this post was submitted on 06 Oct 2024
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If an event chance is too high the cost of insurance increase to a point where it stops making sense.
If every house in an area is 100% guaranteed to get at least one flood event over a 5 years period, that means that every 5 years the insurer need to get in enough money to rebuild all houses, so the cost of insurance will be more than 1/5th of value of a house per year (plus operating cost, profit, and so on). There's no other way, it's just maths.
Ok, the actuarial math is more complex but it boils down to getting enough cash in to pay for claims and pay the operating cost.
At a that point people need to realize that if the risk is too high they need to accept it, plan to rebuild every 5 years on their dime, or move.
Unfortunately people suck at understanding risk.