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In terms of the insurance industry at least, California isn’t too far out of the ordinary compared in terms of bureaucracy and red tape (especially compared to
by nimih 3y ago
In terms of the insurance industry at least, California isn’t too far out of the ordinary compared in terms of bureaucracy and red tape (especially compared to, say, some eastern states with powerful and aggressive regulators such as NY or MA).
Of course, the judicial environment is separate from the regulatory apparatus, and it seems eminently plausible that CA courts are much more willing to protect consumers from bad faith claims practices, etc.
That all being said, catastrophic[1] wilfdire claims are a huge problem in the P&C insurance industry because they make the actuarial math much more difficult, and CA has had quite a few over the past couple years. Where I live in CO, none of the well-known insurers will, as a rule, write home policies in the mountain regions for similar reasons in spite of the relatively friendly regulatory environment.
[1] a term with a rather precise meaning in insurance, referring to a single event which causes a large number of expensive and highly correlated claims
- inferiorhuman 3y agoYep. The cost for our master policy jumped 4x in 2018. This was right after PG&E burned huge chunks of California (including entire cities) to the ground. That's not a bureaucracy issue that's an "oh shit everything's a lot more likely to burn down than we realized" issue.
- coryrc 3y agoThe forests are supposed to burn. They burnt for centuries before 1900. The reaction when houses burn should be "should have built using fireproof materials" or "that happens when you live in a forest" not "here's billions of dollars from more-responsible people".
- jvanderbot 3y agoInsurance is socialization of risk. It's much more cost efficient to socialize costs for infrequent bad events than it is to require anyone who might suffer said event to make themselves immune to it. The cost for making fireproof all homes that may burn is astronomical, as would be ensuring all homes could survive flood, tornado, hurricane, etc etc. The adjustment in cost is simply facing the reality that more homes are burning nowadays. They pay for your flood insurance as much as you pay for their fire insurance, and their premiums are moving up faster than yours.. Today them, tomorrow you
- mixmastamyk 3y agoBricks are quite cheap, why they are used to build homes in developing countries. Metal roofs are available as well at a range of prices.
- jvanderbot 3y agoThese 3 little pig arguments fall a bit flat to me. You may have not seen what a forest fire, like those NorCal gets, does to a house. The insurance companies will have to pay just as much to replace a yard with some scorched brick in it where a family of four used to live, with their cars, possessions, appliances, etc. The house is ruined whether the walls survived the 1000 degree heat or not, because everything in and around it is lost. Now there's certainly a class of old wooden houses on grasslands that are vulnerable to becoming infernos from stray sparks. Assuming they weren't always that vulnerable (and that's what we're talking about here: new risk), I'm just not clear who would pay for it to be torn down and rebuild with (magical?) bricks. Did the homeowners have to do periodic risk assessments and decide when to do this? Who would pay for it? What's their motivation? They have insurance after all. They'll just rebuild. If the insurance companies were caught off guard by this, how is a home owner to know and preemptively rebuild?
- mixmastamyk 3y agoAreas around the house must be cleared as well. These are mitigations to reduce costs not cures.
- deleted 3y ago[deleted]
- coryrc 3y agoIt's not that expensive, reinforced concrete with brick facade and metal roof is fireproof. I happen to know ICF costs 5-10% more than stick-built, so that's about the premium you should expect. But why would people bother when we have to bail them out?
- 3y ago
- inferiorhuman 3y agoAnd knowing that the insurance companies still priced coverage significantly lower before they saw that PG&E was willing and able to start burning things on their own. California's approach to forest management didn't change dramatically between say 2016 and 2019 but the cost for homeowner's insurance sure did.
- olivermarks 3y agoWe have huge political problems, with forestry management failures and lying about controlled burns and fire break creations. https://www.capradio.org/articles/2021/06/23/newsom-misled-the-public-about-wildfire-prevention-efforts-ahead-of-worst-fire-season-on-record/#:~:text=The%20investigation%20found%20Newsom%20overstated,the%20state's%20most%20vulnerable%20communities https://www.capradio.org/articles/2021/06/23/newsom-misled-t.... By fueling 'climate change' anxieties the California supermajority and the monopoly power company PG&E mask their deadly incompetence with massive media spends, stoking fear and with the inevitable result of insurance being withdrawn and businesses leaving the state. It's a shame there's no credible political opposition in the state, the infrastructure is crumbling, street dwelling drug tourist visitors are out of control, we are not on top of water storage during the heavy rain cycle years that occur every 5-7 years.
- hedora 3y agoThe cities are built in flood prone areas, and we got hit with hurricane-level gusts like a dozen times this winter. Also, earthquakes exist. If you exclude everything in an area with those issues, there will be very little left to insure in California.