6 ms·
Allstate joins State Farm, stops issuing new homeowners insurance policies in CA
- nacs 3y agoSounds to me like these mega companies are expecting favorable regulation changes to give them more “freedom” (to reject valid claims). Either that or they’re wanting a tax-payer funded bailout.
- inferiorhuman 3y agoI'm inclined to believe this isn't the case, however the article notes that Allstate pulled out for a few years after having one of their rate increases denied.
- 0xBDB 3y agoIt's probably worth noting in this context that while I believe Allstate is publicly traded and for-profit, State Farm is neither. It's a mutual - it's owned by its customers and its excess rates go back to them as dividends. There could still certainly be shenanigans, but not quite the same kind.
- nerpderp82 3y agoThis is going to cause a collapse in the housing market, you can't secure a loan without an insurance policy.
- valianteffort 3y agoSeems like a perfect opportunity for Blackrock and friends to continue buying up homes in cash. Not like anyone should be buying now with current interest rates.
- jacobr1 3y agoThis is a partial misunderstanding - the institutional purchasers very much are using debt. But at the level of making an offer, they do so in cash without any financing contingencies. The models under which they can make profitable purchases does depend upon the prevailing rates, thus precipitating a recent be drop off in institutional purchases.
- mcphage 3y ago> Not like anyone should be buying now with current interest rates. In the recent past, it seems like interest rates have been unusually low. Do you think they're going to go back down to those levels, instead of rising up to more historical rates?
- WirelessGigabit 3y agoWhich in turn will activate the voters allowing for $ to spend on controlled burns & higher premiums. Then the insurance will maybe come back?
- artursapek 3y agoThat seems like a pretty big deal, it could lead to a domino effect.
- Daishiman 3y agoAs some people who've been following the conversation on climate change around 15 years back noted, it's going to be the reinsurers and long-term value investors the ones who will be the agents of change for climate policy.
- deleted 3y ago[deleted]
- Solvency 3y agoMaybe a dumb question but let's say they all pulled this stunt at once. All of the insurers. What happens? And what stops the insurers from dropping current CA homeowner policies?
- silisili 3y agoTake a look at FL, assuming it works similarly, both of your questions are answered. Yes they can cancel you, and yes you'll be able to get insurance, but it may be prohibitively expensive.
- themodelplumber 3y agoThere's still a state plan right?
- abtinf 3y agoDeciding to not risk operating at a loss is a “stunt”?
- bagels 3y agoAppropriate response is for the state to offer insurance as competition instead of letting them try to coordinate extortion of us all.
- inferiorhuman 3y agoThe article discusses the state's plan of last resort. Carriers are required to pay into it, and this was one of the reasons cited for Allstate and State Farm pulling out.
- w-ll 3y agoIs there something CA is doing the lump all of CA and not just the people in the high risk zones? I mean a lot of east coast states have roughly similar flood/hurricane issues on the coast or flood plain areas right? And they pay out and let them rebuild in the same area? Forgive my ignorance on it.
- Rebelgecko 3y ago3 things that might be contributing: Insurance companies are allowed to charge more for people in high risk areas, but there's a cap that probably doesn't scale with the actual risk level Insurance companies aren't allowed to pass on the costs when their reinsurance costs go up For a while there was a moratorium on dropping policies for homes in high risk areas
- abtinf 3y agoSeems like a textbook example of price controls causing a shortage and subsidies causing excess consumption.
- azinman2 3y agoIt’s a negotiation tactic with the state so they can charge higher rates
- inferiorhuman 3y agoWhat exactly is "excess consumption" of homeowner's insurance?
- andromeduck 3y agoBuilding here you shouldn't. Inflated property values on disaster prone areas.
- Rebelgecko 3y agoRepetitive claims, eg your $5 million house in Malibu burns down, insurance replaces it, and 5 years later it burns down again.
- asimpleusecase 3y agoThe article says that the state has created an insurance product that people can buy if they can’t get insurance in fire risk areas - THEN that entity passes on losses to insurance companies who refused to insure that risk to start with! That seems like a great reason not to be in the fire risk business there. If the state thinks they can do it better, let them hold the risk. Did, I misread that? Why would any company what to be in that space?
- SapporoChris 3y agoThe FAIR Plan is an association comprised of all insurers authorized to transact basic property insurance in California. "THEN that entity passes on losses to insurance companies who refused to insure that risk to start with!" Incorrect, some of them are refusing to offer new coverage. They still have existing contracts. "Why would any company what to be in that space?" The FAIR Plan has higher premiums and the risk is divided by all insurers operating in California. Now, when a insurance companies completely bows out of California. That will be big news.
- dang 3y agoRecent and related: State Farm halts new property insurance policies in California - https://news.ycombinator.com/item?id=36094633 https://news.ycombinator.com/item?id=36094633 - May 2023 (233 comments)
- meursault334 3y agohttps://archive.is/4Muud https://archive.is/4Muud
- photochemsyn 3y agoCalifornia is a quite dynamic state, geologically and meteorologically speaking. Floods, droughts, earthquakes and wildfires (along with the occasional debris flow) are a temporal reality in this state. Nevertheless, insurance has been a reliably solid blue-chip investment sector for about a hundred years, hasn't it? > "To obtain accurate information about the average rate of return on insurance investments in California over the specific 1950-2000 period, you may need to consult historical financial records, insurance industry reports, or academic studies that focus on this particular time frame and geographic area. It is worth noting that past performance does not guarantee future results, and the climatic landscape has changed significantly since the 1950-2000 period." Chevron profits still run this state, I wonder when that bottoms out?
- onetokeoverthe 3y ago[dead]
- incomingpain 3y agoThe cat is out of the bag on globalism ending. California has started their decline for the first time ever. I dont blame them at all for withdrawing from CA.