Above Photo: Retire to sunny Florida. Thomas Simonetti / The Washington Post / Getty Images.
Insurance May Suck, But It Doesn’t Lie.
Say what you want about the insurance industry — damn bloodsuckers constantly cranking up your bills — but you must admit that they understand risk. It is, at its heart, a simple business: Estimate with great precision how much you are likely to pay out in claims, and then charge customers more than that, so you make a profit. The success of insurance companies is closely wedded to their ability to analyze the real world with accuracy. Some businesses, like advertising, may run on delusion, but in insurance, that sort of thing is poison.
So it poses a problem for a certain variety of right-wing free market fundamentalists when the insurance industry begins sending signals that climate change is very, very real — so real that it should be upending our way of life already.
In Louisiana, where private insurance companies have fled or gone insolvent with increasing frequency after a recent string of hurricanes, rates for the state-sponsored homeowners insurance of last resort are about to rise by 63% in a single year. Florida is facing the same environmental problems and the exodus of insurance companies with an even larger amount of property value at risk. There, home insurance rates have doubled in five years, the state insurance company probably doesn’t have enough money to cover the costs of a true hurricane disaster, and most people at risk of flooding don’t even have flood insurance because it’s so expensive. Even as Florida’s Republican elected officials tout the state as a haven for political refugees from the harsh, woke climates of the north, they have no plan to deal with the fact that climate change is making the math of coastal development more unsustainable every year.
If you truly believed in the power of the free market to shape and guide society’s decisions in an intelligent way, you would have to admit that it’s time to stop building beach houses, and instead start planning to move people away from the beach. As storm and flooding risk rises with the warming seas, the price for insuring homes will naturally rise as well — at some point, the costs will get so punishing that everyone but the very rich will have to move away from these risky (but sunny!) areas. That would be undiluted capitalism, in its faceless infinite wisdom, at work: Using price signals to channel humanity and all of its wealth in the most rationally productive direction. Which is to say, not to the place where your McMansion will get inundated with seawater every few years.
That is not what’s happening. The Republican love of the free market extends only to the moment that it begins to inconvenience the beautiful, beautiful boaters, at which point they all become a bunch of raging socialists. Of course, we all know that uncut capitalism is a heartless beast — that’s why we have environmental and safety regulations, public roads and schools, and fire departments that we all pay for. The free market’s failures are big enough to encompass a dystopia. And climate change — the ultimate externality, a global case of privatized oil profits fueling public damage — is both the biggest market failure of all, and the one that Republicans do not want to face.
All of the political momentum in these coastal red states is oriented towards finding a way to artificially lower the soaring insurance costs. The basic political reasons for that are straightforward — homeowners vote, and they like where they live, and they don’t want to pay all that money. But there is little discussion about the fact that artificially lowering the cost of insurance for endangered coastal residents simply creates a financial incentive to pretend like a real problem isn’t real. It is not a plan. It is an attempt to cling to an American dream lifestyle whose time is up in a warming world. Red states threatened by hurricanes are behaving like drunk drivers who will put on a seatbelt, but continue driving drunk. The single biggest coastal engineering project in the country is a flood control effort in Texas meant to protect the oil industry there — the very thing causing the underlying problem.
The future of coastal communities is an engineering problem, a climate problem, and a cultural problem — a difficult and intricate battle of values and history and science and economics. It will require hard, honest conversations whose resolutions will not be easy, no matter what they are. To the extent that national political leaders are unwilling to even acknowledge the need to have those conversations, they are failing. “How do we help the poor who live in these states to cope with climate change?” is a very different conversation from “How do we kick the can for the cost of these problems down the road so developers, business interests, and friendly politicians can maximize revenue before the whole thing collapses?”
The fantasy that insurance costs themselves are the problem — rather than an indicator of the real, underlying problem — is going to create some very bad outcomes. We can say with 100% confidence that it is only a matter of time before a truly awful hurricane hits South Florida and bankrupts that state’s paltry, fictional insurance reserves. Coastal states will increasingly come seeking federal disaster bailouts. The scale of these bailouts will be exacerbated by the fact that those states are not doing the hard work of dissuading people from living on the coasts. Indeed, they are busy doing the opposite. Keep building and pray! Faith above reason!
I often think of America’s basic economic system as gangster capitalism — a system in which rich and powerful interests extort everyone else. Climate change has also opened my eyes to a corollary of this, embraced by the very same people, which we can call gangster socialism.
Nice, reasonable (and actual) socialists look to use the state’s resources to make up for capitalism’s flaws, or replace the system altogether. They want public healthcare, and public transportation, and public schools, and a general effort to protect humanity from the predations and failures of big business.
What we are witnessing in red states now is an equally fervent desire for a version of socialism, but one that protects the owners of big beach houses from having to reckon with the rising tides. States that don’t have enough school teachers are determined to subsidize the right of Palm Beach millionaires to have modest insurance bills. Florida Gov. Ron DeSantis and his counterparts will court development in flood zones, feast on the tax revenue, and then, when the bill for the big storm comes, ask for the entire nation to reimburse them for it. After that they will give speeches about freedom and liberty and how the damn socialists are ruining the country. As always in America, the plan is for the rich to use their resources to shroud themselves in protection, and stick the rest of us with the costs.
Insurance may suck, but it doesn’t lie. Keep a close eye on the people who rose to power touting the free market, and are crying about it now. Gangsters don’t really care whether they’re capitalist or socialist — they’re here to rob you either way.