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CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

sfchronicle.com

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Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#31

Post by hatthew »

_DeadFred_ wrote: post #26
tehlike wrote: post #20

Earlier quoted context omitted.

As far as i can tell, california forest management essentially ended up suppressing "good fires", and didn't do enough of controlled burns, which ended up accumulating a lot of fuel to cause large fires.

Santa Cruz had huge wildfires when I was a kid in the 80s (it snowed ash even). The fire experts were pretty explicite that if the same policies were kept in place (preventing burn off) we would have those same fires 40 years later. It's 40 years later I wonder how that turned out.

How it turned out: https://en.wikipedia.org/wiki/CZU_Lightning_Complex_fires

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#32

Post by infecto »

mistrial9 wrote: post #16

the basic elephant in the room is that in the years 2017, 2018 and 2020.. there were unprecedented losses due to fire. The right way to look at this negotiation.. a power-play between goliaths.. is that losses occurred on a scale and severity that no one predicted.. now, years later the markets are trying to find a way to do business in insurance

No, the elephant in the room is that in many states, including CA, insurance companies are severely limited at how much they can change their rates and what factors they can to determine risk/premiums.

Edit: I think there has been a number of comments from the big underwriters that they are unable to underwrite risk properly. This is not just a CA problem either, Florida is also a huge issue.

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#33

Post by randallsquared »

supernova87a wrote: post #28

State insurance regulators do have a legitimate purpose -- to prevent totally free-market (read, "lawless") behavior by insurance sales companies which happens when people can promise something in the future, take money for it now, but not deliver (ala the golden age of past American business hucksterism). Insurance as a product (or snake oil) is highly prone to this malfeasance when unregulated. Just like lotteries.…

Taking money in exchange for future delivery and then not delivering is no more a “free-market behavior” than mugging is.

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#34

Post by woodrow »

theogravity wrote: post #24

I live in CA. We have a separate optional earthquake insurance that is maintained by some CA authority that is pretty expensive to buy into. Wonder why that can't be done with fires that originate from a forest if it's such a high risk?

California law has established the FAIR plan [1] which is insurance of last resort for people who can't otherwise get fire insurance coverage for their home. It's a mandatory association of insurers who are operating in California.

It's my understanding that FAIR plans are very expensive compared to market-provided homeowners insurance. I presume this is because of adverse selection--if you buy FAIR insurance you're in the same risk pool as people who live in very high fire risk areas and have no other insurance options.

[1] https://www.cfpnet.com/

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#35

Post by konschubert »

randallsquared wrote: post #33
supernova87a wrote: post #28

State insurance regulators do have a legitimate purpose -- to prevent totally free-market (read, "lawless") behavior by insurance sales companies which happens when people can promise something in the future, take money for it now, but not deliver (ala the golden age of past American business hucksterism). Insurance as a product (or snake oil) is highly prone to this malfeasance when unregulated. Just like lotteries.…

Taking money in exchange for future delivery and then not delivering is no more a “free-market behavior” than mugging is.

That’s not how insurances work

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#36

Post by woleium »

supernova87a wrote: post #28

State insurance regulators do have a legitimate purpose -- to prevent totally free-market (read, "lawless") behavior by insurance sales companies which happens when people can promise something in the future, take money for it now, but not deliver (ala the golden age of past American business hucksterism). Insurance as a product (or snake oil) is highly prone to this malfeasance when unregulated. Just like lotteries.…

if only there was some way to ensure that the insurance companies pay, perhaps some kind of insurance insurance /s

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#37

Post by bombcar »

csdreamer7 wrote: post #22
timr wrote: post #15

Earlier quoted context omitted.

The article also mentions that one of the proposed fixes is to allow forward pricing of the insurance market, and more flexible rate change regulations. Right now, California does not allow pricing of insurance policies except on a few non-standard factors. These factors do not include "proximity to wildfire risk areas", which means that insurers lost a lot of money in the big wildfires of 2017-2018. The state refuse…

This explains a lot. Most of CA's population does not live in wildfire prone zones. But most of the rural parts do. This will price them out of their homes. Parts of the central valley, the mountains, and really north California. They also tend to be the more anti-government types. One family in an unincorporated part of the mountains refused to pay the voluntary firefighter service fee. When their home caught on fir…

More than just rural areas are at risk now - but it may not be correctly accounted for. Much of Southern California has canyons that can bring fires much closer to urban areas than expected - as far back as 2007.

https://en.wikipedia.org/wiki/October_2007_California_wildfi...

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#38

Post by tehlike »

DoreenMichele wrote: post #23
tehlike wrote: post #20

Earlier quoted context omitted.

As far as i can tell, california forest management essentially ended up suppressing "good fires", and didn't do enough of controlled burns, which ended up accumulating a lot of fuel to cause large fires.

It's probably a lot more complicated than that. For one thing, California is a place that imported eucalyptus. This is a fire hazard. https://news.ycombinator.com/item?id=37442671

If eucalyptus is now fact of the state, what needs to be done to reduce its impact?

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#39

Post by wbl »

tehlike wrote: post #38
DoreenMichele wrote: post #23

Earlier quoted context omitted.

It's probably a lot more complicated than that. For one thing, California is a place that imported eucalyptus. This is a fire hazard. https://news.ycombinator.com/item?id=37442671

If eucalyptus is now fact of the state, what needs to be done to reduce its impact?

I find chainsaws work fine

Re: CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

#40

Post by cookingrobot »

woleium wrote: post #36
supernova87a wrote: post #28

State insurance regulators do have a legitimate purpose -- to prevent totally free-market (read, "lawless") behavior by insurance sales companies which happens when people can promise something in the future, take money for it now, but not deliver (ala the golden age of past American business hucksterism). Insurance as a product (or snake oil) is highly prone to this malfeasance when unregulated. Just like lotteries.…

if only there was some way to ensure that the insurance companies pay, perhaps some kind of insurance insurance /s

That’s called reinsurance, and insurance companies buy that to cover them when disasters are more than they can afford.
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