The NEXT global crisis / bubble: insurance

Remember one fundamental truth: there is NO global warming (buhahahaha, or other evil laughter ). The weather changes are random and there is NOTHING we can do about it. Or so the right wingers and global masters claim, guzzling petrol, not paying taxes, stealing our money and eating babies.

In the world where “climate does not change”, an American agency for atmosphere and oceans (NOAA – Not Ordinary Annoying Agency) published some data that this year the US was blessed with twelve climate crises costing the taxpayer 1 billion USD EACH. The number of sub-billion-dollar catastrophes (shhhh…blessings) was not given, but we can assume that a few more occurred and more dollars got forked out to those affected.

Having just renewed insurance on my apartment, it got me thinking. Insurance is another mathematical betting game, where the insurer gambles that it will collect more in revenue from dispersed insurers than pay out to those negatively affected by misfortune. Some fancy mathematical modelling there, spreading the risk (bets, anyone?), analysing patterns and where necessary raising premiums to cover increased outlays (as did the insurance industry after 9/11 to offset the massive payouts post-WTC to everyone affected-and-insured).

Now, here’s my quandary: the USA is an enormous country with multiple climates, time zones, major differences between north-south and east-west, two oceans and some massive lakes&rivers. And a puny building technique where houses are made from cardboard. So, we have a continent just begging for God’s wrath: a tornado here, a flood there, forest fire here, earthquake there. Now, just about anything and anyone is/are insured from (against) THEIR particular mishap, but when the number of such tragedies increases as does the typological and timeline spread of such tragedies, because there is NO global warming (buhahahaha), then the mathematical models of insurance companies go out the window (unless a tornado took it out first).

So, insurance companies are finding that they have to either: increase premiums, reduce (or deny any) payouts through cheating on contract and definition interpretation, reduce their profit margin (oh, the horror!!) or transfer the burden onto others (by going global and finding insures in countries where less bad things happen and stealing their premiums to pay the Americans). The problem with increasing premiums is that it changes the risk-versus-reward calculation of policy-holders and one by one they begin to drop out from the system: a poor famer here, a sneaky company owner there, further reducing the amount of money available to pay out to those who remain. Now, the globalisation option (buying insurers elsewhere, reinsuring on global markets) would be useful IF there was no global warming and no weather patterns changing everywhere (and since there is no global warming…buhahahaha).
So, where will the insurance companies get money for their payouts? And, of course, if these are stock traded companies when and how will their cash shortfalls become public knowledge? Will we find another leverage pyramid with trillions stolen (paid out in commission and consultancy fees) and the government (e.g. the same citizens who paid already in insurance premiums) left to pay off the massive debt (by the way: debt to WHOM)?

Food for thought: in Canada (I seem to recall), they tried to institute a no-fault car insurance system administered by the state: every accident gets a “it’s not your fault” payout and the rates would have been lower than in the commercial version. The model was killed by “the business” as insurance companies yelled bloody murder for potential loss of profits from poor suckers (e.g. drivers forced to pay for mathematically calculated/inflated premiums).

Food for thought 2: my apartment’s insurance policy covers (or so they promise) to pay for damage to the roof incurred from a blast wave (I kid you not). Now, as I understand the causal factors of a blast wave, there are 3 major ones: major explosion of some plant (chemical, nuclear, or maybe something like the Hungarian red mudslide disaster?); meteor entering the atmosphere (at that point I won’t care about my roof as if it has a blast wave affecting ME, then it is also landing ON me and squashing ME) or the most logical and probable: supersonic wave from a passing plane. Now, in the third case, the only planes that are supersonic are military and even they do not fly above mach 1 in peacetime and beyond military training grounds. Only in combat (e.g. WAR?????), so if there IS combat over my house, then (again) who will care about the roof getting blown off? But, I am sure that the premium contains some $$$ to cover that eventuality anyway. The last case is a nuclear detonation, but that is… WTF!!!!!!

Food for thought 3: After “Deep Impact” and “Armageddon” came out, enterprising insurance salesmen started selling asteroid insurance (“in case your house gets damaged”). Probability and Fate being what they are, one house DID get damaged by a rock from space, but upon claiming the payout, the policy-holder was politely informed that an asteroid upon entering the atmosphere becomes a meteorite, and his policy did NOT include those.

I might be getting older, but my mind increasingly leans towards the Texan form of insurance: AK447 and a bunker. Screw the mathematical freaks and their useless models. I hope they get fat on our money today, so we can eat their bloated bodies later.
Don’t invest in insurance products… buy gold. Even in Costner’s “Waterworld” people would know what it is (and use it for teeth).