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Insurance companies will change the world

Several US states as suing FEMA because of the increased price and availability of catastrophic insurance.

State farm just announce it will no longer provide homeowners insurance to new customers in California.

Florida resident have seen a 300% increase in the cost of flood and hurricane insurance.

This is the thin wedge of a change that opponents to climat change policies didn’t see coming.  In the case of Florida the governor made things worse by being a pawn of the insurance industry. Still insurance is not a charity and when premiums are no longer sufficient to meet the cost of claims insurance companies walk away.

We should expect an expansion of this trend since State Farm has opened the door to outright quitting parts of the insurance market.  At the same time, but unconnected, FEMA is understood to be revising its ability to write catastrophic insurance policies across the country because of new financial pressures which arose from Congress’ now budget dramatically reducing FEMA’s ability to write new policies at any price, because in the same way the GOP has hamstrung the federal government’s discretionary spending it has effectively cut the insurance resources the FEMA had available.  Talk about funny!  Homeowners in Florida who support the GOP are being informed by FEMA that their floor insurance policies will not be renewed when the come to term!  

FEMA catastrophic insurance for floods, hurricane and earthquake is a separate business supported by the Federal government that just saw its resources shrink by 95%.  If it was not so tragic it would be funny.  The consequence of wanting less federal government is getting less federal government.

In other matters this will impact too.  As the Americans no longer patrol the Hormuz straits premium, because of Iran’s vessel seizures, have already risen by 40%. Eventuality, shippers will be told that they are insured as long as they don’t venture in the straits! 

Insurance costs will eventually kill the globalization because the Americans are no longer willing or able to fulfill that role.

It is the law of unintended consequences that rules the world and not some crazy policy.  No one in DC had clued on the idea that their success at cutting federal government spending would result in home owners no longer having catastrophic insurance.  BTW it also means that in certain parts of the country obtains a mortgage may be far more difficult.  

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