[HN Gopher] CA insurance crisis: Thousands to lose coverage as t...
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CA insurance crisis: Thousands to lose coverage as two more
insurers withdraw
Author : traviswingo
Score : 34 points
Date : 2024-04-18 18:52 UTC (4 hours ago)
(HTM) web link (www.sfchronicle.com)
(TXT) w3m dump (www.sfchronicle.com)
| toomuchtodo wrote:
| https://archive.today/qDmVU
| tekla wrote:
| Exactly what pretty much everyone expected (except for the people
| who were praying for a miracle from god)
| alephnerd wrote:
| The major reason insurers are leaving is because California has
| been considering enforcing Prop 103 recently, which has begun
| spooking insurance providers into leaving.
|
| The Insurance Commissioner is also an elected position now, so
| there is an incentive for them to succumb to populist pressures
| to climb up the poltical ladder (eg. Governer, Senator,
| Congressmember)
|
| Edit: listen to CharlesW. I'm incorrect on the fact that it
| wasn't enforced until recently
| dangus wrote:
| Huh? Prop 103 is from 1988.
|
| The article cites wildfires and close proximity of buildings
| (again, wildfires) as reasons to withdraw.
| alephnerd wrote:
| Yep! But Lara only recently threated to bring in enforcement
| after negotiations with Insurers over liability failed [0]
|
| It's never actually been enforced before in CA.
|
| Edit: listen to CharlesW. I'm incorrect on the fact that it
| wasn't enforced until recently
|
| [0] - https://www.politico.com/newsletters/california-
| climate/2023...
| CharlesW wrote:
| > _It 's never actually been enforced before in CA._
|
| Incorrect, it's been enforced since it passed. Soon after
| it passed, insurance companies refunded over $1.2 billion
| to consumers based on California Department of Insurance
| (CDI) mandates. You can find many more examples.
|
| https://consumerfed.org/pdfs/whatworks-
| report_nov2013_hunter...
| timr wrote:
| 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 refuses to change, so the insurers
| are pulling out of the market.
|
| Framing this as "because of wildfires" is technically true,
| but misses the point. The problem is that insurers in CA
| can't accurately price for wildfire risk.
| csdreamer7 wrote:
| 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 fire the firefights just watched it and put
| out the parts that threatened a neighbor's house who did
| pay the fee.
| jimrandomh wrote:
| This is what happens when government officials are too severely
| ignorant of economics, and try to make things cheaper by
| decreeing prices. They decree a price for something that is below
| what it costs to provide, and all the sellers stop selling.
| DoreenMichele wrote:
| To be clear: California home owners insurance.
|
| One factor listed: post earthquake fires.
|
| California has "fire season," not a season I ever wanted in my
| life. I wonder how much this is actually kind of an issue of
| global warming without being called that. My understanding is
| fires are getting worse on the west coast thanks to climate
| change.
| tehlike wrote:
| 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.
| DoreenMichele wrote:
| 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
| _DeadFred_ wrote:
| 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.
| mistrial9 wrote:
| 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
| teeray wrote:
| > is that losses occurred on a scale and severity that no one
| predicted
|
| The house made some bad bets, the players "won" a few hands,
| and now the house is backing those players off while they
| figure out how to rig the game again.
| JumpCrisscross wrote:
| "When setting their rates, insurance companies [in California]
| cannot consider current or future risks to a property. They can
| only use historical data.
|
| ...
|
| Insurance companies say that because they can't consider climate
| change in their rates, it makes it difficult to truly price the
| risk for properties."
|
| https://apnews.com/article/california-home-insurance-wildfir...
| theogravity wrote:
| 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?
| bombcar wrote:
| The CEA is because earthquakes would bankrupt insurance
| companies because they strike multiple properties at once.
|
| Something similar could be done for forest fires but hasn't
| been setup yet.
|
| The general consensus is CEA policies are underfunded and the
| expectations are that the feds will step in.
| infecto wrote:
| Because state run insurance is kind of a crock. These are
| programs put together for constituents to be pleased enough to
| vote in the next election cycle but will do little to help in
| an actual disaster. Its been years but the state run insurance
| had pretty limiting caps on both contents and the cost to
| rebuild. Seemed kind of pointless from a total loss
| perspective.
| RowanH wrote:
| This is starting to happen in New Zealand - either increased
| rates or simply no coverage. For different reasons - flood & slip
| events.
|
| Re-insurance rates have gone through the roof through 3-4 weather
| events over the past 2 years. No signs of slowing down...
| supernova87a wrote:
| 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.
|
| But on the other hand, because state regulators are slow to react
| or adapt to changing circumstances, they essentially freeze the
| market and the parameters allowed for sales of insurance in the
| past, for circumstances that may no longer exist.
|
| So, new risks and willingness to insure are not accounted for,
| and companies no longer find it profitable to do business with
| rules of the past, in the present.
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