Four For Friday | Mar 15, 2024
LF114 | Fixing disaster insurance, Europe's coming environmental challenges, social infrastructure to combat loneliness & Seoul's impressive agetech.
Welcome to Looking Forward’s Four For Friday. Four things that have piqued my interest this week. Enjoy!
How to fix disaster insurance markets
Insurance for natural disasters is failing just when we need it most.
Trends are alarming: insurance companies are hiking rates, pulling out of markets, and some even going bankrupt. Payouts are being reduced and risk is shifting from private to public markets (e.g. the FAIR public fire insurance option in California).
The driver is obviously the increase in frequency and intensity of climate events. Research by Milliman (graph below) found that the severe wildfires in California in 2017 and 2018 ‘wiped out twice the accumulated underwriting profit from the previous quarter century for California homeowners insurers, meaning that after the wildfires, the industry overall had a $10 billion underwriting loss since 1991.’
The op-ed suggests a number of tactics for insurance companies:
Advise members about risk: being more transparent about risks and expected future rate rises will help educate the market.
Advise towns about suitable interventions: helping towns understand what interventions will be most effective in their given situation.
Advise policy makers on mitigation: drawing a link between CO2 emissions and climate change.
Improve risk models: more granular models that recognize local-level interventions are needed to recognize the benefits of risk interventions. (There is also a role here for regulators around transparency of models being used.)
Make claims easier: insurance companies have been roundly criticized for poor responsiveness (for example with the recent Australian floods)
Use new building codes: using new standards and certified techniques (such as Fortified)
Enable relocation: allowing payments to be used for temporary and permanent relocation.
Europe is not prepared for climate risks
A hard-hitting report from the European Environmental Agency identifies 36 major climate risks for Europe within five broad clusters: ecosystems, food, health, infrastructure, and economy and finance.
Its core message: Europe is the fastest warming continent in the world and policy makers (as well as businesses) are not prepared. Southern Europe is particularly vulnerable to severe heat, and low-lying areas and coastal regions are at significant risk of floods.
A call for social infrastructure in cities
One of my favorite terms, ‘social infrastructure’ makes an appearance in this Bloomberg piece on ways to make cities less lonely.
There are 38 million single-person households in the US, representing a third of all households, and up to a half in some cities, such as Washingon, DC. Feelings of loneliness are common in both young and old; 79% of adults aged 18 to 24 report feeling lonely for example.
The article reports on a number of experiments, including shared park benches, slow (‘happy to chat’) lanes in supermarkets and more fun and engaging physical infrastructure that has been shown to improve engagement.
It references Canadian consulting firm Happy Cities, which has been effective at turning sterile, car-centric physical spaces into more engaging, resident-centric communities. This is a framework they use:
Smart aging Seoul
Lots happening in Seoul around smart tech for seniors, with a focus on AI and robots. The local government has already introduced 430 robot dogs that provide companionship and can call emergency services. New robots are being introduced that help with defecation, cleaning, dementia engagement and rehab.
They’re also renovating senior centers to make them more tech-forward and are building a ‘digital experience bus’ that will go round the city helping older people with digital literacy skills (concept images below).
That’s all for this week. As always, feedback welcome. Feel free to share insights or links of interest.
- Stephen