[HN Gopher] California homeowners to fund half of high-risk insu...
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California homeowners to fund half of high-risk insurer's $1B
'bailout'
Author : JumpCrisscross
Score : 33 points
Date : 2025-02-15 17:43 UTC (5 hours ago)
(HTM) web link (calmatters.org)
(TXT) w3m dump (calmatters.org)
| lttlrck wrote:
| The state had, IIRC, a $100 billion surplus 2 years ago.
|
| They knew the insurers were leaving and why. Yet didn't fund FAIR
| correctly at the time? Or what's the excuse?
|
| Of course now there is a massive deficit. Maybe they'll pay us
| back on the next surplus...
| nickff wrote:
| From what I understand (and I'd appreciate any corrections)
| FAIR was supposed to pay for itself, not be a subsidized
| insurer. It seems like FAIR was underpricing the risk, and the
| private insurers were right to pull out.
| readthenotes1 wrote:
| It didn't work out well...
|
| "FAIR Plan has about $300 billion in total exposure, meaning
| how much they actually insure, and about $200 million in the
| bank," - March 2024
|
| https://www.cbsnews.com/sanfrancisco/news/california-fair-
| pl...
| Sakos wrote:
| Why would the state pay to fund FAIR? It's just a pool of
| insurers required to provide fire insurance and it's paid for
| by insurance customers. Even if the state had $100 billion
| surplus, why would it be justifiable to use it on FAIR as
| opposed to the countless other ways the money could be used to
| help Californian residents? It would effectively be like taxing
| Californians to pay for homeowner fire insurance. Is that fair?
| plasticchris wrote:
| They never actually had that surplus, it was projected revenue.
| The projections were wrong - they extrapolated, then planned
| spending around that. Source:
| https://calmatters.org/commentary/2023/10/california-budget-...
| linotype wrote:
| If they put the money into a fund, you would have complained
| that the government was overtaxing the citizens.
| blackeyeblitzar wrote:
| The problem is the same thing that leads to many California
| problems - it's the leaders voters keep choosing. One party
| states tend to be wasteful and ineffective.
|
| More details on the insurance debacle, which basically is
| classic over regulation: https://youtu.be/ojzUtQlug3I
| jerlam wrote:
| California has budget rules that cap its ability to save money
| from surpluses and require it to issue refunds:
|
| https://www.capradio.org/articles/2024/01/22/how-california-...
| dehrmann wrote:
| I must be missing something, but FAIR is an insurer of last
| resort backstopped by the insurance companies who refused to sell
| risky policies in the first place?
| plasticchris wrote:
| The weren't allowed to - not even the fair plan was charging
| sound actuarial rates. Cali put price controls on insurance,
| making this debacle inevitable.
| chaboud wrote:
| That's really the core problem here. As is often the case
| with rent control models, the natural outcome of an incentive
| structure came to pass in spite of the best intentions of
| legislators/regulators.
| SllX wrote:
| Yep. Government-imposed price controls and caps should
| actually be illegal. Like actually unconstitutional, with
| the requisite constitutional amendments in California (and
| the other States) and the US Constitution being passed.
|
| No matter what anybody's intentions are, they always end up
| creating market distortions that eventually lead to more
| societal issues than the ones they're suppose to alleviate
| and it's just bad economics that shouldn't even be a tool
| in politicians' (or voters, but ballot box lawmaking should
| be illegal too) toolboxes so they're forced to address the
| upstream concerns that cause prices on land, housing,
| rents, services and goods to climb to the point of being
| unaffordable to most of the population.
| dehrmann wrote:
| I keep waiting for people in less risky parts of California ask
| why they're paying more for insurance and power so that people
| can live in risky, fire-prone hills and mountains, but it doesn't
| seem to be happening.
| riku_iki wrote:
| people are asking, but can't do anything without major power
| shift in state government.
| AustinDev wrote:
| Jungle primaries make this nearly impossible.
| polski-g wrote:
| Fire-prone?
|
| Managing fire risk is a simple task; California refuses to
| engage in controlled burns.
| dilyevsky wrote:
| That is not true. Annual number of prescribed burn acres had
| been stable since the 70s with a sharp increase in the last
| two-three years.
|
| The main issues are sprawl and aging, above the ground
| electrical infra
| blackeyeblitzar wrote:
| > Annual number of prescribed burn acres had been stable
| since the 70s with a sharp increase in the last two-three
| years.
|
| The number of burns isn't as important as much as how much
| ground is covered by burns and where. Has anyone studied it
| in greater detail?
|
| > The main issues are sprawl and aging, above the ground
| electrical infra
|
| I am not sure what sprawl matters, but I agree electrical
| infrastructure that is surrounded by fuel or can be
| affected by winds is problematic. But that still comes down
| to local and state leadership doing their job. It's
| incredible that such large budgets and large numbers of
| public employees fail to produce outcomes that are any
| better than other states.
| boroboro4 wrote:
| The parent says number of burn acres, not burns.
| dilyevsky wrote:
| > I am not sure what sprawl matters, but I agree
| electrical infrastructure that is surrounded by fuel or
| can be affected by winds is problematic.
|
| without sprawl forest fire is just forest fire. August
| Complex fire was 10x larger than Camp Fire which caused
| 80x deaths and 50x damages.
| amluto wrote:
| Much of the damage was in areas where a controlled burn would
| have been impossible due to geography. And the kind of
| vegetation in the burn area isn't suited to controlled burns
| anyway:
|
| https://thedispatch.com/newsletter/techne/why-shrubland-
| make...
| bjterry wrote:
| Controlled burns aren't impossible in chaparral, even based
| on the logic of that article the controlled burns just need
| to be less frequent and more intense than for forest.
| There's no reason they couldn't be done.
| chaboud wrote:
| You may be thinking of the US Forest Service's suspension of
| prescribed burns.
|
| https://cepr.net/publications/us-forest-service-decision-
| to-...
|
| However, state and local agencies undertake prescribed burns
| regularly. To be fair, clarity (read: honesty) from political
| figures on this topic (and others) is at an all time low.
| nradov wrote:
| For most of the recent Los Angeles area fires there was never
| any possibility of conducting controlled burns. The terrain
| is too steep and there were too many structures nearby. A
| controlled burn could have turned uncontrolled in moments
| (which has happened before).
|
| Brush clearing can help to an extent. But that's tremendously
| labor intensive on steep hillsides where heavy equipment
| can't be used. Taken too far it can also destabilize the soil
| and cause mudslides during the rainy season.
|
| More realistic solutions are going to include tightening up
| the building code to make structures more fire resistant,
| prohibiting building at all in certain risky areas, and
| provisioning more water supplies so that the hydrants don't
| run dry.
| aeternum wrote:
| >More realistic solutions are going to include tightening
| up the building code to make structures more fire resistant
|
| Problem is this makes building more expensive. A better
| path might be the Japan strategy. Houses are designed to
| last 30 years then be replaced. You often get more energy
| efficiency, ability to build density as-required, more
| efficient ability to build and recover quickly from any
| disaster.
| octacat wrote:
| A lot of stuff is simple, like cleaning brushes around
| the house, replacing wooden fences with metal/stone. More
| harder - changing ventilation for the attics. Except it
| is still not popular, so nobody would do it, if not
| mandated.
| wetpaws wrote:
| "Nothing can be done" says the only place on the planet
| where this happens.
| delfinom wrote:
| California is a bit more nuanced to that. There's a whole
| chunk of Federal land owned by BLM that is poorly managed by
| the feds. And then there's a fuck-ton of private land as well
| that makes up forests and brush. And then finally there's
| state owned land.
|
| Of course california hurts itself with its own environmental
| regs for burns, but there's alot of legal complexity to pull
| it off across the various land ownerships.
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