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Do insurances actually end up loosing money in the sate of California for example? Or is it a negotiating tactic tp increase rate? So far the statement coming f

Do insurances actually end up loosing money in the sate of California for example? Or is it a negotiating tactic tp increase rate? So far the statement coming from insurers themselves, and I think the reason why it was denied, is that they refused to share they financial statements proving losses.

gruez 3y ago
If you're against insurance company profiting, shouldn't you fix that through payout minimums? Even if they could somehow make money in california as a whole, it still a bad idea because the price limit implies of transfer from people with less risk to people with high risk, effectively subsidizing people to live in high risk areas. Regardless of how you feel about insurance profits, I think you can agree that's a bad idea for society as a whole.
- jabroni_salad 3y ago
  Insurance companies already have profit caps. If the loss ratio is too low they will partially refund premiums to bring it up.
mistrial9 3y ago
> end up loosing money in the sate of California for example? the home insurance industry in California changed dramatically with the 2017 summer fire season. The numbers are about "billion" in claims. (edit) substantial destruction of buildings of a major city Santa Rosa. At the same time, price escalation of homes was in full swing. Some houses experience a paper-value growth of more than ten percent a year, on top of high prices. The combination is fatal to the stable insurance industry. No party is innocent on this.. all players are aggressively padding their positions adversarially, including local government. Less than half the burned homes were rebuilt, four years later IIR. ps- a recent study claims that about fifteen percent of residential homes are under extreme fire risk in California now, out of maybe 1.5 million structures... roughly, depending on definitions.
- jeffbee 3y ago
  None of those houses should be rebuilt, of course. Cities need to retreat from their interface with combustible lands, and keep a large cleared buffer around built-up areas. Sprawling out onto parched hillsides isn't a good idea and I fully approve of insurers dropping those policies. Some of your other statements are exaggerated. You say a third of Santa Rosa burned in 2017 but it was more like 3% of the dwellings in that city. The Census states that Santa Rosa has gained net dwellings in the last 5 and 10 years, so Santa Rosa is not another Paradise.
  - mistrial9 3y ago
    more rigorous analysis available for a modest fee. Superficial AI search shows ~2800 homes destroyed completely in Santa Rosa October 2017. ps- I recommend this site.. https://ccst.us/reports/the-costs-of-wildfire-in-california/ https://ccst.us/reports/the-costs-of-wildfire-in-california/
nostrademons 3y ago
If they're smart insurers, they would leave before there are actual losses, because there's a pretty significant lag time between when you write the policy and when the customer makes a claim. By the time there's a major disaster, it's too late: they'll be bankrupt if they didn't collect premiums at a rate that makes the disaster survivable. If you believe that insurance is still profitable at the rates where other insurers leave the market, the rational response is to start your own insurance company. Run the numbers and prepare a presentation to investors; if your numbers are rational and convincing, you can capture the market for yourself and reap the profits.
- fatfingerd 3y ago
  I think few insurers can actually do any of that, let alone a new one when the question is larger calamities. They all have to buy from reinsurers which have a lower limit of what they would charge that may be considerably lower than what they are able to charge given how few reinsurers can play with large risks. For the consumer insurer its more like looking at a commission and guessing whether it will go up again as other market participants decide what to do.
supertrope 3y ago
In 2017 home insurance companies paid out 250% of premiums in claims. See page 63 of: https://www.energy.ca.gov/sites/default/files/2019-12/Forests_CCCA4-CNRA-2018-008_ada.pdf https://www.energy.ca.gov/sites/default/files/2019-12/Forest...
- YeBanKo 3y ago
  It’s one year. Insurance is a spread of losses over the time and over population. What was their aggregated loss/profit over let’s say last decade?
  - supertrope 3y ago
    From the highlights section: "In terms of financial performance, admitted insurers in the Homeowners Multiple Peril line broke even in terms of combined underwriting profit between 2001 and 2017. Results for the Fire line were better, with the combined ratio well below 100 percent over the same period. The industry was profitable when investment returns were considered; however, insurers’ experience between 2001 and 2017 illustrates how a particularly bad wildfire season can wipe out many years of underwriting profits."

gruez 3y ago

If you're against insurance company profiting, shouldn't you fix that through payout minimums? Even if they could somehow make money in california as a whole, it still a bad idea because the price limit implies of transfer from people with less risk to people with high risk, effectively subsidizing people to live in high risk areas. Regardless of how you feel about insurance profits, I think you can agree that's a bad idea for society as a whole.

jabroni_salad 3y ago
Insurance companies already have profit caps. If the loss ratio is too low they will partially refund premiums to bring it up.

mistrial9 3y ago

> end up loosing money in the sate of California for example? the home insurance industry in California changed dramatically with the 2017 summer fire season. The numbers are about "billion" in claims. (edit) substantial destruction of buildings of a major city Santa Rosa. At the same time, price escalation of homes was in full swing. Some houses experience a paper-value growth of more than ten percent a year, on top of high prices. The combination is fatal to the stable insurance industry. No party is innocent on this.. all players are aggressively padding their positions adversarially, including local government. Less than half the burned homes were rebuilt, four years later IIR. ps- a recent study claims that about fifteen percent of residential homes are under extreme fire risk in California now, out of maybe 1.5 million structures... roughly, depending on definitions.

jeffbee 3y ago
None of those houses should be rebuilt, of course. Cities need to retreat from their interface with combustible lands, and keep a large cleared buffer around built-up areas. Sprawling out onto parched hillsides isn't a good idea and I fully approve of insurers dropping those policies. Some of your other statements are exaggerated. You say a third of Santa Rosa burned in 2017 but it was more like 3% of the dwellings in that city. The Census states that Santa Rosa has gained net dwellings in the last 5 and 10 years, so Santa Rosa is not another Paradise.
- mistrial9 3y ago
  more rigorous analysis available for a modest fee. Superficial AI search shows ~2800 homes destroyed completely in Santa Rosa October 2017. ps- I recommend this site.. https://ccst.us/reports/the-costs-of-wildfire-in-california/ https://ccst.us/reports/the-costs-of-wildfire-in-california/

nostrademons 3y ago

If they're smart insurers, they would leave before there are actual losses, because there's a pretty significant lag time between when you write the policy and when the customer makes a claim. By the time there's a major disaster, it's too late: they'll be bankrupt if they didn't collect premiums at a rate that makes the disaster survivable. If you believe that insurance is still profitable at the rates where other insurers leave the market, the rational response is to start your own insurance company. Run the numbers and prepare a presentation to investors; if your numbers are rational and convincing, you can capture the market for yourself and reap the profits.

fatfingerd 3y ago
I think few insurers can actually do any of that, let alone a new one when the question is larger calamities. They all have to buy from reinsurers which have a lower limit of what they would charge that may be considerably lower than what they are able to charge given how few reinsurers can play with large risks. For the consumer insurer its more like looking at a commission and guessing whether it will go up again as other market participants decide what to do.

supertrope 3y ago

In 2017 home insurance companies paid out 250% of premiums in claims. See page 63 of: https://www.energy.ca.gov/sites/default/files/2019-12/Forests_CCCA4-CNRA-2018-008_ada.pdf https://www.energy.ca.gov/sites/default/files/2019-12/Forest...

YeBanKo 3y ago
It’s one year. Insurance is a spread of losses over the time and over population. What was their aggregated loss/profit over let’s say last decade?
- supertrope 3y ago
  From the highlights section: "In terms of financial performance, admitted insurers in the Homeowners Multiple Peril line broke even in terms of combined underwriting profit between 2001 and 2017. Results for the Fire line were better, with the combined ratio well below 100 percent over the same period. The industry was profitable when investment returns were considered; however, insurers’ experience between 2001 and 2017 illustrates how a particularly bad wildfire season can wipe out many years of underwriting profits."