Storm surge
When the roof caves in
Good morning, risk wranglers. This is your Stock Market Rundown for today. Thanks for reading. Let’s get into it:
TODAY’S TOP STORY: PREMIUM PRESSURE
Home insurance: the one thing you buy hoping you’ll never have to use it. You’d think selling home insurance has gotta be a great business—charge customers monthly, pay out once in a while when lightning strikes, and profit, right?
Not so much. These days, the financials of US home insurers are in worse shape than a house on a flood plain during a Category 5 hurricane.
2023 was US home insurers’ worst year this century due to an onslaught of natural disasters. The industry was slammed by a $15.2 billion net underwriting loss.
And over the last decade, US insurers paid out more in claims than they received in premiums for home insurance. Not exactly a strategy for long-term business success.
Why? Well, America’s population is growing the fastest in the states most prone to natural disasters. Think wildfires in California, tornadoes in Texas, and earthquakes in Washington State.
Plus, inflation has raised the cost of replacing stuff: from 2020 to 2023, replacement costs for property losses were up a staggering 45%.
Some insurers are trying to staunch the bleeding by jacking up prices, while others are bailing on home insurance completely to focus on more profitable business lines—leaving customers in the lurch.
So what’s a homeowner to do? Some states are setting up high-risk pools that can be the insurer of last resort. Beyond that, better install those storm windows—and make sure your roof is up to code.
SO WHAT ELSE IS GOING ON?
Despite the spooky downdraft in global stock markets, retail stock trading platform Robinhood reported it received $1 billion of new cash from retail investors in the first week of August. I guess while the music is playing, we’ll keep dancing.
Meta, the parent company of Facebook, just defeated a lawsuit that accused it of censorship. Apparently internet platforms are allowed to censor whoever they want, which may be a problem for my “DIY Fireworks At Home” Facebook group.
Thanks to booming sales of weight-loss drugs, Eli Lilly raised its annual sales forecast, sending the stock up higher than my blood sugar after a Dairy Queen Peanut Buster Parfait.
Lyft’s stock price sank as management forecast weak summer ridership. Please don’t give up, Lyft… if you fail, Uber prices will triple overnight.
Signing off for now, folks; let's continue our journey next time. Yours in capitalism, The Axe
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