooking the Pacific Ocean and the cliff collapses, hope your insurance covers it. Why should I have to pay for it? Should I get a room at your place anytime I want to enjoy the view too?
The way the market works, you purchase insurance from an insurer. They have actuaries that calculate the risk and decide how much risk they want to take. They give you a premium quote.
Generally, it’s a competitive market.
Once they secure your business, they go into the reinsurance market and sell the insurance to diversify their risk. The reinsurance market is gigantic. Warren Buffett plays a lot in this market. Again, it’s also a competitive market.
If only wealthy people wind up living on the coasts, that’s okay with me. The market is speaking. Turns out, coastal living is in high demand because of the views so it makes sense that only wealthy people live there.
I am indifferent to the cause of hurricanes. The global warming cult will say that is the cause. Who cares?
The same goes for the interiors of states. California has wildfires. Homes get destroyed. We know that fires have happened in the interior of California for as long as I have been alive. California as a state refuses to manage the forest to stop wildfires due to the environmental lobby.
Why should insurance on those homes be socialized by the government?
As Sam Kinison said years ago when joking about Ethiopians, “Move to where the food is.”
Hail, tornadoes, earthquakes, big snow, big rain. We all know they happen and we know where they happen. We just don’t know when. I know people here in Nevada who specifically moved here because there weren’t a lot of natural disasters.
Another alternative is to do all you can do to protect yourself. At my cabin in Minnesota, we are deep in the woods. We trim trees up to 8 feet. We cut down the dead ones and remove dead branches, twigs, and other forest detritus. We burn it. A neighbor has cut down all of his trees near his place and installed an outdoor overhead sprinkling system powered by propane.
If there is a big fire the odds of my little cabin surviving is probably nil. I know that but at the same time, the stuff I have in that cabin is sentimental and not valuable.
Let markets speak. They do better than socialized solutions to problems.
Thank you for saying this!
One of the strangest phenomenons of the modern age is how willing regular folks are to subsidize the lifestyles of the wealthy. I favor limited government but if government is going to be involved in the lives of the citizens it ought to be in providing oversight so insurance prices are based on the actual risk of loss for specific property use and location.
But no, government loves Socialism because that allows the politicians and their wealthy friends to pass on costs to the general population. We experience this most directly with health insurance. But the socialization of risk and costs is a general fixture of Big Government.
Ypu would think with all the talk about climate change and rising ocean levels that local governments would restrict building on coast lines and in flood zones. I have not seen a single government entity do this because they all want more tax revenues. So much for the government wanting to help.