Dire predictions for the insurance industry

Now summarize that in 5yr old terms please

Think NFIP but for homeowners.

Liability will be capped via tort reform to allow for insurance to still exist.

Trial lawyers have killed their golden goose.

Given the last 10+ years of storms, etc in the gulf coast market I have been surprised that home owners haven't been forced to cover a much larger co-insurance % than what currently exists. It's irrational to continue to offer coverage when the odds of annual significant storm damage has become much higher than 20 years ago. If I was a re-insurer I would never write coverage in that area.

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Now summarize that in 5yr old terms please

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The reinsurance that insurers buy to mitigate their risk is going to be more expensive and perhaps cost prohibitive altogether. This will cause further price increases and exits from certain classes of business.

Property is the biggest issue, but all coverage is backed by the same pool of capital. If more capital is being diverted to property it reduces the amount for other lines causing price increases and reduced capacity.

Property is stretched thin already due to a rise in castrophic events around the country. Wildfires, tornados, hurricanes, etc. There were 25 $1B+ catastrophic property events in 2021. As someone said above, population density is also a factor now.

Due to inflation, property claims cost significantly more to resolve. Repairs that might have cost an insurer $50,000 a few years ago might cost $80,000 now. This is a reason that hail storms are now regularly topping $1B. The cost of replacing roofs has out stripped the increase in premiums.

Social inflation is a term we use for the increase in jury verdicts. Inner city juries and juries of millennials have no problem handing out $100mm verdict with no idea what that even means.

Exacerbating that issue is the rise of third party funding. These are investors who give money to trial lawyers to pursue cases those lawyers might otherwise feel is too weak or will take too long to be worth the monetary outlay. In return, the investors get part of the settlement amount.

Even further exacerbating all of these issues are the macro events happening around the world. Higher interest rates, a strong dollar, strong inflation. All of those things are sucking out capital that would normally be available for insurers. Liquidity and access to cheap capital is harder to come buy.

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A Hard Market means very strict underwriting standards and high prices.

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Sounds like a new front for the Equity Justice Warriors in the making (ie: "the insurance industry is racist").

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Now summarize that in 5yr old terms please

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Tuesday's edition (10/18/22) of the NYT podcast The Daily was titled "Did Hurricane Ian Bust Florida's Housing Boom?" All about how FL propped up its markets after Andrew with re-insurance and state-backed insurance and how it all looks to be on the brink of crumbling. I don't have any particular interest in the topics discussed -- coastal real estate, insurance, re-insurance, equitably dealing with climate change impacts -- but really found it interesting and digestible.

Not really true.

As interest rates rise, the value of the bond portfolio of the Life Insurance companies go down. Granted, they can purchase new bonds at higher rates of return or sell off older bonds (and lose money) and buy bonds with higher yield. Therefore, in future years, the portfolio will look better. But again, in the time period of rising rates, like now, it is not good. Life Insurance companies portfolios are almost exclusively invested in Bonds.

Regarding Property an Casualty insurers, they invest in a mixture of diversified things, meaning lots of stocks and real estate, along with bonds. As we know, all of this is not doing well as rates rise.

Therefore, I disagree with your opinion on insurance companies doing well as interest rates go up.