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Climate change is making home insurance unavailable or unaffordable in the riskiest areas for hurricanes, wildfires and flooding.
Why it matters: As insurance companies pay record amounts to homeowners who have suffered partial or total losses, they retreat from or raise premiums in places where claims are owed.
What's happening: Company payouts for natural catastrophes in 2017 and 2018 stood at $219 billion, the highest ever for a consecutive two-year period, according to Swiss Re, a company that underwrites risks for insurers, known as a reinsurer.
Yes, but: The rise masks that insurers are limiting coverage in areas deemed too risky.
Fearing bigger losses, insurers are pulling back from high-risk areas in California, leaving homeowners scrambling.
In Florida, homeowners have seen insurance costs rise in areas considered more at-risk by insurers.
The bottom line: Writing these policies could eventually put the insurers out of business as weather events become more unpredictable.
Insurers are resisting rate hikes from their insurers, including the property reinsurers that act as a safety net if insurance companies’ losses reach a certain level.
Why it matters: Reinsurers, which in the past have bid up rates as insurers accumulated more losses than expected, are competing more with alternative capital.
What’s new: Endowments and pension funds are increasingly putting money into catastrophe bonds, a vehicle that raises money for insurance companies — giving insurers other options to turn to in the event they need help paying out claims.
S&P Global Ratings says there is now a 30% chance the U.S. economy enters a recession in the next 12 months — scaling back the 35% recession risk it forecast in August.
Why it matters: A slew of Wall Street economists and analysts now see the outlook for the U.S. economy as rosier than a few months ago. That sentiment is reflected in the stock market, which closed at another record high yesterday.
The number of cases the SEC filed against publicly traded companies hit at least a decade-high this year, according to findings from New York University and Cornerstone Research that analyzed the SEC’s annual report.
Between the lines: The jump is explained by the agency’s initiative that encouraged financial firms to self-report instances where advisers sold certain fee-paying mutual funds to clients over other funds. (In return for self-reporting, those companies will pay a small fee and don’t have to admit wrongdoing.)
Why it matters: Over 50 of the enforcement actions on public company and subsidiaries targeted investment advisers or brokers — a nod to SEC chairman Jay Clayton’s emphasis on protecting the retail investor since taking the helm.
By the numbers: The SEC settled with Mylan, KPMG and Fiat Chrysler this year, among others. The highest dollar figure settlement this year against a publicly traded company came to $147 million.
The bottom line: For all enforcement activity, including cases brought against individuals, the SEC took in $4.3 billion in fines and disgorgements (or the return of profits gained illegally) though a single case against a privately held real estate investing firm accounted for $1 billion of that amount.
P.S. Enforcement activity by the Commodity Futures Trading Commission slowed to 63 from last year’s 83 cases, the agency said on Monday.
Jerome Powell. Photo: Win McNamee via Getty Images
Fed chair Jerome Powell said the Fed’s monetary policy stance is appropriate, for now, though he noted the central bank is not on a “preset course,” in a speech Monday night.
Why it matters: It was Powell's final public remarks — and the last opportunity to recalibrate market expectations — before the Fed enters its "quiet period" ahead of the next interest rate decision.
Joseph Stiglitz. Photo: Julia Reinhart via Getty Images
Nobel laureate Joseph Stiglitz renewed calls to retire GDP as the go-to economic indicator.
" So what if GDP goes up, if most citizens are worse off? ... [I]t should be clear that, in spite of the increases in GDP, in spite of the 2008 crisis being well behind us, everything is not fine."— Joseph Stiglitz, in op-ed for The Guardian
The big picture: Calls to revamp GDP, no matter how unlikely, are no longer coming from the corners of academia. They're seeping into the mainstream.
Did you know: When Janet Yellen ran the Fed, she got hate emails from angry savers who wanted higher interest rates. Apparently, her email address at the time — Janet.Yellen@FRB.gov — wasn't hard to figure out.