Back to Prindle Institute

Insurance, Natural Disasters, and the Relevance of Luck

photograph of black smoke and forest fire approaching apartments

Last year, Hurricane Ida caused around $30 billion in damages. This cost was largely borne by insurers, forcing some companies to declare insolvency. The United States is now on the brink of another active hurricane season, and – as a result – insurers in some of the riskiest parts of the country are cancelling home insurance policies. Around 80,000 homes in Louisiana have already lost their coverage, with an additional 80,000 Floridian policy holders set to be affected by the end of this week.

This is nothing new. The worsening climate crisis has seen a marked increase in the number of uninsurable homes. For example, in Australia – a country blighted by recent wildfires and floodsaround 720,000 homes are set to be completely uninsurable by the end of the century. When these homes are damaged or destroyed, their occupants are left destitute.

What, then, should we be doing to help these people? More generally, what kind of moral obligations do we have to people who lose their homes as the result of a natural disaster?

One way of approaching this issue is through the concept of ‘luck’. We experience luck all the time – some of it good, some of it bad. And bad luck comes in many different forms: We might have our car destroyed by an errant bolt of lightning; or we might lose our entire life savings betting on a bad hand of poker. In both cases, we’re left worse off. But the obligation on others to help us may very well differ. Consider the bolt of lightning. This is, perhaps, the purest example of a case of ‘brute’ bad luck. Compare this with that losing hand of poker. Sure, there’s still an element of luck at play: if the random shuffle of the deck had dealt me a better hand, I might’ve won. But I knew what I was signing up for. I made a calculated gamble knowing there was a good chance I might lose all of my money. Unlike the bad luck of being struck by lightning, the losing hand of poker was bad luck I opted in to – “option” luck, if you will.

This distinction between “brute” bad luck and “option” bad luck forms an important part of how Luck Egalitarians see our obligations to help others.

Stated in its simplest form, Luck Egalitarianism says that we have a moral obligation to help those who suffer from bad brute luck, but not those who suffer from bad option luck.

So, how does Luck Egalitarianism help us with disaster-prone homeowners? Well, wildfires and floods are (like bolts of lightning) clear cases of bad brute luck. But this doesn’t necessarily mean we have an automatic obligation to help those who lose their homes to such disasters. Here’s the thing: wildfires and floods aren’t entirely unpredictable. They tend to occur in disaster-prone areas, and such areas are usually well-documented. In fact, those who choose to build their homes in a risky location will usually find themselves paying substantially less for their homes. In this way, these people make a calculated gamble – so when disaster does inevitably strike, it is instead a case of bad option luck, not brute luck.

At least, it used to be this simple. For a long while, disaster-prone areas were largely stable. But the climate crisis has seen a swift end to that. Risky areas are growing, and wildfire and flood seasons are lengthening and worsening. Someone who chose to build in a safe area several decades ago may now find their home regularly in the path of catastrophe.

But what about the fact that these people choose to stay in disaster-prone areas? Sure, there may have initially been no risk in that location, but now that there is, doesn’t their choice to stay make any disaster that befalls them a case of bad option luck?

The Luck Egalitarian would say “yes” – but only if a homeowner actually has a choice in the matter. Sadly, many don’t. Selling a home that’s at risk of imminent destruction is hard. What’s more, selling it for a price that allows the occupants to afford a new home in a safer area is even more difficult. For this reason, many disaster-prone homeowners find themselves stranded – unable to afford to move. So, if someone builds a home in an area that later becomes disaster-prone, and – as a result – cannot afford to move, the Luck Egalitarian will still see the destruction of their home as a case of bad brute luck.

But there’s one final complication – namely, the role played by insurance. According to some Luck Egalitarians, the availability of affordable insurance is sufficient to convert bad brute luck into bad option luck. Why? Consider the lightning example again. Suppose that automotive lightning strikes are frequent in my area, but that full lightning coverage for my car is available for only $1 per month. I, however, opt not to purchase this insurance and instead spend my money on something more frivolous. Suppose, then, that the inevitable happens and my car is destroyed by a random bolt of lightning. While the lightning might be an “act of God,” the loss of my car is not. Why?

Because that loss is a combination of both the lightning and my calculated gamble to not purchase insurance. I, essentially, signed up for the loss of my car.

This is why insurance is so important when considering what we owe to disaster-prone homeowners. If affordable insurance is widely available – and a homeowner refuses to purchase it – any disaster that befalls them will be a case of bad option luck. This will mean that – for the Luck Egalitarian, at least – the rest of us have no specific moral obligations to help those individuals. When such insurance isn’t available, however (as it no longer is for many residents of Louisiana and Florida) the story changes. Those who (1) built their homes in previously safe areas that have now become disaster-prone; (2) subsequently cannot afford to move; and (3) inevitably find themselves the victims of natural disasters are victims of bad brute luck. And this may very well put strong moral obligations on the rest of us to come to their aid – either as individuals, or through our elected government. As the climate crisis worsens – and more and more homes become uninsurable – the need for this kind of assistance will only grow.

Pandemic Sacrifices: It Matters Who Dies and Why

photograph of small liferaft at sea

Political leaders, faux medical experts, and pundits are advocating for a stop to isolation policies despite the real loss of life that would result from doing so.

They are weighing the impact that isolation is having on the economy. The longer we isolate, the more businesses will suffer, and the more corporations will not be able to benefit from the labor that previously was performed. Further, we are facing a catastrophic rise in unemployment—22 million due to the pandemic. Instead of looking towards social benefits and supporting those most affected from losing their jobs and health, these leaders are suggesting ending isolation and further exposing the workforce in the name of an economy that, experts warn, will just need to be shut down again—next time with further dead, made up of those apparently expendable and worth sacrificing for the economy.

These calculations stand in for rhetorical frameworks for moral analysis. We do have approaches for dealing with massive losses when they are the result of, say, natural disasters. These can be blunt instruments that weigh the impact of saving each individual human life against the resources that could otherwise be spent on the good of “society.”

Imagine you were on a lifeboat in a stormy sea. There is no way for everyone to survive, and the experts estimate that a certain percentage must be sacrificed for the survival of the majority. What is the ethical method for making this decision?

The stipulations here force us into “consequentialist” thinking—we would like to maximize the number of people alive at the end of the hellish scenario. However, most would find the “pure” consequentialist reasoning abhorrent. In other words, maximizing the number of people alive at the end is not where our ethical duties end. When stuck on a lifeboat and in a position where 20% of those on board will die, there is a moral difference in this 20% being determined randomly or at the will of a corrupt captain. (Or as a result of the previous decisions of the corrupt captain.)

Our current situation is, and isn’t, parallel to the lifeboat analogy. There isn’t an inevitable number of people that must be sacrificed. There isn’t a storm forcing us to weigh human life against a “greater good”—in this case, the economy. We could, in fact, stay on our boat and take the measures that experts are suggesting at avoiding the sacrifice the leaders are saying are “necessary.”

However, when there is inevitable harm, the procedure for allocating that harm matters morally. Say we do face a scenario where there is a percentage of human lives that will be lost given the pandemic, and a need to end isolation for the greater good of the economy. COVID-19 is the great equalizer we must endure, and while we will lose some, our country/lifeboat will endure.

It’s important to note that even with that stipulation, the metaphor breaks down. That isn’t even the position we are in, either. The actions of the leadership of our lifeboat continue to ensure that the amount of harm increases, and becomes more unavoidable, more inevitable. By defunding the WHO and pandemic response teams, but counteracting state efforts and absolving the federal government from its responsibility for action, the situation continues to be made worse.

Further, they’re able to do this by invoking the notion that it is just like the inevitability of a natural disaster while asking people to unequally bear the burdens of the harm. They’re banking on the support from those they don’t think will accrue the harm. As in the lifeboat analogy, the ones who survive will likely be grateful. But the decision-making for who will be sacrificed is not morally neutral.

Treating these losses as distant and abstract statistics is a strategy. There is force in calling the impact of the coronavirus the great equalizer, as celebrities and politicians alike have claimed. It evokes the frameworks of natural disasters or warfare where there is a limit to what we can do to intervene—lives will “just be lost.” Trump’s message has shifted from denial and buck-passing to attempts to frame casualties under 100,000 as a victory.

This is not an equalizer and is structurally and reliably affecting some groups of people more than others. Black Americans are dying at a much higher rate than non-Black Americans—33%, while only making up 14% of the areas analyzed. Thirty percent of COVID-19 patients are black despite representing only 13% of the population (the different data is the result of varying availability of data). These stark differences become more dire in some cities: In Wisconsin, for example, African Americans represent 6 percent of the population, but nearly 40 percent of COVID-19 fatalities.

Other over-represented vulnerable populations include those living in care facilities, such as disabled people and the elderly, and the incarcerated. Meanwhile, the rich are much safer than others.

This makes a moral difference. Just like on a lifeboat, the captain is not absolved of making every attempt to avoid circumstances where sacrifices must be made, and is responsible for ensuring that just burden-sharing is in place. Sacrifices cannot be justified for false reasons—saving the economy isn’t even a true reason in the sense that sacrificing people may not actually achieve the intended aim.

Anyone suggesting sacrificing 2-3% of the population needs to name family members and loved ones they are willing to sacrifice. They then need to indicate a further segment of their loved ones to live with the effects of a serious illness and extended ICU stay. Because if this is an inevitable sacrifice we all must make, treat it as the great equalizer they claim it is. This will affect us all.

What Apocalypse Predictions Say About Our Response to Calamity

An apocalyptic, dark-red sunset with dramatic clouds.

Since the biblical ascension of Jesus into heaven, biblical literalists have been predicting the coming of the end times, rapture, and destruction of the world. The recent eclipse in August and a series of natural disasters, including Hurricanes Harvey and Irma, wildfires in the Northwest United States, and an 8.2-magnitude earthquake that shook Mexico, have sparked discourse once again about the alleged coming apocalypse. What apocalyptic discourse is currently urging people to repent, and what does it say about the human response to disaster?

Continue reading “What Apocalypse Predictions Say About Our Response to Calamity”

Moral Obligations in Hurricane Conditions

Photo of a hurricane from space.

On August 25, Hurricane Harvey made landfall in Texas.  The storm devastated the state, destroying homes and business and claiming many lives.   Faced with such dire circumstances, many people living in Texas found and continue to find themselves in need of assistance from others. Many have stepped up to provide support.   At least two prominent donors faced public criticism for their donation efforts.  Popular television cook Rachel Ray donated $1 million specifically to shelters providing disaster relief to animals.  Actress Ruby Rose took to Twitter to announce her intention to match donations up to $10,000 for relief to the Montrose LGBT center in Houston.

Continue reading “Moral Obligations in Hurricane Conditions”