I am Anti-Insurance Stocks

Over the past century of American history, but really for the past 40 years, insurance has been a profitable business. Year after year, insurance has lobbied effectively, putting money into easily corrupted government officials undeserving of their post. Through this gross purchasing of the US Federal system, insurance companies have been able to eke out billions in profit in a business where a good year should mean breaking a bit more than even. For over half a decade now, this has been by reason for never investing in insurance companies, a moral stand, albeit a small one.

At the same time, something else has been working against the insurance agency (and no, it’s not the forces of good in their eternal fight against evil). For over 20 years, probably more like 50, there has been a trend building that will make/has made insurance companies much worse assets. I am of course talking about climate change.

Despite what the Wall Street Journal editorial board says, a body that veers a bit right of Alex Jones, climate change is absolutely wreaking havoc on this business, not, the bizarre Marxian Californian government. It isn’t California’s fault that the entire insurance industry had to pull out of the state of Florida. This wildfire is being spread by hurricane-level winds. Hmmm, well climate change does speed up winds, if not by a hyper-dramatic amount. Two years of back-to-back sopping winters in California that allowed for too much underbrush, I wonder what caused that? Ding ding ding, yes, climate change did cause it to be wetter.

Every year, it feels like there is a record-breaking wildfire or a record-breaking hurricane, and when you combine that with the fact that homes are getting valuable at a rate faster than inflation, insurance companies have too much to pay for.

I live in Western North Carolina, in the Appalachian mountains. You know what we don’t get about 300 miles from the coast too much? Yeah, hurricanes. Do you know what we usually don’t get 600 miles from the Gulf of Mexico? Yeah, a gigantic hurricane that cost the state of North Carolina alone $60 billion in damages. Entire neighborhoods were underwater, schools were shut down, and people filed millions of claims which they will likely get, and if they do not, will likely take these companies to court.

Maybe this all sounds too emotional to you. Even though I do feel pretty strongly about climate change as someone who is six decades away from the average death, I promise this section is not wholly emotional. Warren Buffett has long had money in insurance companies like Progressive and Geico, which has always been smart. Insurance companies are super good at getting money where they probably should not, but climate change is an existential threat to this industry. Insurance companies are going to get priced out of their own business, at least when it comes to homeowner insurance.

Healthcare insurance is, if you still want to sell your soul, still the best bet in insurance because those guys are dawgs, Michael Jordan level, when it comes to extracting the maximum amount of money. But they are not facing a threat quite so unprecedented and devastating.

Also, sorry this one is short. I feel like the answer to this equation is pretty simple. Also, I am writing this while in the car driving to a funeral :(, so I’m sort of managing.