Why Home Insurance in Florida Is a Mess
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Hello, and welcome to another episode of the all bots podcast. I'm Tracy all .

away and I just wasn't joe.

We need to do more on insurance.

Yeah, absolutely. So we are recording this october eighteen th. In the last several weeks, we've had two extraordinary storms.

The second one, milton, that aimed directly in florida, new tab abate was not as bad as people thought even a few hours before land fall with people. I was just going to be tremendously catastrophe potentially. However, IT was obviously still quite damaging. And once again, the question of hurray risk, storm risk, the certain lood prone markets who's going to pay for them, all of these things continues to be a source of, I would say, rising anxiety regardless of what just happened with these storms.

Yeah absolutely. And you've seen estimates flying around for how much is this onna cost the insurer. But I think there was one that said as much as five billion from those two storms. So big numbers here.

And obviously, people who live in those areas have been talking for a long time about how their insurance premiums are already going up a lot and certain areas of the country are perhaps becoming unaffordable. Or maybe you can't find insurance for a property on the coast of florida anymore. Or if you do, you have to go to the state insurance body rather than a private entity.

And I think just getting really big picture, sure. I found insurance fascinating because it's basically the original finance. Yes, it's like the pricing of risk is essentially the very essence of finance. So I find the idea of how we're going to be pricing the risk of more and more storms, who's going to bear those cost, absolutely fascinating totally.

And we know there are structural issues going on in the market and their marriage and we will get into all them. But yes, there is much to discuss on this topic, on this episode employment I episodes to come. okay.

So in this particular discussion, we're going to be coming at IT from a slightly different angle. We're going to focus on florida, what's been happening in the structure of that market and what else could be done. And yes, I promise listeners, there will be discussion about florida proof insurance for odds and all of that because there are some interesting things happening there as well.

So I am very happy to say we do, in fact, have the perfect guest. We're going to be speaking with Jerry, the azora a. He is the policy director of finance, insurance and trade over at our street institute, which describes itself as a free market think tank. He has written a lot about the florida insurance market. So Jerry, thank you so much for coming on.

All lots, thanks.

So maybe give us your background just to start because you've been in the insurance world for a while.

Yeah, thanks. I began my career as a commercial underwriter at kubin son, and after a couple of years moved over to a ig. A, I, J.

Shift me over to europe when I worked in paris and Frankfurt in the middle ast for about ten years as an expectant, and after coming back to the united states, I joined a company called cunning, worked at conning for about a dozen years. Conning is an insurance as that manager that has an insurance research ARM. I was one of the researchers there.

One of the analysts wrote a lot of books, did a lot of presentations on the insurance industry. And about three and half years ago, I joined our street and using my knowledge of the market and economics and products, connections in the industry for public policy purposes, to explain to folks in washington, in the state capitals how insurance works and recommended policy solutions for areas that are troubling. Like the one we're .

discussing today, you do sound indeed like the private guest. You know, let's say fifteen years from now or let's say not fifteen years from now, let's say today, our sixteen look, I am ready to retire. I don't want to live in the cold weather anymore.

I just wanted a nice little house and four mires florida. But I kind of want to get a shirt because it's a big part of my retirement. This asset, what are my options? What am I going to do?

But first of all, agrees. Lovely prospect to have a place in front mires where you can see the ocean front from the window. But when the ocean IT comes into your bedroom, that's another story. And that's when you should reconsider if you made the right decision.

But I made that decision, right? So now i'm making the insurance decision.

Now he has to get insurance for his retirement property. What does he do? What are these options?

Well, first, while having home on the insurance is not only important, but it's required if you ever o alone in the mortgage loan that's back by the federal government. One of the gc is funny, made pretty mac. So it's required some people go bear, they don't Carry insurance.

And there are three major sources of insurance for future real research is yourself, joe. One is the national insurance markets are your jumble insures and Operate nationally, all state state farm travellers, heartburn and the lake. And there's also some companies that are the so called florida domestics.

These are companies that were set up following catastrophes about fifteen years ago that are focused on floria, and four of them were publicly traded. And there's also citizens property insurance. Citizens property is a state run ensure in floria. So those are the three options, and agents are the ones that are responsible for guiding you to get the best policy for the best Price. So that's the market that you will confront you when you get.

So insurer of last resort in florida, like citizens, at what point do you get access to those like i've never really understood? Is that, that no one else will give you insurance? Or is IT that no one else will give you insurance at a Price that you like?

It's at a Price that that you like. So is, as you say, Tracy, the insure of last resort. So if you agent can't place IT with any of the national or the flood only domestics, then citizens is required to take that policy. However, if the citizens policy to be more expensive than one on the market, then you're obligated to take one that's in the private market.

Is so people say there is an uninsurable crisis in florida for reduce to the storms and do to other structural things. I guess I have a two part question. A do accepted premise that there is something broken about the for the insurance market as IT stands right now. And be how would you describe IT? I wouldn't say .

that it's broken, but I would say like a piece of ports l and that's crack. It's got a bit of it's got cracked to IT. And it's more than just the risk of hurricanes and floods because flood is, after all, mainly a peninsula adjudged into warm waters of the gulf, mexico and the atlantic ocean.

So it's prone to catastrophic. There been storms in florida for as long as we've got data on that. Yeah, let's go back to two thousand and four and two thousand.

And there were four land falling storms that had florida. Those were Charles, Francis, ivan and gene. And in two thousand and five there was, we called the K.

R. W. Could train to read a wilma. Now reda did the most damage to florida. So there were two back to back years of really strong hurricanes. And the market took a lickin.

And as they used to say, with time x watch advertisements, but IT kept on ticking. So the market continued. And what is more? Fresh capital came in after two thousand, five, because banking on the theory that the paraphrase, that lightning doesn't strike the same place twice.

Indeed, the bet was a good one in two thousand and six and two thousand and seven, there were no harricane in made landforms Flora. The insurance company recouped the about that had lost. So the market was functioning.

And now we're in the wake of haleine and milton on these questions are being asked, but for a variety reasons, which i'd i'd like to get into. Yeah, the market is resilient. IT has these walls that protect the baLance sheet of these companies because the risk is recognize. So why is i'd crack to the reason creates conventional insurance.

Insurance companies are in the business. I just years ago, Tracy, we did an episode. I went the rate of session fda history like days like twenty fifteen. And we've did episode about the one hundred and twenty six hurray e in the one thousand nine hundred and twenty eight OK tobi hurricane caused the floor of land that bubble you know, florida is history is not just hurry and history of bubbles.

And sometimes I feel we've been doing the show too long when it's like, oh yeah, go to our back for the episode on the one thousand nine hundred and twenty is florida property bubble .

but just fish bubble? But I only say this to appreciate your point. And storms and floor da are certainly nothing new, and nothing that catches people really by surprise at this point. So anyway, keep going on with what you are saying about why ther's cracks, even if the storm story is nothing now.

right? Other other states also have catastrophes power, texas, california. But flat was special in a way that's unrelated to the risks and the premium of insurance.

And that is because of the activity of the trial bar in fda. You have billboards on every highway advertising. If you have a check accident, call us.

We had a two million dollar judgment. So the a lot of legal advertising and people are responding to that. So insurance companies are getting sued in floria more than anywhere else in the country. Let me give you a statistics here.

Floria has got about eight percent of the country's population, so it's about eight percent of homes and the home owner insurance policies in the country, but IT has seventy eight percent of the home owners litigation, so the state of flat alone has got four fifths of the entire country's litigation. And what are the lawsuits? A lot of them are related to what's called A O B.

Assignment of benefits. So if you have a house that sustains some damage, uh, someone will come to your house in a juster and ask you to sign forms saying, we'll take care of the insurance for you. We will put in a claim.

So they put in a claim and the damage was not something that was caused by the storm. It's discovered, for example. And the insurance company denies the claim. And then the attorneys will sue the insurance company for high five figure amount, and rather than fight IT and spend a lot of money more than the cases worth, they settle. So this is as attracted a cottage industry and in filing frivolous suits and giving flat the reputation of being owned and driven by a the trial bar.

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How did florida become an environment for this type of litigation to begin with? Like why is the trial bar so big in that particular state?

Yeah, I don't want to get into politics.

but not have politics. But but .

politics does play a hand. A lot of the donations, the contributions that are made to local politicians campaigns comes from the trial bar. This is an a national basis in that just florida.

But in florida, it's especially the case. And also there is some bad legislation that was passed in florida, which permits these things. So the statutes are unfavorable compare to others, where a case that doesn't meet the leading standard is is just not advanced. So you have this situation. The good news is, though, but about a year and a half ago, the governor flower to sign tort reform into law that would stop the process of assignment of benefits, and also, one way a tourney fees, where the insurance company pays the legal fees of the plaintiff.

A couple of other measures as well were struck down by the structure form that was signed into law, but that was sort of a rare event because in order to get that done, IT require the president of the follow senate and the leader of the house and the governor pushing in the same direction, and with someone in the flatter legislature taking this on to drive IT through. So this is a situation that you don't get. I mean, imagine what happened on a national level with house and the same, and the White house in the same, pushing in the same direction, not likely.

But in florida, IT happened. Something similar happened in texas about fifteen years ago. And the results of the reform are already being seen where the number of suits have mentioned the no seventy eight percent of the national total of homework ders insurance litigations father that's coming down and also is a formal document that announced the intention to sue.

Those numbers are coming down as well. So floria seems to have turned to corner in terms of the you know whether the sky is following and the places uninsurable. What does wall street say? What is four of those flare to? Only the insurance .

company give a ticker .

that her publicly traded. And when the news was coming out of noa about the approaching hurricane, people started selling the stock of those companies, about twenty five percent reduction in the stock Price. But one, as you say, joe IT IT was a disaster averted.

I didn't go to tempo another HEllen, nor milton on its sewed north, rescued itself. Stocks rebound didn't went up by about fifteen percent. So this was really just another manifestation of what people in the industry used to say about florida insurance stocks selling may and go away.

What can you tell some of these names? Do you have any thing I actually want to them up?

So all state .

would be onder. No, no. The data.

C da H H C I.

hera insurance holding.

someone needs to make a florida insurance etf.

So we can just see, you can just directly get exposure to, oh yeah, there you go. OK still down.

down. But IT recovered. They didn't continue to go down. yeah. So the rebound when I was a bull of that was dodged because hulin went north of tampa, had landed a pilatka. And then when milton was coming and headed toward to the tamp, a ae IT turned south at the last minute, and the day is a sarod, but he spared.

In H, C, I group and h, that's all time right now is so that's actually really interesting to if you .

zoom out on a lot of these, they are up .

quite a bit over the past year. Oh, not only, by the way, H I S I K, higher OK. I like looking at charts. Me, joe.

stop looking at charts. Let me ask a tort reform question. OK.

Tort law to, by the way, for those who don't know, is like a legal framework for addressing for wrongdoing. It's not criminal stuff. It's the civil stuff. And the only reason I know that is because I read a book about the station house fire in road island. And that was I don't recommend IT, it's a good book, but don't read IT because it's one of the most disturbing cases of all time. But anyway, I guess my question is, so tour reform happened in florida a couple of years ago, as you point out, Jerry, but what was the turning point at which the state decided actually, this is a really big deal and we need to do something about IT?

Yeah, a great question. IT was I think when IT became evident that the number of lawsuits ts and the volume of the lawsuit its was getting so strategy spheric c that IT was really impacting the baLance sheet of the companies that were there and driving some to leave florida to exit the state because they couldn't make a book there.

Why stay and throw a good money after bad? So a couple years ago was at a conference of the flight of chAmber of commerce, and the mood was all gloom and doom. And you know, the market is broken. There were strains on the reinsure that is a obligatory in a gator insure these companies that joe, you looked up in seconds and very impressed .

that we have the bloomberg terminal, oh, lug for a court product.

but very easy. So those companies had the universe and the other, they're aware of the risk in order to protect their capital. They buy a lot of reinsurance, which means that if you hear that our heritage had six hundred million dollars in losses or something, well, most of that, a lot of that, about eighty may be ninety percent of that is reinsured.

So the risk is passed onto these reinsurance companies. But the first one that involved is the florida hurricane atap rohe fund, F H C F farder hurray e catastrophes und and one of the reasons why people were in gloom and doom mood a couple years ago, private reform, is because there appeared to be strains on that fund that IT was. How is IT funded? IT gets the premiums from the seats the company primary ensure, like heritage or any other company will will seed reinsurance and they pay premium for that and that's the revenue of the fund.

But because it's a public entity, IT was surprising. The reinsurance reinsurance is provided mainly by these mammoth giant insurance companies in europe like and over we swiss y munich's ore and there's also the capital market instruments, catastrophe funds, insurance linked securities. So a third party capital coming in, you've got reinsurance available in bermuda, big source of fla insurance capacity and also loads of london and less so in the united states.

So these companies are really protected because they're aware of the risk that is there. So the reinsurance picture is one that's very important because when you see that the company had x amount of loss, well, what's the loss after reinsurance? It'll be a fraction of the growth loss because of the impact of reinsurance. These like the .

but the of the gross losses for like the domestic ensure the first layer of insurance keep going up, then the reinsurance premiums go up as well eventually, right?

That's right. And here's some other news, which is good news. Prior to Helen and milton, insurance rates started to come down, insurance rates started to come down.

The june renewal, the media renewal, showed some decreases in the cost of insurance. So whether there some hey, penny, the sky is falling chicken little folks out there saying, oh, church is going to just get more and more expensive. It's got nowhere to go but up and we can buy insurance.

Not necessarily that not true because the rate or the premium follows the risk that stairs, the risk goes down, then the rates go down. If you look at workers compensation, a different line of insurance for the last twelve years, the rates for workers compensation have been coming down because of improvements and safety at manufacturer plants. Other replaces automation. So there are we have a good example of rates coming down because the risk is come down. People like to ignore that because it's more fun to talk about bad things happening.

And that's true true if everything. So fundamentally, I guess, structurally sound, you know, all street does its thing that says is the risk of a hurricane at of the risks of catawba fees to the catastrophe. Ds, is that why does the citizens even need to exist? And why do so many florida homeowners either end up with citizens or end up is going there not having .

insurance in finder the impact of the out of control lawsuit abuse? yeah. Is that driving a premium? So that was a part from the risk, and this happens in other states as well where you have some of damage to the private market when the free market is having trouble making a decent return.

And the insurance industry is not is not a rich industry, it's other industries. S N P, I think the average margin is fourteen percent, and the insurance industries, about six percent. So as as if these are, these are fat, rich companies.

They Operated relatively slim margins. So when there is an exodus of insurance companies from particularly state, then the state will often establish its fund, which is supposed to be a temporary stop gap, until the market, the private market, reitan stability. This happened in california with schiff, the state run workers compensation entity, and other places as well have had this for accordion type results, where business expands, like citizens expanded a lot. And then you have d population, which is the effort to take policies out of citizens. So depopulation was happen and still is still happening.

Wait, depopulation efforts to take policies out of citizens.

That's right to put him back into the private market because the private market now is out of the intensive care unit. It's just in a recovery room in the .

success rate on that.

I don't have the numbers, but I started with a trickle and it's continuing. We'll see what what happens now in in the wake of mild, see the population there will be.

So one thing I wanted to ask just going back to tort reform is I take the point that making IT more difficult to file ridiculous lawsuits has made the ease of business for insurer in the state a little bit Better. But I guess the downside is if you're a consumer who experiences some sort of damage to your house, maybe IT makes you know having actual conversations, much less litigation with your insurance company a lot more difficult. How do you baLance, I guess, the baLance of power between the consumer and the insurance company? Here the .

upper hand was was held by the trial bar, where the concept of civil litigation, and again, this is civil litigation, that criminal litigation, these are torts, civil wrongs, the emphasis in tort law, or the purpose tort law is is not to punish, but the compensate.

So many of the large vertical settlements that have made IT difficult on the commercial side for people to create products from macuto als, the research of are being hit by these very large outside judgments that have no real place in the law. So you have the. Expansion of juries vertical and settlements that they are exacerbated by misbehavior in the part of the plenty of bar, new legal theories and aggressive attempts to extract those large amounts, pune tive damages that are multiples of actual damages sustained.

So this is entering the topic of social inflation, the expansion of the the concept of tard. And a lot of states have tried to put in into that with the legislation like florida did in order to keep services and businesses at Prices that are not unaffordable because this ends up driving up the cost of things. When you have companies that are paying hundreds of millions of dollars or tens of millions for actions that are necessarily caused by their activity is a distortion of the legal system.

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Come back to insurance for a second. And I take all this point about tart insurance is a key part of what makes for the a habitable a place where people are going to invest assets to build one aspect of insurance or one aspect of risk is flood insurance. And my understanding is that a big part of flood insurance is national and federal funded. What is the role of flood insurance in making parts of florida safe to build in? And who pays for that flood insurance?

right? You are to flood insurance is provided mainly through a government program called the national flood insurance program, and the program has been around for several decades, and IT covers flood insurance because flood damage is not covered in the conventional homeowners policy, say the h 3 home others insurance policy。

So people buy flood insurance policies separately from the national program, fla, which is aware of the risk, that is there eighteen percent of homeowners by flood insurance. Where's the north CarOlina, which got hit? Really bad, tragically bad, a lot of loss of life as well.

In western north CarOlina, only one percent of the tar heel state homeowners board flood insurance from the N. F, I. P.

Now there's been pressure because it's a government program. A lot of IT is underPriced. It's subsidized.

Really IT runs at a deficit. There's been pressured to have the private market come in and provide flood insurance. And here the good news is that the private market is finally starting to grow. And if I P is got about three point one billion dollars in premiums, where the private market is estimated to have about one point four.

So almost half of the federal flood is now provided by the private market, where is a couple years ago, the private market was virtually non existent because nobody would buy IT at the risk adjusted rates. So now you have a healthier situation. Problem is though that the N, F, I P is going to bear a lot of the losses from Helen and and millton, because we know, we know about the storm surge, one, two feet of water, and these torrential, violent rains that brought down mud and flooded homes, really destroying lots of properties over the flood.

And the storm surge were not covered by the age of three policies, but are covered by the N F, Y, P. And the gap there. We with only eighteen percent of 4 having the insurance， I think, going a message because the message that we've been trying to send as we educate folks about insurance and how that works, is that you need to spread the risk. You need to have a pool of risk in order to absorb the losses when they happen .

to put b luntz, our taxpayers, in less flood prone areas, currently subsidizing the construction of homes and more flood pro n areas.

Yes, they are. And that's the problem when the fact that do you have construction in areas that are in harms way, and when you have a development that by the coast, you're going to have internal surfaces, when you have as fault, there's nowhere for the water to go. So IT stays inside homes or IT backs up.

So there's one word which I focused on when I think about catastrophe and in florida, and that is resilience. Resilience, strengthened homes, capacity to withstand these kinds of storms. Florida has recognized the issue. So if we look at the track of halen a few weeks ago, because Michael hit florida in the gulf area, in the big band area, the pan handle side building codes were strengthen, houses were built to code.

But when alan cross the border from florida into George, there was much more destructed in ora because George does not have those building codes that you need to have to, uh, really make your house more resilient. So resilience is key. International basis, I turned back to one thousand nine hundred and fifty three when the dutch, the dutch low country below sea water flooded lots and lots of times for centuries. One thousand nine and fifty three, they had a horrible storm there. And they said, basta was not that, but.

Yeah, enough.

I guess you. And they had big project to build levies and other sort of defense systems, and they haven't had A A massive flood loss since. And also we compare ha ane 2 of two thousand five to ida exactly sixteen years later， we will remember two thousand and five when the levees burst in newer leans. And after that the levees were strengthened and the city survived idea, which was a as powerful the storm for for lousianner. So that demonstrates that resilience works as a ratio that's typically used in the industry, that one dollar of resilience results in six dollars of disaster relief averted.

By the way, Tracy, I just say if there any academic economists listening to this episode, do a paper on the floor of virgo, georgia damage. In the natural experiment, we saw an updated building code IT sounds like it's there for the taking, for someone looking for .

their masters theses. And a good idea. I had a question. So we talked about reinsurance.

But the funny thing about insurance is that there's always another layer IT feels like. So there is reinsurance for reinsurance as well. What's been going on with rates there?

That's right. There's reinsurance for reinsurance as well as the the retro the retro market. And the rates and the retro market typically are similar to what you have in the primary market.

So they sort of move hand in glove. There are going to be renewal als of a lot of reinsurance treated in january one. The one one renewal is when most global reinsurance treaties renew.

And as I said earlier, rates have started to come down and in some instances, for reinsurance now in the in the wake of these hrc anes, there may be stable. People are not looking at increases. The industry is looking at these losses.

And that fifty five billion, jo, that you mentioned before, as you said, is at the upper moody, just lowered their estimate. Moods, acquired a modeling firm called the arms recently, and so they have their own modeling of catastrophies, and they lower the estimate from about forty five billion to about thirty five billion. Another modeling source, current Clark, who is usually right on the money and think, is estimating thirty five, thirty six billion and versa, a publicly traded company that also has its own modeling, is also landing in the thirty five billion area.

So this thirty five billion is going to be born by the national Carriers and by the flooded domestics, and by the reinsurance companies in loyd, bermuda, european, united states, and by the flat hickie cats ropy fund and by private investors that are buying catastrophe bonds. Those insurance linked securities, some of them are gona pay out, but it's not going to be an exhaustion of the of the collateral that's in there. So the industry is really breathing a sigh of relief that this could have been the one that is not only an earnings event but a capital event yeah that dense the capital of an insurance company.

And insurance companies typically like to have fortress baLance sheet because there there are existence to take care of things and even, you know, what's the worst that could possibly happen? They think about these things. They they model these things. So it's not a surprise that we are able to, with standards, as as we clean up the mess.

I like that distinction between an earnings, this event for insurance company .

in a capital event.

And that is and that doesn't have one less random question. Go back to the when I think of politics, I think of republican candidates around the country. And they like blame the trial of atterley, and they like to use the trial bars, one of their hobby horses, to fight again.

St inflate specifically know, is a red state biology. Is the trial bar is, is the lawyer industry a little bit more savy about being on both sides of this? Is this a have they? Are those lawyers little bit every about understanding that they need to kind be on both teams?

In the days before governor descendest signing tort reform in law in florida, in a few days before that, the trial bar industry submitted one hundred, and I think that was two, one hundred and eighty thousand claims. So they got things under the door before the shop was closed.

So and there was a letter that was circulated among one of the major firms that had belka sort of terminology there, like, you know, this is a war, know you can't be friendly to the defense. They are the enemy yeah. So I don't think people are holding hands and singing cumbria and a gathering of defense and the council.

So summed up this whole conversation. You know, people talk about what needs to happen in florida to make IT a viable place or an affordable place to live. This is kind of a loaded subject that there are plenty of people out there who say, well, maybe we just don't build houses on the coast of florida anymore. I'm sure a lot of florida ans probably have strong opinions about that. But what else could be done, I guess, to make the state more resilient and to make insurance more affordable for the people who are there?

The codes are really important, really important. There was a house wasn't in floria, but this is a good illustration. There was a house in mississippi that was worth sixty nine hundred thousand dollars, and IT flooded thirty four times in thirty two years.

Wow, because the owner knew that the N. F I P, the flood international floodings program, would pay out. So is about seven hundred thousand dollars paid out.

There have been removals of homes that make sense, like that happens in queens, in southern new york city, where where you had the houses in breezy point that were elevated economically. Sometimes IT does make sense to do that. If you ve ever bit anyone that's been to promote will see that the roofs there, they're they're all the same across the entire island.

They're made of limestone so um which is in the middle of atlantic gets these storms and it's a Mandatory thing in promoting the building code to have this kind of a limestone roof not only because IT protects the house from being destroyed, some roofs there for two hundred years, but also because IT collects rainwater bermudas a pretty dry island. So you have the strict code. So we are removals work.

About one percent of N F I P. Policies are responsible for thirty percent of the losses because you have these repetitive loss properties like the one I mentioned, mississippi and is a story of a house in houston that was rebuilt eight times instead of we're moving IT somewhere else. So Price sends a signal.

If you look at classical liberal economics, Price is a signal. And if the Price goes up, then IT tells you that is something going on here. Why is IT more expensive?

So of these sending the right signal is something that these public programs, like the national finances program, will crop insurance, which another thing, don't send the right signals. They encourage people to have behavior which is not economically appropriate. They're passing on socializing the risk. The ordinary taxpayers, Tracy, and just like you and I .

don't want to pay that, think you know the only person I know who is spent a lot of time and muted, by the way, as an insurance .

exception and our our owner oh.

that's right.

That's right. Oh, okay, Jerry. Uh, thank you so much for covic all the show at explaining the latest in florida insurance and roof fraud s to us as well.

Thank you very much for the pressure.

So that was really interesting, especially the .

contrast between florida. Yeah, just really interesting. A natural experiment out in the world. One mp on like .

someone who's not us. Please look into this. No, that's bad. I mean, there are so many things about florida, and to some extent it's kind of IT feels like in the discourse often people don't like separate its natural propensity yeah to have big hurricanes and storms from the structure of the market. So I was kind of good to kind of zero in a little little bit more .

on structure issues totally. And to his point, florida's history is a history of realistic bubbles and busts and storms. There have been many cycles of them. And IT really, you know, dates back to at least the nineteen twenties. I mean, the history of florida is essentially the history of air conditioning.

And once air conditioning kind of existed, there is always going to be this massive ve people from the other forty seven mainland states, or maybe the eight states, whatever that will want to go there to live in a warm place by the ocean where they have their conditioning on demand. And florida has been counted out so many times in the past. And i'm just going to say something further, which is that every time we talk about one of these extreme weather states, whether it's florida or arizona.

with the he and there's .

this sort of like a version that people have towards the even process of moving there like this, is humans weren't meant to live in this land. And i'm just going to say right here, no, what humans do that other animals don't, is we make land habit a ball that we aren't naturally eliminated at, that is what makes us different from all the animals that we find land that Normally we couldn't survive in under Normal conditions. And we turn IT into something we can live in, and we'll always be going to the most extreme parts of the world for that land. Yeah.

but the question is how much is that end of cost date, right?

Like this is like telling to spend .

much time in like mangrove forest without telling me you haven't spent much time in mangrove forest like cost a lot of money. And and there's like environmental debate about whether we should be, but there not the coast to do.

I get that and there are certainly cost. But you know there's a lot of people in the world right now who can live kind of near a beach and ocean in florida, people who might have private, who consider the middle class, who can have something that might have been reserved for the outer elite many times ago.

And that is sort of problem. Yeah, okay, I mean, look, I get, well, I get that people want to live on the beach. Yeah, like that's basically what you're say. I think they're still an open question about how that how desirable that is from a social perspective.

Yeah well, other people I I am not you know i'm just say, yeah sure. I I I want I believe there are issues with the flood insurance aspects specifically in which people who don't get to live on the beach, or people who aren't living in as fault laden areas are subsidizing the existence of people who do live near the beach on asphalt, latin areas, there are issues there.

And I feel like maybe the flood insurance system specifically probably needs some sort of Better correlation between who benefits from IT and who pays IT. But i'm done an expert, but that would be my intuition. Nonetheless, I am confident that over time, the march of people towards warm weather, water and their conditioning will continue, will find away OK.

Let's leave IT there. Because after this episode, john are going to go off and argue in private over whether or not florida beach homes are the height of human progress. All right? This has been another episode of the adults podcast. I am Tracy away. You can follow me at Tracy away .

and i'm gel wasn't though you can follow me at the stowers follow our producers common rud rids at common armon dash o Bennett at dash pot and kill Brooks at q Brooks. Thank you to our produced our mosses on dom. For more outlets content, go to bloomberg dog com slash outlooks. We have transcripts blog in a newsletter, and you can chat with fellow listeners about all this stuff that we talk about in our discord. Gg, slash outlives.

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thanks for listening.

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