Risky Business with Nate Silver and Maria Konnikova Wildfires, Insurance, and Planning for Disaster
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Jan 16, 2025 Wildfires in California take center stage as the hosts unravel the complex dynamics between insurance markets and homeowner decision-making. They dive into the psychological factors influencing how we assess disaster risks, advocating for proactive planning. A listener's query about the intertwining of the River and the Village prompts a discussion on risk perception. Reflecting on cultural travel insights juxtaposed with the dire realities of climate change, the conversation underscores the urgent need for rational risk assessment in an increasingly unpredictable world.
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Insurance and Wildfires
- Insurers are leaving disaster-prone areas, changing risk models with AI.
- This creates problems for homeowners, especially the poor, who may lose coverage.
Challenges in Risk Modeling
- Modeling disaster risk is difficult due to climate change's unpredictable impact and adverse selection.
- California's regulations exacerbate the issue by limiting premiums, leading insurers to withdraw.
Rational Risk Assessment
- Evaluate risks rationally, not based on personal experience or wishful thinking.
- Consider selling your house and moving if the risk-reward ratio isn't favorable.
