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This strikes me as not understanding the limits of private insurance. There wouldn’t be earthquake insurance across much of California if the state didn’t provi

This strikes me as not understanding the limits of private insurance. There wouldn’t be earthquake insurance across much of California if the state didn’t provide it. Private insurance isn’t generally able to withstand large calamities which result in many thousands of high dollar claims in a short period of time.

tptacek 2y ago
You can insure against a very expensive event that is very likely to happen; it's simply that the premiums for that insurance will be very, very high. If you're "insured" for a catastrophic event that is likely --- for instance, a home in Pacific Palisades of any sort --- and your premiums look reasonable and bearable, then the odds are you're not insured, you're subsidized.
- metabagel 2y ago
  This is a distinction without a difference (no insurance vs. unaffordable insurance).
michaeljx 2y ago
Private insurance can and generally withstands large calamities (known as natcat losses) without government intervention via the utilisation of global reinsurance organizations. Especially for earthquake, a properly reinsured insurance can cover a large earthquake loss about once every 15-20years
- sangnoir 2y ago
  Re-insurers also re-calibrate their rates, which may mean private may be effective ... until the first big disaster whereafter the re/insurance premiums become eye-watering.
WalterBright 2y ago
When the government regulates the premiums, there will be (inevitably) shortages of companies willing to provide the coverage.
reshlo 2y ago
> There wouldn’t be earthquake insurance across much of California if the state didn’t provide it. That’s fine. If it’s not possible to buy insurance for a particular house at a price that you can afford, don’t live in that house. The state’s other taxpayers shouldn’t be assuming your financial risk.
- bruce511 2y ago
  True, but it's not quite as simple as that. Say the city has invested in infrastructure, has a thriving industry etc. That typically isn't "portable". To get a return on that investment they need residents. The residents naturally want things like insurance etc. It's high though - a barrier to entry. The city runs the numbers and decides that a resident is a net win even after insurance subsidies are applied. Now granted, the calculation isn't that simple, and usually these things come with much hand-waving. But its not as simple as "other tax payers assuming the risk".
  - reshlo 2y ago
    How would it be profitable for the government to provide insurance if it’s not profitable for a private insurer? My impression is that private insurance premiums are a lot higher than the portion of local taxes that could be allocated to insuring homes. It seems like sunk cost fallacy is at play here. When is it time to stop throwing good money after bad, and start thinking about a managed retreat?
    - sokka_h2otribe 2y ago
      Government takes in other taxes. The case being made is that the city wouldn't exist without being living there. So, the local government has a particular interest to enable people to live there by subsidizing. Private insurance doesn't have the same upside I don't know if I agree with this but am answering your question fwiw
    - ElevenLathe 2y ago
      I think in this scenario the theory is that the city will take in more in taxes than they spend in subsidies. I have no idea how realistic that is, but it seems very similar to saying that they could buy this person a house in exchange for just living in it and paying taxes, which is something I've never heard of happening.

tptacek 2y ago

You can insure against a very expensive event that is very likely to happen; it's simply that the premiums for that insurance will be very, very high. If you're "insured" for a catastrophic event that is likely --- for instance, a home in Pacific Palisades of any sort --- and your premiums look reasonable and bearable, then the odds are you're not insured, you're subsidized.

metabagel 2y ago
This is a distinction without a difference (no insurance vs. unaffordable insurance).

michaeljx 2y ago

Private insurance can and generally withstands large calamities (known as natcat losses) without government intervention via the utilisation of global reinsurance organizations. Especially for earthquake, a properly reinsured insurance can cover a large earthquake loss about once every 15-20years

sangnoir 2y ago
Re-insurers also re-calibrate their rates, which may mean private may be effective ... until the first big disaster whereafter the re/insurance premiums become eye-watering.

WalterBright 2y ago

When the government regulates the premiums, there will be (inevitably) shortages of companies willing to provide the coverage.

reshlo 2y ago

> There wouldn’t be earthquake insurance across much of California if the state didn’t provide it. That’s fine. If it’s not possible to buy insurance for a particular house at a price that you can afford, don’t live in that house. The state’s other taxpayers shouldn’t be assuming your financial risk.

bruce511 2y ago
True, but it's not quite as simple as that. Say the city has invested in infrastructure, has a thriving industry etc. That typically isn't "portable". To get a return on that investment they need residents. The residents naturally want things like insurance etc. It's high though - a barrier to entry. The city runs the numbers and decides that a resident is a net win even after insurance subsidies are applied. Now granted, the calculation isn't that simple, and usually these things come with much hand-waving. But its not as simple as "other tax payers assuming the risk".
- reshlo 2y ago
  How would it be profitable for the government to provide insurance if it’s not profitable for a private insurer? My impression is that private insurance premiums are a lot higher than the portion of local taxes that could be allocated to insuring homes. It seems like sunk cost fallacy is at play here. When is it time to stop throwing good money after bad, and start thinking about a managed retreat?
  - sokka_h2otribe 2y ago
    Government takes in other taxes. The case being made is that the city wouldn't exist without being living there. So, the local government has a particular interest to enable people to live there by subsidizing. Private insurance doesn't have the same upside I don't know if I agree with this but am answering your question fwiw
  - ElevenLathe 2y ago
    I think in this scenario the theory is that the city will take in more in taxes than they spend in subsidies. I have no idea how realistic that is, but it seems very similar to saying that they could buy this person a house in exchange for just living in it and paying taxes, which is something I've never heard of happening.