1 00:00:10,720 --> 00:00:14,000 Speaker 1: Hello, and welcome to another episode of the Odd Loots Podcast. 2 00:00:14,080 --> 00:00:15,400 Speaker 1: I'm Tracy Alloway. 3 00:00:15,160 --> 00:00:16,280 Speaker 2: And I'm Joe Whysenthal. 4 00:00:16,760 --> 00:00:23,040 Speaker 1: Joe, do you do you like watching the weather? I 5 00:00:23,040 --> 00:00:25,280 Speaker 1: can hear the pain in your voice as soon as 6 00:00:25,320 --> 00:00:25,720 Speaker 1: I asked them. 7 00:00:26,120 --> 00:00:28,000 Speaker 2: It's so funny. I didn't. I was wondering how you're 8 00:00:28,000 --> 00:00:31,080 Speaker 2: gonna start this one. I hate rain. I hate rain 9 00:00:31,280 --> 00:00:34,199 Speaker 2: so much. Other than that, I don't know. It's not 10 00:00:34,240 --> 00:00:36,520 Speaker 2: a big thing for me. What about you up in Connecticut? 11 00:00:36,720 --> 00:00:38,159 Speaker 2: Is it a bigger deal up there? 12 00:00:38,440 --> 00:00:42,560 Speaker 1: I love weather. I am sort of an armchair meteorologist, 13 00:00:42,680 --> 00:00:45,239 Speaker 1: by which I mean I have several weather apps. I 14 00:00:45,280 --> 00:00:48,879 Speaker 1: get very excited about thunderstorms and other types of storms. 15 00:00:49,440 --> 00:00:54,400 Speaker 1: My husband, however, does not. He gets extremely anxious whenever 16 00:00:54,440 --> 00:00:58,040 Speaker 1: there's a forecast of a severe thunderstorm because inevitably it 17 00:00:58,160 --> 00:01:00,840 Speaker 1: ends up dumping like two inches of where we are, 18 00:01:00,880 --> 00:01:02,560 Speaker 1: and our basement starts to flood. 19 00:01:02,920 --> 00:01:05,520 Speaker 2: I've lived in a house that had flood damage. It 20 00:01:05,600 --> 00:01:10,320 Speaker 2: is extremely stressful experience too. I mean there's just like 21 00:01:10,360 --> 00:01:13,600 Speaker 2: the direct issue of like cleaning up all of the 22 00:01:13,640 --> 00:01:17,000 Speaker 2: lost damage and then like compensation and damage to the 23 00:01:17,040 --> 00:01:18,959 Speaker 2: house is probably one of the more like sort of 24 00:01:19,000 --> 00:01:21,280 Speaker 2: like stressful things a homeowner can deal with. 25 00:01:21,640 --> 00:01:24,880 Speaker 1: Well, you know one of the stressful things happening right now, 26 00:01:24,920 --> 00:01:29,360 Speaker 1: and we're recording this on let's see September eighth. There's 27 00:01:29,400 --> 00:01:33,240 Speaker 1: a major hurricane brewing in the Atlantic right now, Hurricane Lee. 28 00:01:33,640 --> 00:01:36,600 Speaker 1: It exploded from a tropical storm I think just two 29 00:01:36,640 --> 00:01:40,160 Speaker 1: days ago into a category four hurricane. Now it's category 30 00:01:40,240 --> 00:01:43,560 Speaker 1: five and there's a lot of deliberation about whether or 31 00:01:43,640 --> 00:01:46,240 Speaker 1: not it's going to sort of run up the Atlantic coast, 32 00:01:46,600 --> 00:01:50,080 Speaker 1: might even get into New England. So an interesting one to. 33 00:01:50,040 --> 00:01:52,840 Speaker 2: Watch, yes, and I guess I guess by the time 34 00:01:52,840 --> 00:01:55,080 Speaker 2: people listen to this will be resolved. But I'm glad 35 00:01:55,480 --> 00:01:58,640 Speaker 2: you mentioned that. But it's also coming in the context 36 00:01:58,640 --> 00:02:00,680 Speaker 2: of a time when there is a lot of anxiety 37 00:02:00,840 --> 00:02:04,360 Speaker 2: about the property market and insurance. And this came up 38 00:02:04,440 --> 00:02:07,520 Speaker 2: on our recent episode that we did with Howard Hughes 39 00:02:07,680 --> 00:02:12,240 Speaker 2: Holding CEO. We talked about this huge surge in the 40 00:02:12,280 --> 00:02:14,840 Speaker 2: cost that the company is paying for insurance. And there 41 00:02:14,840 --> 00:02:18,920 Speaker 2: have been so many stories about natural disaster prone areas 42 00:02:19,200 --> 00:02:22,440 Speaker 2: and homeowners are either just getting staggering sticker shock when 43 00:02:22,440 --> 00:02:25,160 Speaker 2: it comes to the cost of homeowners insurance and other 44 00:02:25,200 --> 00:02:28,160 Speaker 2: property insurance or there's no one at all, or you know, 45 00:02:28,240 --> 00:02:32,320 Speaker 2: companies abandoning markets like Florida, like California, et cetera. 46 00:02:32,639 --> 00:02:35,359 Speaker 1: Absolutely, and it's not just hurricanes and floods. Of course, 47 00:02:35,400 --> 00:02:40,120 Speaker 1: we've seen wildfire risk becoming a more major thing, particularly 48 00:02:40,200 --> 00:02:42,960 Speaker 1: in Hawaii and Maui. Recently, there have been a number 49 00:02:43,040 --> 00:02:46,840 Speaker 1: of headlines, as you just mentioned, of certain insurance companies 50 00:02:46,919 --> 00:02:51,360 Speaker 1: pulling out of markets all together because they're no longer profitable, 51 00:02:51,480 --> 00:02:54,079 Speaker 1: or in some cases, like Florida, they haven't actually been 52 00:02:54,120 --> 00:02:58,200 Speaker 1: profitable for a very very long time. And insurance premiums 53 00:02:58,240 --> 00:03:01,480 Speaker 1: are going up all over the United States. But it's 54 00:03:01,520 --> 00:03:04,200 Speaker 1: really interesting if you look at them on a regional basis. 55 00:03:04,240 --> 00:03:07,440 Speaker 1: I think in Miami the average cost of insurance is 56 00:03:07,480 --> 00:03:11,000 Speaker 1: something like five thousand dollars versus less than two thousand 57 00:03:11,040 --> 00:03:13,640 Speaker 1: dollars for the rest of the US. So that gives 58 00:03:13,639 --> 00:03:17,640 Speaker 1: you some idea of how this risk is starting to 59 00:03:17,760 --> 00:03:21,440 Speaker 1: get repriced. But it opens up all these interesting questions 60 00:03:21,520 --> 00:03:26,160 Speaker 1: about what is going to happen to cities, to houses, 61 00:03:26,320 --> 00:03:31,320 Speaker 1: to other buildings that are in these natural disaster prone areas. 62 00:03:31,600 --> 00:03:33,880 Speaker 2: You know, the thinking of things like flood insurance, which 63 00:03:33,919 --> 00:03:37,800 Speaker 2: is already sort of socialized or there's publicly funded. There 64 00:03:37,840 --> 00:03:40,800 Speaker 2: doesn't seem to be a lot of appetite politically to 65 00:03:41,080 --> 00:03:45,280 Speaker 2: let property owners sort of completely be without insurance in 66 00:03:45,320 --> 00:03:48,320 Speaker 2: other words, right, So it's like if the private market 67 00:03:48,600 --> 00:03:51,680 Speaker 2: leaves an area, you don't really see politicians like, Okay, well, 68 00:03:51,680 --> 00:03:54,440 Speaker 2: I guess we can't build here anymore. There's usually the 69 00:03:54,480 --> 00:03:56,360 Speaker 2: government steps in in some way, maybe there's like a 70 00:03:56,400 --> 00:03:59,960 Speaker 2: state insure, a national insurre in the case of flood. 71 00:04:00,000 --> 00:04:02,040 Speaker 2: And of course this creates its own issues, and that 72 00:04:02,160 --> 00:04:04,560 Speaker 2: it's sort of another one of these financial services that's 73 00:04:04,600 --> 00:04:07,040 Speaker 2: like sort of post market, kind of like banking in 74 00:04:07,080 --> 00:04:09,840 Speaker 2: some respects. And so there is a lot going on 75 00:04:10,080 --> 00:04:13,440 Speaker 2: with this market. And you know, obviously comes in the 76 00:04:13,520 --> 00:04:16,560 Speaker 2: time of other financial tightening financial conditions, comes at so 77 00:04:16,680 --> 00:04:18,919 Speaker 2: much attention played to climate risk, and I think we 78 00:04:18,960 --> 00:04:20,640 Speaker 2: need to understand more of this area. 79 00:04:20,720 --> 00:04:23,840 Speaker 1: Absolutely, it's a complex market. It seems to be getting 80 00:04:23,920 --> 00:04:26,520 Speaker 1: more complex by the day, So let's dig into it. 81 00:04:26,560 --> 00:04:28,600 Speaker 1: I am very pleased to say that we really do 82 00:04:28,680 --> 00:04:30,640 Speaker 1: have the perfect guest. We are going to be speaking 83 00:04:30,640 --> 00:04:34,000 Speaker 1: with Melanie gall She's the co director of the Center 84 00:04:34,160 --> 00:04:38,360 Speaker 1: for Emergency Management and Homeland Security at Arizona State University. 85 00:04:38,600 --> 00:04:42,880 Speaker 1: She also manages the Spatial Hazard Events and Losses Database 86 00:04:42,960 --> 00:04:45,800 Speaker 1: for the United States, something known as SHELDUS. We're going 87 00:04:45,880 --> 00:04:48,360 Speaker 1: to dig into exactly what that is in a few minutes, 88 00:04:48,520 --> 00:04:51,120 Speaker 1: but Melanie, thank you so much for coming on all thoughts. 89 00:04:51,920 --> 00:04:53,159 Speaker 3: Thank you so much for having me. 90 00:04:53,800 --> 00:04:56,839 Speaker 1: So maybe just to begin with, can you explain what 91 00:04:56,960 --> 00:05:00,360 Speaker 1: the co director of the Center for Emergency MA Management 92 00:05:00,400 --> 00:05:03,360 Speaker 1: and Homeland Security at Arizona State actually does. What does 93 00:05:03,400 --> 00:05:04,159 Speaker 1: that entail? 94 00:05:04,600 --> 00:05:07,159 Speaker 3: So I may be the kind of person that you 95 00:05:07,200 --> 00:05:10,919 Speaker 3: don't necessarily directly associate with, that kind of you know, 96 00:05:11,160 --> 00:05:14,600 Speaker 3: leadership position because by training, I am a geographer. I 97 00:05:14,720 --> 00:05:19,640 Speaker 3: started out making maps, digital maps, and I came into 98 00:05:19,640 --> 00:05:24,640 Speaker 3: the field of emergency management through a stint that I 99 00:05:24,720 --> 00:05:28,000 Speaker 3: did in Africa. I was actually in Mozambique and I 100 00:05:28,000 --> 00:05:30,440 Speaker 3: did training on you know, how do you collect data 101 00:05:30,520 --> 00:05:32,800 Speaker 3: in the field with a GPS, this kind of information. 102 00:05:33,279 --> 00:05:36,320 Speaker 3: And it was after a massive flood event and then 103 00:05:36,560 --> 00:05:39,280 Speaker 3: I realized, ooh, there's a great connection between what I 104 00:05:39,320 --> 00:05:42,800 Speaker 3: was doing geographic information system and emergency management because you 105 00:05:42,839 --> 00:05:45,000 Speaker 3: need a lot of logistics support, you need to know 106 00:05:45,040 --> 00:05:47,440 Speaker 3: where your stuff is, where you should set up shelters 107 00:05:47,680 --> 00:05:51,120 Speaker 3: and alike. And that was my route into emergency management. 108 00:05:51,480 --> 00:05:54,400 Speaker 3: And so what I do here now at Arizona State University, 109 00:05:54,440 --> 00:05:56,680 Speaker 3: I teach. Obviously, we have a master's degree in an 110 00:05:56,720 --> 00:06:00,120 Speaker 3: undergrad program in emergency management and homeland security, and I 111 00:06:00,200 --> 00:06:03,520 Speaker 3: do numerous research projects. I work with out a nonprofit 112 00:06:03,640 --> 00:06:08,279 Speaker 3: organizations here in Arizona. So it's really a broad variety 113 00:06:08,320 --> 00:06:10,200 Speaker 3: of things. So it's very exciting as a job. 114 00:06:10,240 --> 00:06:13,720 Speaker 2: I have to say, you mentioned data collection, and of 115 00:06:13,760 --> 00:06:16,920 Speaker 2: course you have this database, and you know, it strikes 116 00:06:16,960 --> 00:06:22,520 Speaker 2: me that collecting natural disaster data seems extremely difficult for 117 00:06:22,560 --> 00:06:25,360 Speaker 2: all kinds of reasons. I mean, even something as simple 118 00:06:25,400 --> 00:06:28,919 Speaker 2: as like tallying up the dollar amounts spent on recovery 119 00:06:29,200 --> 00:06:31,960 Speaker 2: strikes difficult. And what these trends are and I could 120 00:06:32,040 --> 00:06:34,760 Speaker 2: imagine that you could have an increase in dollar amounts 121 00:06:34,800 --> 00:06:37,400 Speaker 2: for an area and because there's more disasters, or maybe 122 00:06:37,440 --> 00:06:39,839 Speaker 2: because there's just more building and more people there that 123 00:06:40,000 --> 00:06:42,839 Speaker 2: could also cause that, and so like disambiguating some of 124 00:06:42,839 --> 00:06:45,880 Speaker 2: these effects. Talk to us a little bit about just 125 00:06:45,960 --> 00:06:48,360 Speaker 2: the challenge of measurement, because if we're going to get 126 00:06:48,360 --> 00:06:51,479 Speaker 2: into insurance and know like how much risk is in 127 00:06:51,520 --> 00:06:54,320 Speaker 2: a given area that you have to start with, like, well, 128 00:06:54,320 --> 00:06:56,640 Speaker 2: how much dollar what is the dollar value of the 129 00:06:56,680 --> 00:06:58,760 Speaker 2: property in an area? So talk to us about the 130 00:06:58,839 --> 00:07:01,680 Speaker 2: challenges of measuring these types of things. 131 00:07:02,480 --> 00:07:05,360 Speaker 3: So let me start with telling you a little bit 132 00:07:05,360 --> 00:07:07,960 Speaker 3: about where we get our data from, and then too 133 00:07:08,040 --> 00:07:12,480 Speaker 3: the measurement because we are a secondary user of disaster 134 00:07:12,600 --> 00:07:15,720 Speaker 3: loss information. So we get the vast majority of our 135 00:07:15,880 --> 00:07:20,360 Speaker 3: data from the National Weather Service or better you know, 136 00:07:20,440 --> 00:07:23,920 Speaker 3: the National Weather Service feeds the information to the National 137 00:07:23,960 --> 00:07:27,560 Speaker 3: Centers for Environmental Information in CI, and that is where 138 00:07:27,600 --> 00:07:29,800 Speaker 3: we get the majority of the data from. So it 139 00:07:29,880 --> 00:07:35,480 Speaker 3: is actually your local forecast office, your local meteorologist that 140 00:07:35,560 --> 00:07:39,080 Speaker 3: collects that information. So it is not an economist or 141 00:07:39,120 --> 00:07:41,800 Speaker 3: an assessor or anything like this. So it's the local 142 00:07:41,840 --> 00:07:47,040 Speaker 3: forecast office that collects that information. So I came into 143 00:07:47,080 --> 00:07:50,080 Speaker 3: this arena of collecting disaster losses way back in the 144 00:07:50,160 --> 00:07:53,200 Speaker 3: days when I was a PhD student, where my professor 145 00:07:53,520 --> 00:07:56,440 Speaker 3: had this idea that as a geographer, it should be 146 00:07:56,440 --> 00:07:59,960 Speaker 3: fairly easy to develop profiles for the country. You know, 147 00:08:00,480 --> 00:08:04,240 Speaker 3: how does County A suffer more from hurricane damage than 148 00:08:04,280 --> 00:08:08,720 Speaker 3: flood damage than County B and LO and behold, there 149 00:08:08,800 --> 00:08:13,360 Speaker 3: was not really easily accessible database where you can get 150 00:08:13,360 --> 00:08:17,360 Speaker 3: this information, and that was really the starting point for 151 00:08:17,440 --> 00:08:19,720 Speaker 3: setting up this database. So now we are in the 152 00:08:19,760 --> 00:08:25,480 Speaker 3: business of compiling data that is already assessed from different 153 00:08:25,520 --> 00:08:29,280 Speaker 3: federal agencies. So NCI is one of our main data sources, 154 00:08:29,280 --> 00:08:32,640 Speaker 3: and then we also use data from the US Geological Survey, 155 00:08:33,679 --> 00:08:39,880 Speaker 3: especially related to geological hazards earthquake damage, volcanic eruption damage 156 00:08:39,880 --> 00:08:43,800 Speaker 3: tsunamis analyte because the Weather Service obviously only collects data 157 00:08:43,840 --> 00:08:48,120 Speaker 3: related to mitrological and hydrological events, but we are interested 158 00:08:48,160 --> 00:08:53,000 Speaker 3: in compiling a database that covers all natural hazards. So 159 00:08:53,280 --> 00:08:56,680 Speaker 3: we are vistly using data. And there's only a tiny 160 00:08:56,679 --> 00:08:59,280 Speaker 3: fraction where we compile our own data, and that is 161 00:08:59,360 --> 00:09:03,880 Speaker 3: landslide data. So landslide data is really not or has 162 00:09:03,960 --> 00:09:07,600 Speaker 3: not been easily accessible. There was a Landslide Act passed 163 00:09:07,600 --> 00:09:10,360 Speaker 3: a few years ago, so that now triggered the US 164 00:09:10,400 --> 00:09:15,000 Speaker 3: Geological Survey to get most serious about collecting that data. 165 00:09:15,840 --> 00:09:19,440 Speaker 3: And so we decided that we want to include landslide 166 00:09:19,480 --> 00:09:22,240 Speaker 3: data in our database. And that's where we then started 167 00:09:22,720 --> 00:09:26,880 Speaker 3: like scouring newspapers, websites, and we're applying the same sort 168 00:09:26,880 --> 00:09:31,160 Speaker 3: of assessment methodology that the Weather Service is employing. Because 169 00:09:31,760 --> 00:09:37,880 Speaker 3: the main users of our data are local planners, hazard 170 00:09:37,880 --> 00:09:42,439 Speaker 3: mitigation planners. And hazard mitigation planners sit in the emergency 171 00:09:42,440 --> 00:09:46,240 Speaker 3: management division of your county or of your state, and 172 00:09:46,640 --> 00:09:50,520 Speaker 3: they are actually charged by law. They are not required 173 00:09:50,720 --> 00:09:53,400 Speaker 3: to compile what it is called hazard mitigation plans, but 174 00:09:53,559 --> 00:09:57,480 Speaker 3: they are incentivized to compile these hazard mitigation plans. And 175 00:09:57,559 --> 00:10:00,240 Speaker 3: in these plans you have to do risk assessments. These 176 00:10:00,320 --> 00:10:03,680 Speaker 3: risk assessments need to include a history of past losses 177 00:10:04,120 --> 00:10:06,920 Speaker 3: and that's then when people tend to come to us. 178 00:10:07,720 --> 00:10:11,480 Speaker 3: So measuring losses and assessing them goes exactly you know, Joe, 179 00:10:11,520 --> 00:10:14,559 Speaker 3: you already mentioned it's a question of you know, how 180 00:10:14,600 --> 00:10:16,560 Speaker 3: much property do we have in an area and what's 181 00:10:16,600 --> 00:10:22,360 Speaker 3: the property worth. So there are two types of losses. 182 00:10:22,400 --> 00:10:25,680 Speaker 3: There's what's called direct losses and indirect losses. So direct 183 00:10:25,720 --> 00:10:28,080 Speaker 3: loss is when you see, you know, the destruction of 184 00:10:28,120 --> 00:10:33,000 Speaker 3: a storm or a hurricane, like a loss directly tied 185 00:10:33,200 --> 00:10:37,200 Speaker 3: to the event. That is what we include in our database. 186 00:10:37,240 --> 00:10:40,880 Speaker 3: We only include direct proper damage, direct crrupt damage, injuries, 187 00:10:40,920 --> 00:10:43,840 Speaker 3: and fatality, So that would be for instance, a person 188 00:10:44,200 --> 00:10:46,640 Speaker 3: you know, who got injured or drowned in a flood 189 00:10:46,720 --> 00:10:50,720 Speaker 3: or something like that. And the indirect losses is, for instance, 190 00:10:50,760 --> 00:10:53,000 Speaker 3: when a business has to shut down for a given 191 00:10:53,040 --> 00:10:55,360 Speaker 3: time because they can't operate their power is down or 192 00:10:55,360 --> 00:10:58,160 Speaker 3: something like that. And the indirect losses we do not 193 00:10:58,200 --> 00:11:01,080 Speaker 3: include in our database. So what I'm trying to say 194 00:11:01,120 --> 00:11:04,120 Speaker 3: is even what we have in our database is way 195 00:11:04,600 --> 00:11:08,000 Speaker 3: underestimating really the burden of losses that we have in 196 00:11:08,000 --> 00:11:09,560 Speaker 3: the country from natural hazards. 197 00:11:10,440 --> 00:11:12,959 Speaker 1: So I was going to ask, what happens when you 198 00:11:13,000 --> 00:11:15,680 Speaker 1: see I mean, you just gave us a great summary 199 00:11:15,800 --> 00:11:18,280 Speaker 1: of how tricky it can be to measure some of 200 00:11:18,320 --> 00:11:21,160 Speaker 1: these costs. But what is happening if you get a 201 00:11:21,280 --> 00:11:25,280 Speaker 1: wildly different estimate of the cost of a certain disaster? 202 00:11:25,440 --> 00:11:27,800 Speaker 1: And for instance, one thing I read was that, I 203 00:11:27,840 --> 00:11:32,319 Speaker 1: think the NCDC estimates that the damages from Hurricane Katrina 204 00:11:32,480 --> 00:11:34,920 Speaker 1: or something like one hundred and twenty five billion dollars 205 00:11:35,360 --> 00:11:39,880 Speaker 1: versus what Shelda says at eighty billion. What's happening there 206 00:11:39,920 --> 00:11:42,520 Speaker 1: when you get a discrepancy like that, And does it 207 00:11:42,679 --> 00:11:46,280 Speaker 1: matter in the real world in terms of contingency planning? 208 00:11:47,679 --> 00:11:50,960 Speaker 3: So it does to some degree. So it matters when 209 00:11:51,000 --> 00:11:55,560 Speaker 3: you as a community have to justify why you need 210 00:11:55,679 --> 00:11:58,960 Speaker 3: money and why you want to invest to reduce the losses. 211 00:11:59,440 --> 00:12:04,280 Speaker 3: So communities have to do cost benefit analyses to justify 212 00:12:04,360 --> 00:12:07,480 Speaker 3: why it makes sense to invest maybe you know, building 213 00:12:07,480 --> 00:12:10,640 Speaker 3: a new retention pond or you know changing their building 214 00:12:10,640 --> 00:12:14,160 Speaker 3: codes and anything that has a price tag associated with it. 215 00:12:14,240 --> 00:12:17,359 Speaker 3: You know, these communities have to run benefit cost analysis 216 00:12:17,480 --> 00:12:20,240 Speaker 3: and say, what we're investing is reducing losses in the 217 00:12:20,280 --> 00:12:22,640 Speaker 3: long run. And that's where it matters what you can 218 00:12:22,720 --> 00:12:26,599 Speaker 3: document in terms of past hazards. So the discrepancy and 219 00:12:26,720 --> 00:12:29,720 Speaker 3: estimates that you just mentioned is really that's our standard 220 00:12:29,760 --> 00:12:33,000 Speaker 3: business because it is so tricky to estimate these losses. 221 00:12:33,320 --> 00:12:36,280 Speaker 3: There's the direct, there's the indirect losses. There's also insured 222 00:12:36,320 --> 00:12:39,679 Speaker 3: and uninsured losses. So it's always a question of sort 223 00:12:39,679 --> 00:12:41,920 Speaker 3: of what slices of the pie and how much of 224 00:12:41,960 --> 00:12:45,040 Speaker 3: the pie people looking at when they estimate losses. And 225 00:12:45,080 --> 00:12:48,760 Speaker 3: that's also where you see you've probably seen it many times, Noah, 226 00:12:48,960 --> 00:12:53,559 Speaker 3: the National Oceanic and Atmospheric Administration, they have what is 227 00:12:53,640 --> 00:12:57,600 Speaker 3: called billion dollar events. They get cited all over and 228 00:12:58,080 --> 00:13:01,480 Speaker 3: their estimates are always vast hire than what we have 229 00:13:01,600 --> 00:13:06,480 Speaker 3: in our database because they rely heavily on enshort data 230 00:13:07,160 --> 00:13:10,240 Speaker 3: and so in short data is again different from direct 231 00:13:10,280 --> 00:13:13,440 Speaker 3: losses what we document, and this is where all these 232 00:13:13,480 --> 00:13:17,000 Speaker 3: discrepancies come from. So in my line of business, when 233 00:13:17,000 --> 00:13:20,480 Speaker 3: it comes to direct losses, we tend to be conservative. 234 00:13:20,559 --> 00:13:24,280 Speaker 3: So if we have competing estimates, we use the lower 235 00:13:24,440 --> 00:13:26,840 Speaker 3: estimate just to be on the safe side of not 236 00:13:27,040 --> 00:13:31,000 Speaker 3: over estimating losses. But that really just you know, might 237 00:13:31,080 --> 00:13:34,520 Speaker 3: aggravate the problem because we already have under estimation problem 238 00:13:34,559 --> 00:13:37,199 Speaker 3: and then we are conservative. But that is the approach 239 00:13:37,240 --> 00:13:40,600 Speaker 3: we've taken at the start of you know, developing this database. 240 00:13:40,880 --> 00:13:43,439 Speaker 2: Well, I want to get into you know, obviously we 241 00:13:43,480 --> 00:13:46,160 Speaker 2: want to get into what's happening right now and what 242 00:13:46,200 --> 00:13:48,640 Speaker 2: we're seeing in insurance markets. But I think just to like, 243 00:13:49,120 --> 00:13:53,640 Speaker 2: before we get to that, are the cost of natural 244 00:13:53,679 --> 00:13:56,400 Speaker 2: disasters going up? And maybe that's a naive question, but 245 00:13:56,520 --> 00:13:58,400 Speaker 2: I always have these states, Oh, is it just that 246 00:13:58,440 --> 00:14:02,200 Speaker 2: we're getting more attention to natural disasters in the media, 247 00:14:02,360 --> 00:14:04,360 Speaker 2: and is it just a sort of like is it 248 00:14:04,440 --> 00:14:06,520 Speaker 2: just a narrative that there are more that there are 249 00:14:06,559 --> 00:14:09,280 Speaker 2: more wildfires, et cetera, Or is it like, what are 250 00:14:09,320 --> 00:14:12,760 Speaker 2: we actually seeing big picture in the data. Are things 251 00:14:12,840 --> 00:14:14,720 Speaker 2: are we you know, is it getting worse? 252 00:14:16,000 --> 00:14:18,880 Speaker 3: It is getting worse, So our risk is going up. 253 00:14:19,080 --> 00:14:22,920 Speaker 3: We have more severe events, we have more events. The 254 00:14:23,080 --> 00:14:27,280 Speaker 3: question is why do we see higher losses. So higher 255 00:14:27,320 --> 00:14:29,920 Speaker 3: losses could be a function of simply having, you know, 256 00:14:30,000 --> 00:14:34,320 Speaker 3: more events, more extreme events, and or it could also 257 00:14:34,400 --> 00:14:38,160 Speaker 3: be a function of what you mentioned earlier, Joe, more 258 00:14:38,200 --> 00:14:42,040 Speaker 3: people living in high risk areas, more property, or simply 259 00:14:42,040 --> 00:14:45,720 Speaker 3: more value being accumulated in high risk areas. It could 260 00:14:45,800 --> 00:14:49,000 Speaker 3: also be that maybe as a society we don't do 261 00:14:49,240 --> 00:14:52,320 Speaker 3: enough to mitigate these losses so that we get outpaced 262 00:14:52,720 --> 00:14:56,160 Speaker 3: by the risk that we're experiencing. Or it could also 263 00:14:56,200 --> 00:14:59,680 Speaker 3: be that we have not as resilient of a society, 264 00:15:00,160 --> 00:15:07,120 Speaker 3: resilient infrastructure, resilient residential homes, and or it could also 265 00:15:07,160 --> 00:15:09,680 Speaker 3: be an increase in what we call social and nobility, 266 00:15:09,960 --> 00:15:13,960 Speaker 3: meaning you have more people that lack the capacity to 267 00:15:14,040 --> 00:15:16,400 Speaker 3: prepare for, respond to, or recover from an event. 268 00:15:32,400 --> 00:15:36,120 Speaker 1: Let's pivot to insurance and talk about what's going on there, 269 00:15:36,160 --> 00:15:38,520 Speaker 1: And maybe just to begin with, could you sort of 270 00:15:38,560 --> 00:15:42,120 Speaker 1: walk us through the landscape of this type of insurance 271 00:15:42,160 --> 00:15:44,720 Speaker 1: as it exists now, So let's say, you know, a 272 00:15:44,840 --> 00:15:50,920 Speaker 1: hurricane happens in Florida. What's the sort of process by 273 00:15:50,960 --> 00:15:55,120 Speaker 1: which a homeowner would expect to get reimbursed? Because my 274 00:15:55,240 --> 00:15:58,600 Speaker 1: understanding is there's different layers of private insurance and then 275 00:15:58,640 --> 00:16:02,360 Speaker 1: there's sort of federal potentially as well, and of course 276 00:16:02,400 --> 00:16:04,960 Speaker 1: there are also the reinsurers who are sort of backing 277 00:16:05,400 --> 00:16:09,040 Speaker 1: the upfront insurans. Can you walk us through how all 278 00:16:09,080 --> 00:16:11,200 Speaker 1: that would work in a typical case. 279 00:16:12,160 --> 00:16:14,800 Speaker 3: Yes, so you know, just let me stay again. I'm 280 00:16:14,800 --> 00:16:19,560 Speaker 3: a geographer and training, I'm not an economists expert, but 281 00:16:19,600 --> 00:16:23,520 Speaker 3: I can tell you that a it's very complex because 282 00:16:23,520 --> 00:16:26,760 Speaker 3: it varies, like you said, from state to state. And 283 00:16:26,800 --> 00:16:29,160 Speaker 3: I think what a lot of people don't realize is 284 00:16:29,720 --> 00:16:35,000 Speaker 3: you might have to purchase different insurance policies to be covered. 285 00:16:35,520 --> 00:16:38,640 Speaker 3: So I think most people assume all this is covered 286 00:16:38,720 --> 00:16:42,520 Speaker 3: in my homeowner is insurance, and it is not, and 287 00:16:42,560 --> 00:16:46,360 Speaker 3: it depends on where you live. Like, for instance, landslide 288 00:16:46,440 --> 00:16:50,720 Speaker 3: risk not covered in any policy in any state in 289 00:16:50,760 --> 00:16:55,200 Speaker 3: the US. So landslide risk is something that you cannot 290 00:16:55,320 --> 00:16:58,000 Speaker 3: file an insurance claim on because you can't get insurance 291 00:16:58,000 --> 00:17:00,760 Speaker 3: for it. So let's go to Florida. So if you 292 00:17:00,840 --> 00:17:04,280 Speaker 3: live in Florida, so you would let's say ideal scenario, 293 00:17:04,400 --> 00:17:08,640 Speaker 3: as a homeowner, you have homeowners insurance. You also have 294 00:17:08,840 --> 00:17:12,400 Speaker 3: flood insurance from the federal government. Also, many people don't 295 00:17:12,440 --> 00:17:15,880 Speaker 3: realize that that's a federal program because it's ministered by 296 00:17:15,920 --> 00:17:19,400 Speaker 3: your local insurance agent. So you buy your flood insurance 297 00:17:19,440 --> 00:17:23,000 Speaker 3: policy from your local agent, but actually you know the 298 00:17:23,040 --> 00:17:26,800 Speaker 3: company that ensures you is the federal government. And then 299 00:17:27,359 --> 00:17:30,720 Speaker 3: depending on what stayed you in and exactly how you 300 00:17:30,760 --> 00:17:34,879 Speaker 3: know the policy works. You also have to buy wind insurance, 301 00:17:35,359 --> 00:17:39,800 Speaker 3: and states have different sort of thresholds. You know, when 302 00:17:40,000 --> 00:17:42,879 Speaker 3: is a storm actually a hurricane, does it have to 303 00:17:42,920 --> 00:17:45,840 Speaker 3: reach a certain wind speed then for the wind insurance 304 00:17:45,880 --> 00:17:49,879 Speaker 3: to pay out over the homeowners insurance. So for you 305 00:17:50,040 --> 00:17:53,240 Speaker 3: as an individual a you have to navigate what do 306 00:17:53,280 --> 00:17:57,240 Speaker 3: I want to ensure, what can I afford to ensure, 307 00:17:57,280 --> 00:17:59,280 Speaker 3: what kind of different policies do I need to buy? 308 00:17:59,720 --> 00:18:02,960 Speaker 3: And then when you actually have damage from an event, 309 00:18:03,480 --> 00:18:07,000 Speaker 3: and we've seen this for instance after Hurricane Katrina, you 310 00:18:07,240 --> 00:18:10,399 Speaker 3: very often might face a situation where you then have 311 00:18:10,480 --> 00:18:13,119 Speaker 3: to argue with the insurance company if the damage that 312 00:18:13,200 --> 00:18:16,920 Speaker 3: you have was caused by wind or cause by flooding amazing, 313 00:18:17,000 --> 00:18:21,240 Speaker 3: and we've seen discrepancies where you know, one neighbor their 314 00:18:21,280 --> 00:18:26,280 Speaker 3: wind insurance paid out because their insurance company said, yes, 315 00:18:26,320 --> 00:18:28,600 Speaker 3: we recognize that this is wind damage, and the other 316 00:18:28,640 --> 00:18:31,879 Speaker 3: neighbor didn't get anything from their policy because they're the 317 00:18:31,920 --> 00:18:34,360 Speaker 3: insurance said, oh, this is flood damage that you have. 318 00:18:35,000 --> 00:18:40,800 Speaker 3: So having insurance does not necessarily mean that policy is 319 00:18:40,840 --> 00:18:43,320 Speaker 3: also going to kick in because they might be disputes 320 00:18:44,000 --> 00:18:46,440 Speaker 3: with regard to what type of data, but what type 321 00:18:46,560 --> 00:18:48,920 Speaker 3: hazard caused that damage? 322 00:18:50,119 --> 00:18:52,960 Speaker 2: What insurance rates up so much? I mean, I know 323 00:18:53,040 --> 00:18:55,480 Speaker 2: this is like the whole question, but if someone asked 324 00:18:55,480 --> 00:18:58,679 Speaker 2: you that me why, Like in Florida, you know, I 325 00:18:58,720 --> 00:19:01,480 Speaker 2: saw there's a stat forty two percent higher for home 326 00:19:01,520 --> 00:19:04,960 Speaker 2: owned home insurance premiums. I mean I get that, like, okay, 327 00:19:05,320 --> 00:19:09,520 Speaker 2: generally speaking, maybe natural disasters they're trending higher, but that 328 00:19:09,680 --> 00:19:12,840 Speaker 2: is like a staggering amount. And you know, I'll add 329 00:19:12,880 --> 00:19:16,400 Speaker 2: to that. You see when you see companies dessert a state, why, 330 00:19:16,480 --> 00:19:18,080 Speaker 2: I mean, why can't why don't they just charge more? 331 00:19:18,080 --> 00:19:20,640 Speaker 2: And what's happened in the last couple of years that's 332 00:19:20,680 --> 00:19:22,560 Speaker 2: so different than in the past. 333 00:19:23,920 --> 00:19:26,680 Speaker 3: So let's maybe start with the statements that these insurance 334 00:19:26,680 --> 00:19:29,320 Speaker 3: companies released why they are shoring out of the market, 335 00:19:29,480 --> 00:19:33,720 Speaker 3: especially like in Florida. So they cited a higher risk 336 00:19:33,800 --> 00:19:36,960 Speaker 3: in California was higher, while fire risk, which guest check, 337 00:19:37,080 --> 00:19:41,000 Speaker 3: we see higher risk of that. They had higher building costs, 338 00:19:41,119 --> 00:19:45,000 Speaker 3: so yeah, you know, spending paying for the cost of 339 00:19:45,000 --> 00:19:47,399 Speaker 3: somebody rebuilding a home that has gone up as well. 340 00:19:48,000 --> 00:19:52,399 Speaker 3: And then they also cited an increase in their own 341 00:19:52,520 --> 00:19:57,560 Speaker 3: insurance policies, meaning insurance companies ensuring with what is called 342 00:19:57,560 --> 00:20:02,080 Speaker 3: a reinsurance company that raid has also gone up for them. 343 00:20:02,480 --> 00:20:04,560 Speaker 3: So they had to make a decision, you know, are 344 00:20:04,560 --> 00:20:07,480 Speaker 3: we going to or can we pass on these higher 345 00:20:07,520 --> 00:20:11,199 Speaker 3: costs that we have and create an insurance product that 346 00:20:11,359 --> 00:20:14,040 Speaker 3: is competitive in the market. So can they then offer 347 00:20:14,520 --> 00:20:18,280 Speaker 3: a insurance premium that people would be willing to pay? 348 00:20:18,640 --> 00:20:21,320 Speaker 3: And obviously they made the decision that they're going to 349 00:20:21,560 --> 00:20:25,199 Speaker 3: pause writing policies. And I think, you know, calling this 350 00:20:25,280 --> 00:20:27,879 Speaker 3: a pause is important because this is not the first 351 00:20:27,880 --> 00:20:31,960 Speaker 3: time that we've seen this happen. Insurance companies have retreated 352 00:20:32,280 --> 00:20:34,520 Speaker 3: for a certain time period and then have come back 353 00:20:34,520 --> 00:20:37,520 Speaker 3: into the market. So we've seen this, for instance, in 354 00:20:37,560 --> 00:20:41,120 Speaker 3: the state of Louisiana when this happened before the same 355 00:20:41,160 --> 00:20:45,000 Speaker 3: happened in Florida. You could also what you didn't see 356 00:20:45,000 --> 00:20:47,240 Speaker 3: in the statement, you could also interpret this. This is 357 00:20:47,280 --> 00:20:50,520 Speaker 3: what I personally interpret this approach as well, is sort 358 00:20:50,520 --> 00:20:54,679 Speaker 3: of a signal to a state government saying maybe we 359 00:20:54,720 --> 00:20:57,800 Speaker 3: need to rethink our partnership or maybe we need to 360 00:20:57,840 --> 00:21:00,159 Speaker 3: engage in a partnership, and maybe they need to be 361 00:21:00,240 --> 00:21:04,480 Speaker 3: legislation that incentivizes us to come back. Because, as you 362 00:21:04,560 --> 00:21:09,000 Speaker 3: mentioned earlier, we do not want people to be without 363 00:21:09,040 --> 00:21:14,240 Speaker 3: insurance because we know research shows that people recover much 364 00:21:14,480 --> 00:21:18,600 Speaker 3: much slower from a disaster if they do not have insurance. 365 00:21:18,760 --> 00:21:22,120 Speaker 3: And it's obvious because you don't have the financial resources. 366 00:21:22,320 --> 00:21:25,720 Speaker 3: Unless you have massive savings, then maybe you don't need insurance. 367 00:21:26,119 --> 00:21:28,959 Speaker 3: But if you're a person like me who doesn't have 368 00:21:29,000 --> 00:21:31,919 Speaker 3: massive savings, I need insurance if I need to recover 369 00:21:32,080 --> 00:21:35,080 Speaker 3: and rebuild my home. And so we want people to 370 00:21:35,160 --> 00:21:38,520 Speaker 3: be insured. So the fewer people we have that have insurance, 371 00:21:38,920 --> 00:21:42,240 Speaker 3: we are really foregoing what we know is a key 372 00:21:42,359 --> 00:21:43,880 Speaker 3: factor to disaster recovery. 373 00:21:44,560 --> 00:21:47,760 Speaker 2: Tracy Melanie said something, there's a lot there, but one 374 00:21:47,760 --> 00:21:50,160 Speaker 2: thing that I just want to or sort of pull out. 375 00:21:50,680 --> 00:21:53,000 Speaker 2: Is that point about higher construction costs because we talk 376 00:21:53,000 --> 00:21:55,760 Speaker 2: about this all the time with inflation and labor costs 377 00:21:55,760 --> 00:21:58,560 Speaker 2: and materials, et cetera. I mean, if it's like significantly 378 00:21:58,640 --> 00:22:01,720 Speaker 2: more expensive in twenty two twenty three to rebuild a 379 00:22:01,760 --> 00:22:05,679 Speaker 2: home than in twenty nineteen, then just not everything else aside, 380 00:22:05,680 --> 00:22:08,360 Speaker 2: like mathematically you'd expect. Yeah, of course, like Insuran's got 381 00:22:08,400 --> 00:22:10,240 Speaker 2: to be a compensated for. 382 00:22:10,200 --> 00:22:13,240 Speaker 1: That, absolutely, Melanie. I want to go back to something 383 00:22:13,440 --> 00:22:16,040 Speaker 1: you just said about, Well, maybe the insurers are sort 384 00:22:16,080 --> 00:22:21,520 Speaker 1: of angling for legislative assistance and no one wants people 385 00:22:21,560 --> 00:22:25,199 Speaker 1: to go uninsured. I mean, another way of looking at 386 00:22:25,240 --> 00:22:29,840 Speaker 1: it is maybe we should be incentivizing people to move 387 00:22:30,000 --> 00:22:34,800 Speaker 1: out of these risk prone areas by not providing them 388 00:22:34,840 --> 00:22:37,359 Speaker 1: insurance and saying like, hey, if you want to live here, 389 00:22:37,480 --> 00:22:40,480 Speaker 1: you're on your own, and if something happens, that's on you. 390 00:22:41,080 --> 00:22:45,280 Speaker 1: I mean, is that a legitimate thought to have about this? 391 00:22:45,359 --> 00:22:48,639 Speaker 1: And is there any evidence that people not having insurance 392 00:22:48,720 --> 00:22:51,400 Speaker 1: actually does encourage them to move elsewhere? 393 00:22:53,119 --> 00:22:56,399 Speaker 3: So what really encourages people to have insurance is having 394 00:22:56,440 --> 00:22:59,920 Speaker 3: gone through a disaster, like we know, a key drive 395 00:23:00,200 --> 00:23:05,040 Speaker 3: force for people to become proactive for instance, with regard 396 00:23:05,080 --> 00:23:08,520 Speaker 3: to maybe thinking about elevating their home, purchasing insurance, maybe 397 00:23:08,520 --> 00:23:13,720 Speaker 3: even moving, sort of really bracing for a future event 398 00:23:13,800 --> 00:23:16,480 Speaker 3: and preparing to have less impacts in the future. The 399 00:23:16,600 --> 00:23:19,720 Speaker 3: key driver for that is having gone through a disaster before, 400 00:23:20,000 --> 00:23:21,879 Speaker 3: so experience is a key factor. 401 00:23:22,160 --> 00:23:25,160 Speaker 1: So no, not change their behavior until they've actually been 402 00:23:25,359 --> 00:23:26,520 Speaker 1: flooded out of their house. 403 00:23:28,440 --> 00:23:30,879 Speaker 3: Very much. For a lot of people, yes, that's the 404 00:23:30,920 --> 00:23:32,639 Speaker 3: case because you see it all the time. Like you 405 00:23:32,680 --> 00:23:35,080 Speaker 3: turn on the you know, turn on the TV. You 406 00:23:35,119 --> 00:23:37,400 Speaker 3: will see people say all the time, Oh, I've never 407 00:23:37,560 --> 00:23:40,000 Speaker 3: thought this is going to happen. And this I never 408 00:23:40,080 --> 00:23:44,800 Speaker 3: thought is going to happen factors into the decision to 409 00:23:44,960 --> 00:23:47,880 Speaker 3: not buy insurance because you know, if you think it's 410 00:23:48,040 --> 00:23:51,000 Speaker 3: likely to happen, and it's a good investment for you 411 00:23:51,040 --> 00:23:53,080 Speaker 3: to make, Like you know, you only have a limited 412 00:23:53,080 --> 00:23:55,359 Speaker 3: amount of resources, so you have to make trade off decisions. 413 00:23:55,880 --> 00:23:59,000 Speaker 3: Do I spend what I have on buying insurance. You 414 00:23:59,040 --> 00:24:01,840 Speaker 3: will do this if you see it's likely to happen, 415 00:24:02,480 --> 00:24:06,600 Speaker 3: so that you have a backstop when the event actually unfolds. 416 00:24:06,880 --> 00:24:09,000 Speaker 3: But if you in your mind think, oh this is 417 00:24:09,040 --> 00:24:12,480 Speaker 3: so unlikely, I'm not going to do it, then there's 418 00:24:12,520 --> 00:24:15,080 Speaker 3: a high chance unless you force you not going to 419 00:24:15,119 --> 00:24:17,920 Speaker 3: buy insurance. I mean, think about it. It's very similar 420 00:24:18,320 --> 00:24:23,800 Speaker 3: to our thinking with health insurance investing in retirement. We 421 00:24:23,960 --> 00:24:27,600 Speaker 3: humans have a real problem thinking about the future and 422 00:24:27,680 --> 00:24:31,040 Speaker 3: not discounting the future. So this is why we have, 423 00:24:31,200 --> 00:24:35,720 Speaker 3: you know, sort of carrot and stick approaches to being 424 00:24:35,760 --> 00:24:39,439 Speaker 3: insured regarding any health issues and retirement because we are 425 00:24:39,480 --> 00:24:42,399 Speaker 3: not very good with this long term thinking, and buying 426 00:24:42,440 --> 00:24:46,000 Speaker 3: insurance also factors into that long term thinking. So it's 427 00:24:46,040 --> 00:24:51,000 Speaker 3: really really hard now to your point about moving. So 428 00:24:51,040 --> 00:24:54,600 Speaker 3: I have to say, I get this question quite a lot. 429 00:24:54,760 --> 00:24:59,320 Speaker 3: Should people not just move? I always, you know, sort 430 00:24:59,320 --> 00:25:02,840 Speaker 3: of just ask yourself, where would you move and how 431 00:25:03,000 --> 00:25:06,120 Speaker 3: likely would you be to move? How far away would 432 00:25:06,119 --> 00:25:10,960 Speaker 3: you move? Like what holds you? You know, what ties 433 00:25:11,000 --> 00:25:13,520 Speaker 3: you to this place that you're in right now? Is 434 00:25:13,560 --> 00:25:17,040 Speaker 3: it your job opportunities? Is it your family? Is it 435 00:25:17,080 --> 00:25:19,720 Speaker 3: maybe the amenities of where you live and most of 436 00:25:19,760 --> 00:25:21,960 Speaker 3: the time, you know, it's sort of a combination of 437 00:25:21,960 --> 00:25:23,480 Speaker 3: all of these things. Or it could be you know, 438 00:25:23,560 --> 00:25:25,600 Speaker 3: your family lived in this place for a long time, 439 00:25:25,920 --> 00:25:29,640 Speaker 3: maybe you inherited the land that you live on, and 440 00:25:30,560 --> 00:25:33,119 Speaker 3: for a lot of people moving is not necessarily a 441 00:25:33,160 --> 00:25:36,200 Speaker 3: thing they want to do or they can do, especially 442 00:25:36,240 --> 00:25:39,040 Speaker 3: maybe if you live in a maybe more rural area 443 00:25:39,200 --> 00:25:41,679 Speaker 3: or so there's not maybe a lot of money you 444 00:25:41,720 --> 00:25:44,639 Speaker 3: can get for selling your property and then moving somewhere 445 00:25:44,640 --> 00:25:47,399 Speaker 3: else and starting over. So the question of you know, 446 00:25:47,640 --> 00:25:51,000 Speaker 3: willingness to move is one thing, and then you know 447 00:25:51,240 --> 00:25:54,280 Speaker 3: for which type of hazards sort of where would we 448 00:25:54,359 --> 00:25:59,960 Speaker 3: start making people move, Like is it hurricanes? Is it earthquakes? 449 00:26:00,040 --> 00:26:03,159 Speaker 3: Because if you think about earthquakes, I mean, there is 450 00:26:03,200 --> 00:26:04,920 Speaker 3: not many people that should be living in. 451 00:26:04,880 --> 00:26:09,040 Speaker 1: California right, All of California needs to move immediately exactly. 452 00:26:09,160 --> 00:26:11,480 Speaker 3: So there is really if you like break it down 453 00:26:11,440 --> 00:26:13,760 Speaker 3: and say, okay, everybody has to move out of high 454 00:26:13,800 --> 00:26:17,560 Speaker 3: risk areas, there is not a lot of you know, 455 00:26:17,800 --> 00:26:21,560 Speaker 3: land that will be left for then because the Midwest 456 00:26:21,600 --> 00:26:25,520 Speaker 3: has hurricanes, you not hurricanes, no good things. They don't 457 00:26:25,560 --> 00:26:28,040 Speaker 3: have her they have tornadoes. You know, you also have 458 00:26:28,160 --> 00:26:32,359 Speaker 3: winter storms. They have massive hail events sometimes, so there 459 00:26:32,480 --> 00:26:34,960 Speaker 3: is really no place to hide in the country, I 460 00:26:35,000 --> 00:26:39,520 Speaker 3: would say, or hardly any So how would you make 461 00:26:39,560 --> 00:26:42,520 Speaker 3: that decision? I think that is I mean, I think 462 00:26:42,560 --> 00:26:48,080 Speaker 3: ethically and politically a topic you people really don't want 463 00:26:48,080 --> 00:26:51,840 Speaker 3: to get into. And I think what's happening is we 464 00:26:51,960 --> 00:26:56,959 Speaker 3: have sort of implicit migration out of high risk events 465 00:26:57,000 --> 00:27:00,200 Speaker 3: when something happens, you know, because when something happens, people 466 00:27:00,240 --> 00:27:02,800 Speaker 3: have to make a decision. Am I staying here? Am 467 00:27:02,800 --> 00:27:06,360 Speaker 3: I rebuilding here? Or am I moving? And the research 468 00:27:06,440 --> 00:27:10,440 Speaker 3: shows that people who decide to move after they've after 469 00:27:10,520 --> 00:27:13,520 Speaker 3: they've been impacted by a disaster, they actually don't tend 470 00:27:13,560 --> 00:27:16,760 Speaker 3: to move very far. So they still tend to stay 471 00:27:16,800 --> 00:27:21,359 Speaker 3: within their state. They maybe move, you know, within the county, 472 00:27:21,760 --> 00:27:25,240 Speaker 3: maybe to the neighboring county, But people don't take tend 473 00:27:25,240 --> 00:27:27,760 Speaker 3: to pack up and leave and move from let's say, 474 00:27:27,920 --> 00:27:30,720 Speaker 3: from from Louisiana to New Jersey or something like that. 475 00:27:31,400 --> 00:27:34,200 Speaker 2: I want to ask you about you know, you mentioned 476 00:27:34,200 --> 00:27:36,720 Speaker 2: that companies leave states, but then they might come back, 477 00:27:36,760 --> 00:27:39,960 Speaker 2: and part of it is an implicit negotiation with state 478 00:27:40,000 --> 00:27:44,320 Speaker 2: regulators and state governments to change some policies. What do 479 00:27:44,359 --> 00:27:46,000 Speaker 2: we think I mean, like, what do you think, like 480 00:27:46,040 --> 00:27:49,639 Speaker 2: when you see a company leave California or Florida or 481 00:27:49,640 --> 00:27:52,159 Speaker 2: some of these other markets are there, what are the 482 00:27:52,200 --> 00:27:55,919 Speaker 2: policy levers that these states could pull in order to 483 00:27:56,320 --> 00:27:59,719 Speaker 2: or are pulling in order to bring more competition and 484 00:27:59,760 --> 00:28:02,920 Speaker 2: care back into the state, or like what is historically 485 00:28:03,520 --> 00:28:06,280 Speaker 2: what types of changes prompt and insured to come back 486 00:28:06,280 --> 00:28:07,200 Speaker 2: into a given market. 487 00:28:08,440 --> 00:28:12,600 Speaker 3: So the market in the state of Louisiana is actually 488 00:28:12,800 --> 00:28:16,440 Speaker 3: often referred to as an example of what could be 489 00:28:16,680 --> 00:28:21,199 Speaker 3: good policy choices or offerings to the insurance market. So 490 00:28:21,840 --> 00:28:27,840 Speaker 3: meaning the state what decide or decides to protect insurance companies, 491 00:28:27,880 --> 00:28:29,720 Speaker 3: you know, only up to a certain level is when 492 00:28:29,720 --> 00:28:32,359 Speaker 3: they have to step in with payments, and then the state, 493 00:28:32,680 --> 00:28:38,240 Speaker 3: you know, jumps in above that level. And it's Louisiana 494 00:28:38,320 --> 00:28:41,480 Speaker 3: also has they have a what's called the insurer of 495 00:28:41,600 --> 00:28:44,400 Speaker 3: last resort, So if you know, you as a homeowner, 496 00:28:44,440 --> 00:28:48,000 Speaker 3: you can find a policy from a private insurer, then 497 00:28:48,040 --> 00:28:51,640 Speaker 3: you can ensure with Citizens. So it has the same 498 00:28:51,760 --> 00:28:54,320 Speaker 3: name as the program in Florida, but they are distinctly 499 00:28:54,320 --> 00:28:59,840 Speaker 3: different because in Louisiana, Citizens is required that they do 500 00:29:00,080 --> 00:29:04,239 Speaker 3: offer the premium at a slightly higher price than the 501 00:29:04,240 --> 00:29:08,760 Speaker 3: private market. Okay, so they do not offer let's just 502 00:29:08,840 --> 00:29:14,280 Speaker 3: call it reduced or kind of sort of cheaper insurance premium. 503 00:29:14,280 --> 00:29:16,280 Speaker 3: So there's not a lot of savings because when it 504 00:29:16,280 --> 00:29:19,800 Speaker 3: comes to insurance what's really really tricky in setting these 505 00:29:19,840 --> 00:29:22,400 Speaker 3: premiums if you don't want to set them too high, 506 00:29:22,720 --> 00:29:25,000 Speaker 3: because then people forego insurance. But you also don't want 507 00:29:25,000 --> 00:29:27,480 Speaker 3: to set it too low, and that's something that we've 508 00:29:27,480 --> 00:29:30,640 Speaker 3: struggled with all along with now the National Flood Insurance Program, 509 00:29:30,720 --> 00:29:35,360 Speaker 3: because when you set insurance premiums too low, then the 510 00:29:35,440 --> 00:29:38,800 Speaker 3: decision to live and stay in a high risk area, 511 00:29:39,600 --> 00:29:42,600 Speaker 3: you don't really have to pay for that risk. You 512 00:29:42,640 --> 00:29:44,840 Speaker 3: don't have to pay the adequate price for that risk. 513 00:29:44,880 --> 00:29:47,120 Speaker 3: So let's say the risk is fairly high, but your 514 00:29:47,160 --> 00:29:50,680 Speaker 3: premium is not very high, so the decision to stay 515 00:29:50,680 --> 00:29:53,800 Speaker 3: where you are is easy because your premium is not 516 00:29:53,920 --> 00:29:55,680 Speaker 3: high and it doesn't cost you a lot of money. 517 00:29:56,120 --> 00:30:01,240 Speaker 3: So you actually start incentivizing stay in high risk areas 518 00:30:01,280 --> 00:30:04,160 Speaker 3: if you set the premium too low. So back to 519 00:30:04,200 --> 00:30:08,360 Speaker 3: Tracy's point about thinking about migrating, migrating and shouldn't people move. 520 00:30:08,880 --> 00:30:11,800 Speaker 3: So also when you have insurance premium being really high, 521 00:30:12,960 --> 00:30:15,720 Speaker 3: you as a homeowner or as a renter, you can 522 00:30:15,720 --> 00:30:18,960 Speaker 3: make the decision, okay, am I purchase insurance to stay here, 523 00:30:19,360 --> 00:30:21,800 Speaker 3: sort of being able to sleep at night not freaking 524 00:30:21,800 --> 00:30:24,880 Speaker 3: out about the risk I'm facing will possibly also move. 525 00:30:24,960 --> 00:30:27,360 Speaker 3: You know, that's kind of a signal that really the 526 00:30:27,480 --> 00:30:32,080 Speaker 3: risk is really high in this location and it's not 527 00:30:32,160 --> 00:30:32,920 Speaker 3: easy to get. 528 00:30:32,800 --> 00:30:51,520 Speaker 1: Insurance, just in terms of things like governments could do. Again, 529 00:30:51,600 --> 00:30:55,560 Speaker 1: going back to this idea of insurers maybe wanting something 530 00:30:55,800 --> 00:30:58,920 Speaker 1: from either state or federal government, like what would be 531 00:30:59,680 --> 00:31:03,040 Speaker 1: the risk sharing arrangements here? Would it be something on 532 00:31:03,080 --> 00:31:05,560 Speaker 1: the level of the flood insurance that exists now. 533 00:31:06,720 --> 00:31:10,880 Speaker 3: So when you think about managing risk, the question is 534 00:31:11,560 --> 00:31:16,560 Speaker 3: for governments, insurance companies, any private sector company. You as 535 00:31:16,560 --> 00:31:20,200 Speaker 3: an individual, how much are you willing to pay to 536 00:31:20,240 --> 00:31:26,360 Speaker 3: reduce your risk. So it's really a decision about of 537 00:31:26,920 --> 00:31:29,800 Speaker 3: how much or how low you want the risk for 538 00:31:29,880 --> 00:31:33,240 Speaker 3: people to be. And so there's different when you look 539 00:31:33,280 --> 00:31:37,120 Speaker 3: around the globe, there's different approaches. Like in the Netherlands, 540 00:31:37,560 --> 00:31:39,760 Speaker 3: people don't have flood insurance. Why do they not have 541 00:31:39,800 --> 00:31:43,800 Speaker 3: flood insurance because the government is committed to reducing flood 542 00:31:43,880 --> 00:31:47,160 Speaker 3: risks so that people don't have to purchase flood insurance. 543 00:31:47,360 --> 00:31:50,240 Speaker 3: It's not an option for us. And here in the 544 00:31:50,360 --> 00:31:56,120 Speaker 3: US our flood insurance program there is no requirement. Nobody 545 00:31:56,200 --> 00:31:59,880 Speaker 3: is forced to buy flood insurance unless you purchase a 546 00:32:00,120 --> 00:32:05,840 Speaker 3: mortgage from a federally backed mortgage company. So then the 547 00:32:05,880 --> 00:32:08,520 Speaker 3: government says, okay, if you live in a one hundred 548 00:32:08,560 --> 00:32:11,600 Speaker 3: year floodplan, plus you hold a mortgage from US, you 549 00:32:11,920 --> 00:32:14,560 Speaker 3: have to buy flood insurance. But if you live in 550 00:32:14,600 --> 00:32:18,160 Speaker 3: a one hundred year floodplane and you maybe hold your 551 00:32:18,160 --> 00:32:21,240 Speaker 3: house free and clear, nobody is forcing you to purchase 552 00:32:21,560 --> 00:32:26,600 Speaker 3: flood insurance. So it's really still up to people to 553 00:32:26,760 --> 00:32:30,360 Speaker 3: buy insurance. For the vast majority, you know, it's a 554 00:32:30,360 --> 00:32:34,120 Speaker 3: free decision to purchase insurance. And so the question is 555 00:32:35,200 --> 00:32:38,320 Speaker 3: the government could step in. There are always discussions about, 556 00:32:38,360 --> 00:32:42,360 Speaker 3: you know, should we have national disaster insurance? You see 557 00:32:42,360 --> 00:32:48,040 Speaker 3: this sort of the topic rises and falls very much 558 00:32:48,160 --> 00:32:51,520 Speaker 3: depending on, you know, the crises of disasters we face. 559 00:32:51,880 --> 00:32:54,640 Speaker 3: That could be a potential, But think about, you know, 560 00:32:54,680 --> 00:32:56,800 Speaker 3: what kind of risk the government would be taking on 561 00:32:56,880 --> 00:32:59,640 Speaker 3: in terms of financial costs if the government where to 562 00:32:59,680 --> 00:33:02,960 Speaker 3: offer them, And then the government also has to decide, 563 00:33:03,000 --> 00:33:05,560 Speaker 3: you know, then what is the premium for these policies. 564 00:33:06,960 --> 00:33:12,520 Speaker 3: It's really there is no easy answer to this. I mean, 565 00:33:12,600 --> 00:33:15,040 Speaker 3: I would also say, you know, when you think about 566 00:33:15,080 --> 00:33:21,080 Speaker 3: purchasing insurance, what is often forgotten an insurance company or 567 00:33:21,200 --> 00:33:26,120 Speaker 3: insurance is a highly highly highly data driven process and 568 00:33:26,200 --> 00:33:30,320 Speaker 3: product and setting those premiums. Does the government, if let's 569 00:33:30,320 --> 00:33:33,240 Speaker 3: say the federal government, where to offer an insurance product. 570 00:33:33,280 --> 00:33:35,960 Speaker 3: Does the government even have the data and the information 571 00:33:36,520 --> 00:33:39,680 Speaker 3: to really price a product like that adequately. We are 572 00:33:39,720 --> 00:33:42,920 Speaker 3: already struggling, you know, on trying to understand how many 573 00:33:42,960 --> 00:33:46,200 Speaker 3: people should have flood insurance versus how many people actually 574 00:33:46,240 --> 00:33:50,160 Speaker 3: have flood insurance. So I think data would be really 575 00:33:50,240 --> 00:33:53,840 Speaker 3: really important if the government where to get into this business. 576 00:33:53,880 --> 00:33:57,760 Speaker 3: And then also insurance companies, can you know you get 577 00:33:57,800 --> 00:33:59,960 Speaker 3: a letter every year if you want to renew your 578 00:34:00,040 --> 00:34:02,760 Speaker 3: homeowners insurance on that you as a person are not 579 00:34:02,840 --> 00:34:05,959 Speaker 3: deciding every year are you moving or not? So the 580 00:34:06,000 --> 00:34:08,680 Speaker 3: insurance market is so much more volatile in terms of 581 00:34:08,800 --> 00:34:11,719 Speaker 3: being able to offer it or retreat. And you as 582 00:34:11,760 --> 00:34:14,360 Speaker 3: a homeowner, you know, you are in your property, you 583 00:34:14,400 --> 00:34:16,880 Speaker 3: stay in your property. You might be able to switch, 584 00:34:16,960 --> 00:34:19,759 Speaker 3: but you don't have this annual choice off what you 585 00:34:19,800 --> 00:34:20,239 Speaker 3: want to do. 586 00:34:21,320 --> 00:34:22,759 Speaker 2: I was going to save this thought to the end, 587 00:34:22,760 --> 00:34:24,800 Speaker 2: but I just keep getting flashbacks to like it's like 588 00:34:24,840 --> 00:34:26,960 Speaker 2: the bank conversation all over again, because we think of 589 00:34:27,000 --> 00:34:29,960 Speaker 2: this as a private market deposit taking. 590 00:34:30,640 --> 00:34:32,919 Speaker 1: Why don't we all have direct insurance? Right? 591 00:34:33,239 --> 00:34:35,640 Speaker 2: But this is like the degree to which it's really 592 00:34:35,640 --> 00:34:39,040 Speaker 2: a public utility. It's like so many of the same 593 00:34:39,200 --> 00:34:42,799 Speaker 2: like sort of philosophical economic moral questions come up, and 594 00:34:42,880 --> 00:34:46,840 Speaker 2: like deposit insurance and things like that. As an insurance insurance. 595 00:34:47,000 --> 00:34:49,120 Speaker 2: I want to go back to something you mentioned that 596 00:34:49,160 --> 00:34:52,919 Speaker 2: the Louisiana approach in the Florida approach are different. There's 597 00:34:52,960 --> 00:34:56,279 Speaker 2: two sort of like state level public insurance. They both 598 00:34:56,320 --> 00:34:59,960 Speaker 2: happen to be named citizens. Can you compare and control? 599 00:35:00,120 --> 00:35:02,839 Speaker 2: Asked what Florida is doing versus what Louisiana has done 600 00:35:02,840 --> 00:35:03,320 Speaker 2: in the past. 601 00:35:04,800 --> 00:35:10,279 Speaker 3: So in Florida you do not have this requirement that 602 00:35:10,400 --> 00:35:14,640 Speaker 3: citizen has to offer a fairly high premium four product. 603 00:35:15,080 --> 00:35:19,920 Speaker 3: So they're the amount of property properties that are now 604 00:35:19,960 --> 00:35:25,400 Speaker 3: insured by the state. That number has exploded. Plus it 605 00:35:25,520 --> 00:35:30,240 Speaker 3: is truly a state backed insurance program, so the state 606 00:35:30,440 --> 00:35:36,120 Speaker 3: holds the risk. Plus Florida's also apparently a highly litigious state, 607 00:35:36,280 --> 00:35:38,480 Speaker 3: so a lot of the insurance companies have to deal 608 00:35:39,120 --> 00:35:45,520 Speaker 3: with homeowners filing lawsuits, which is completely different from any 609 00:35:45,520 --> 00:35:47,319 Speaker 3: other state here in the US. And this is for 610 00:35:47,440 --> 00:35:50,719 Speaker 3: Florida that's really the big issue, the sort of litigation 611 00:35:51,000 --> 00:35:54,360 Speaker 3: against insurance companies and for how long you can file 612 00:35:54,560 --> 00:35:57,840 Speaker 3: a lawsuit in Florida. So that's what makes Florida very different. 613 00:35:57,840 --> 00:36:01,839 Speaker 3: But the fact that you truly have insurance program that's 614 00:36:01,880 --> 00:36:04,080 Speaker 3: backed by the state and you hold that much risk 615 00:36:05,200 --> 00:36:08,680 Speaker 3: I find very concerning in terms of, you know, financial 616 00:36:09,000 --> 00:36:12,200 Speaker 3: soundness of a state budget. So that's very very different. 617 00:36:12,280 --> 00:36:15,759 Speaker 3: It's very unique in terms of insurance solution. So one 618 00:36:15,800 --> 00:36:19,040 Speaker 3: thing I wanted to mention. So there's a researcher, Howard 619 00:36:19,040 --> 00:36:22,560 Speaker 3: come Ruther, and he unfortunately just recently passed away. He 620 00:36:22,680 --> 00:36:27,520 Speaker 3: has long proposed this idea of maybe having the policy 621 00:36:27,760 --> 00:36:31,000 Speaker 3: not with you as a person, but with the home, 622 00:36:31,920 --> 00:36:36,520 Speaker 3: because that would incentivize that maybe people invest more in 623 00:36:36,600 --> 00:36:43,359 Speaker 3: building or reconstructing disaster resistant homes because what happens right 624 00:36:43,400 --> 00:36:46,839 Speaker 3: now and maybe this is going to change cricket. Then 625 00:36:46,920 --> 00:36:49,640 Speaker 3: we think about right now, the risk is not priced 626 00:36:49,680 --> 00:36:51,360 Speaker 3: into a home like you know, you go on a 627 00:36:51,400 --> 00:36:54,799 Speaker 3: website like Zillow or redfin you see, okay, what's your 628 00:36:54,800 --> 00:36:57,440 Speaker 3: square footage and how many bedrooms and do you have 629 00:36:57,480 --> 00:37:01,920 Speaker 3: granted in the kitchen. Now, when you look at those websites. 630 00:37:02,000 --> 00:37:04,239 Speaker 3: It just happened over the recent years. You get a 631 00:37:04,239 --> 00:37:07,960 Speaker 3: little bit of information on what they know slabeled climate 632 00:37:08,040 --> 00:37:10,600 Speaker 3: risks are, and then it will say, oh, your risk 633 00:37:10,680 --> 00:37:12,880 Speaker 3: for heat is going up, and maybe you have limited 634 00:37:12,880 --> 00:37:17,160 Speaker 3: flood risk. But the information I personally think is not 635 00:37:17,239 --> 00:37:20,200 Speaker 3: really translated in actionable information. You know, what are you 636 00:37:20,200 --> 00:37:23,040 Speaker 3: going to do as a potential home buyer with fifteen 637 00:37:23,040 --> 00:37:25,800 Speaker 3: different hazard types? How does that factor into your decision making? 638 00:37:26,640 --> 00:37:29,799 Speaker 3: If the risk goes up or not? Factors into your 639 00:37:29,800 --> 00:37:32,600 Speaker 3: decision making when it affects the home price. And for 640 00:37:32,719 --> 00:37:36,680 Speaker 3: a lot of people, there is now something starting where 641 00:37:36,719 --> 00:37:41,160 Speaker 3: people decide or potential buyers decide they have there's a 642 00:37:41,200 --> 00:37:44,399 Speaker 3: contingency to buy the home or not if they are 643 00:37:44,440 --> 00:37:48,160 Speaker 3: able to buy insurance, purchase insurance for that home. And 644 00:37:48,239 --> 00:37:50,360 Speaker 3: I feel like, you know, these struggles that we're seeing 645 00:37:50,360 --> 00:37:54,200 Speaker 3: in the insurance market, the ability to buy insurance might 646 00:37:54,320 --> 00:37:59,839 Speaker 3: be really the starting point the impetus for possibly risk 647 00:38:00,080 --> 00:38:04,759 Speaker 3: being priced into home values, and that hasn't happened yet, 648 00:38:05,160 --> 00:38:07,640 Speaker 3: so it's not very common right now that people are 649 00:38:07,640 --> 00:38:10,520 Speaker 3: aware of the risk. There's also no disclosure of risks, 650 00:38:10,560 --> 00:38:14,600 Speaker 3: so there's also different policies across the country, for instance, 651 00:38:14,600 --> 00:38:17,920 Speaker 3: in Louisiana. Now there are some risks that have to 652 00:38:17,960 --> 00:38:21,240 Speaker 3: be disclosed to you as a home buyer, but very often, 653 00:38:21,640 --> 00:38:24,480 Speaker 3: you know, you buy a home, do you get a 654 00:38:24,520 --> 00:38:27,439 Speaker 3: car fax on your home? Do you know how many 655 00:38:27,440 --> 00:38:30,840 Speaker 3: times this property has been flooded before or damaged, you know, 656 00:38:30,880 --> 00:38:33,799 Speaker 3: by a windstorm. We don't have that information. It's if 657 00:38:33,800 --> 00:38:35,520 Speaker 3: you're thinking of it's kind of crazy, you know, because 658 00:38:35,560 --> 00:38:38,439 Speaker 3: it's a pretty substantial investment when you buy a home 659 00:38:38,719 --> 00:38:42,120 Speaker 3: and you don't have that history of a property because 660 00:38:42,160 --> 00:38:46,000 Speaker 3: there's no requirement in many states that that gets disclosed, 661 00:38:46,520 --> 00:38:50,640 Speaker 3: and we only look at sort of the superficial things 662 00:38:50,680 --> 00:38:55,080 Speaker 3: in a home square footage, number of bedrooms. But do 663 00:38:55,200 --> 00:38:58,600 Speaker 3: people know, you know, if they actually have the appropriately 664 00:38:58,680 --> 00:39:01,960 Speaker 3: rated shingles on top of their roof, or if their 665 00:39:02,080 --> 00:39:06,280 Speaker 3: roof is connected adequately to the rest or the structure 666 00:39:06,280 --> 00:39:09,240 Speaker 3: in the house to you know, withstand hurricane forced winds. 667 00:39:09,920 --> 00:39:14,040 Speaker 3: We just somehow assume, because we got a building permit 668 00:39:14,719 --> 00:39:17,840 Speaker 3: from our local community, that this is a safe place. 669 00:39:18,000 --> 00:39:19,960 Speaker 3: And then when a home inspector comes, you know, for 670 00:39:20,000 --> 00:39:21,880 Speaker 3: you to decide if you want to buy this house. 671 00:39:22,800 --> 00:39:27,320 Speaker 3: You also don't get much information all that. So we really, 672 00:39:27,400 --> 00:39:29,279 Speaker 3: I think at a point right now where there is 673 00:39:29,360 --> 00:39:36,960 Speaker 3: maybe also more demand from potential home buyers to want 674 00:39:36,960 --> 00:39:39,920 Speaker 3: to have information about the risks that they are taking 675 00:39:39,920 --> 00:39:42,919 Speaker 3: on when you are purchasing a property, because you're also 676 00:39:42,960 --> 00:39:45,080 Speaker 3: purchasing the risk that comes with that property. 677 00:39:45,760 --> 00:39:52,000 Speaker 1: Melanie, that was a fantastic overview of this very complicated issue. 678 00:39:52,080 --> 00:39:53,600 Speaker 1: We're going to leave it there, but thank you so 679 00:39:53,680 --> 00:39:55,400 Speaker 1: much for coming on all thoughts. That was great. 680 00:39:55,640 --> 00:39:57,640 Speaker 3: Thank you so much for having me. I know it's 681 00:39:57,640 --> 00:39:58,920 Speaker 3: a slightly depressing topic. 682 00:40:13,560 --> 00:40:13,840 Speaker 2: Joe. 683 00:40:13,880 --> 00:40:16,239 Speaker 1: That was a great overview of that topic. I feel 684 00:40:16,239 --> 00:40:19,160 Speaker 1: like we hit a lot of the major points. The 685 00:40:19,560 --> 00:40:22,080 Speaker 1: one thing that Melanie brought up that was really interesting 686 00:40:22,120 --> 00:40:25,520 Speaker 1: to me was that idea of tying the insurance policy 687 00:40:25,560 --> 00:40:29,040 Speaker 1: to the house itself as a way of incentivizing, you know, 688 00:40:29,120 --> 00:40:34,800 Speaker 1: better construction methods or more resiliency to disaster risk. 689 00:40:35,440 --> 00:40:37,640 Speaker 2: There were so many things that were interesting. So the 690 00:40:37,640 --> 00:40:40,440 Speaker 2: one thing I knew is that a typical homeowners insurance 691 00:40:40,440 --> 00:40:43,080 Speaker 2: policy doesn't have floods, right you like sure, So I 692 00:40:43,120 --> 00:40:45,560 Speaker 2: was aware that I didn't realize that wind insurance was 693 00:40:45,600 --> 00:40:48,080 Speaker 2: often in many cases a separate thing. I didn't realize 694 00:40:48,080 --> 00:40:51,520 Speaker 2: that there is no insurance policy whatsoever they can protect 695 00:40:51,560 --> 00:40:55,480 Speaker 2: against landslides, which I have to imagine in places like California. Yeah, 696 00:40:55,520 --> 00:40:57,759 Speaker 2: and then the big thing that really drove me home 697 00:40:57,920 --> 00:41:00,839 Speaker 2: is just like the sheer complexity, right, if you can't 698 00:41:00,920 --> 00:41:03,239 Speaker 2: really calculate it, well, like you're not going to get 699 00:41:03,239 --> 00:41:05,080 Speaker 2: any price, And so it sort of makes sense to 700 00:41:05,080 --> 00:41:07,320 Speaker 2: see like, Okay, we're gonna companies is gonna leave for 701 00:41:07,360 --> 00:41:10,319 Speaker 2: a while, Like if there's just so much like complexity 702 00:41:10,360 --> 00:41:13,040 Speaker 2: with the rising number of natural disasters or the rising costs, 703 00:41:13,040 --> 00:41:15,280 Speaker 2: like maybe the market just doesn't work. Well. 704 00:41:15,320 --> 00:41:17,520 Speaker 1: Also the point about well why don't we all just 705 00:41:17,560 --> 00:41:21,880 Speaker 1: have federal insurance? You know, to some extent, maybe that 706 00:41:21,960 --> 00:41:24,920 Speaker 1: makes sense, But then how does the federal government with 707 00:41:25,280 --> 00:41:28,960 Speaker 1: no expertise in this or very little expertise, very little data, 708 00:41:29,440 --> 00:41:32,480 Speaker 1: actually start to price those products and that risk that 709 00:41:32,520 --> 00:41:33,480 Speaker 1: seems really interesting. 710 00:41:33,560 --> 00:41:36,319 Speaker 2: Well, and furthermore, even if you did have like say 711 00:41:36,440 --> 00:41:40,520 Speaker 2: like a public option for national homeowners insurance, it would 712 00:41:40,520 --> 00:41:43,400 Speaker 2: inevitably be subject also to political fights like should the 713 00:41:43,400 --> 00:41:45,400 Speaker 2: government you know, It's like you'd have some people in 714 00:41:45,440 --> 00:41:47,960 Speaker 2: some places like no, why are you like not, why 715 00:41:47,960 --> 00:41:50,360 Speaker 2: are you pricing it? In Texas and Florida and California 716 00:41:50,440 --> 00:41:52,279 Speaker 2: this way is this because it's a red state or 717 00:41:52,600 --> 00:41:54,600 Speaker 2: like they're just it would you could do it, and 718 00:41:54,600 --> 00:41:57,280 Speaker 2: then it would introduce a whole new set of complications 719 00:41:57,320 --> 00:41:58,840 Speaker 2: that wouldn't exist in a private market. 720 00:41:58,920 --> 00:42:02,759 Speaker 1: Absolutely. I just say I live in fear of bureaucratic 721 00:42:02,800 --> 00:42:06,160 Speaker 1: paperwork and the idea of having to like talk to 722 00:42:06,160 --> 00:42:08,719 Speaker 1: you if your house is destroyed by a hurricane and 723 00:42:08,719 --> 00:42:11,239 Speaker 1: then having to file paperwork about whether or not the 724 00:42:11,320 --> 00:42:14,800 Speaker 1: damage was caused by wind or flooding. That's just my nightmare. 725 00:42:14,840 --> 00:42:15,359 Speaker 1: On many leave. 726 00:42:15,440 --> 00:42:19,120 Speaker 2: Well, I was gonna say this, but like you, I'm 727 00:42:19,160 --> 00:42:21,799 Speaker 2: completely agree. So it's like your house is damaged and 728 00:42:21,840 --> 00:42:24,319 Speaker 2: you're trying to get through to an insurance agent and 729 00:42:24,400 --> 00:42:26,840 Speaker 2: talk to them and prove and have the paperwork, and 730 00:42:26,880 --> 00:42:28,520 Speaker 2: then it's like, yeah, I kind of want maybe the 731 00:42:28,560 --> 00:42:31,080 Speaker 2: Florida system where you could just sue your insurer and 732 00:42:31,120 --> 00:42:33,319 Speaker 2: then it's right, and then it's like it have put 733 00:42:33,360 --> 00:42:35,719 Speaker 2: some fear of God in them because well, and then 734 00:42:35,760 --> 00:42:37,960 Speaker 2: the insurance company leaves the state because you have this 735 00:42:38,040 --> 00:42:39,719 Speaker 2: highly litigious state like well. 736 00:42:39,760 --> 00:42:41,640 Speaker 1: I think also one of the issues in Florida is 737 00:42:41,640 --> 00:42:43,799 Speaker 1: that a lot of those lawsuits are fraudulent in one 738 00:42:43,800 --> 00:42:46,319 Speaker 1: way or another. Sure, there's all these roofing scams that 739 00:42:46,400 --> 00:42:48,799 Speaker 1: are in and of themselves quite interesting and would make 740 00:42:48,800 --> 00:42:50,200 Speaker 1: an interesting episode. 741 00:42:50,480 --> 00:42:53,239 Speaker 2: Uh No, there's just there's a lot there and no 742 00:42:53,480 --> 00:42:56,320 Speaker 2: easy answers. But I feel like that helped me understand, 743 00:42:56,360 --> 00:42:58,680 Speaker 2: like why this space is such a mess right now. 744 00:42:58,760 --> 00:43:01,200 Speaker 1: Yeah. Well, we're definitely to be doing some more insurance 745 00:43:01,239 --> 00:43:03,640 Speaker 1: episodes in the future, I feel but for now, shall 746 00:43:03,640 --> 00:43:04,160 Speaker 1: we leave it there? 747 00:43:04,239 --> 00:43:04,960 Speaker 2: Let's leave it there? 748 00:43:05,000 --> 00:43:05,439 Speaker 3: All right? 749 00:43:05,480 --> 00:43:08,240 Speaker 1: This has been another episode of the oud Loots podcast. 750 00:43:08,320 --> 00:43:11,799 Speaker 1: I'm Tracy Alloway. You can follow me at Tracy Alloway and. 751 00:43:11,719 --> 00:43:14,240 Speaker 2: I'm Joe Wisenthal. You can follow me at the Stalwart. 752 00:43:14,600 --> 00:43:18,520 Speaker 2: Follow our producers Carmen Rodriguez at Carmen Arman and Dashel 753 00:43:18,520 --> 00:43:21,560 Speaker 2: Bennett at dashbot, and check out all of our podcasts 754 00:43:21,680 --> 00:43:25,280 Speaker 2: under the handle at podcasts and for more odd Lots content, 755 00:43:25,320 --> 00:43:27,880 Speaker 2: go to bloomberg dot com slash odd Lots, where we 756 00:43:27,920 --> 00:43:31,120 Speaker 2: have a blog, we post transcripts, we have a weekly newsletter, 757 00:43:31,600 --> 00:43:33,759 Speaker 2: and I'm sure there's gonna be a lot to talk 758 00:43:33,760 --> 00:43:37,600 Speaker 2: about this one discord dot gg. Slash odd Lots is 759 00:43:37,640 --> 00:43:40,200 Speaker 2: where listeners hang out and chat twenty four to seven 760 00:43:40,280 --> 00:43:43,000 Speaker 2: about all of these topics. Go there and check it out. 761 00:43:43,080 --> 00:43:45,440 Speaker 1: And if you enjoy Odd Lots, if you would like 762 00:43:45,520 --> 00:43:49,440 Speaker 1: us to do an episode on Florida roofing, insurance scandals 763 00:43:49,520 --> 00:43:52,759 Speaker 1: and frauds, then please leave us a positive review on 764 00:43:52,800 --> 00:44:04,840 Speaker 1: your favorite podcast platform. Thanks for listening in