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Like we see in California, when the government sets a price ceiling, insurance companies just leave. Same in Florida. If the free market truly was allowed run

• tptacek 2y ago
  Or some forms of housing in high-risk areas, like sprawling single-family houses, might get too expensive, and the only way for people to live in those places would be a smaller number of denser, more easily defended structures. Also a good thing.
• underwater 2y ago
  Price caps always seem like such a transparent political move.
  • mgiampapa 2y ago
    How about profit caps? I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders. To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums.
    • ladberg 2y ago
      Insurance companies have pretty thing profit margins regardless, even in areas where profits are not capped. It's a competitive marketplace!
      • tomrod 2y ago
        I'm not sure I believe your factoid. Can you cite? UHC is one of the wealthiest companies in the world.
        • ladberg 2y ago
          Health insurance does have profit caps, so like the sibling commenter said their margins are small (6%) but also decently under the cap (20%) in the first place.
          • tomrod 2y ago
            The insurance subsidiary will have a cap, but provider subsidiaries have no such cap.[0] [0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-shifting-profits-to-provider-subsidiaries/ https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...
        • amazingamazing 2y ago
          their september 2024 earnings put them at 6% margin. that’s not very good. for reference apple is 15%, mcdonalds is 32% and costco is about 3%. that being said compared to a competitor, elevance at 2.5%, they’re doing well. a little worse than allstate (car and home insurance), which is about 7%.
          • tomrod 2y ago
            To be fair, they play a shell game by steering people towards their subsidiary owned medical providers (avoiding loss ratio limits of 15% to 20% by putting the money into providers, which have no profit cap).[0] [0] https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-shifting-profits-to-provider-subsidiaries/ https://pnhp.org/news/insurers-avoid-loss-ratio-limits-by-sh...
            • anomaly_ 2y ago
              Yea, and after all that they still only eked out a 4% net profit after tax for 2024.
    • bitcurious 2y ago
      > To some extent this has helped with health insurance. Each year I get a check back from my insurer saying they didn't spend enough on my care vs my premiums. This has baffled me ever since Obamacare was first passed - it seems that each year the insurance companies have an incentive to drive up the cost of healthcare, since that’s how they earn more money in absolute terms. Is it not so?
      • nradov 2y ago
        That is so, to an extent. But it's balanced against employer demands to hold down medical costs because they pay most of the bills. If your HR department can save 5% on employee medical costs by switching from Blue Cross to Cigna next year they'll absolutely do it.
      • gunian 2y ago
        Any idea why Obamacare didn't follow the European model? Other than the freedom argument People on HN always talk about European health insurance seems like an easier route than to murder people lol
        • School-Cotton 2y ago
          First of all there isn’t one “European model”, every country in Europe has its own system. To answer the substantive point, it’s extremely difficult to pass substantial laws in the US due to the structure of its political system. The mandatory coalition of the president + 60% of the senate + 50% of the House of Representatives is a much higher bar than any other democracy. So laws aren’t written to be optimal policy, they are written to satisfy this extremely high coalition requirement — Obamacare in particular was very fundamentally weakened from some of the more expansive initial proposals to address the concerns of one or two senators and get them on board.
          • gunian 2y ago
            but people always talk about how insurance is guaranteed in europe something must be working if gunning down a CEO is pro the people wouldn't copying one of the European countries be even more pro the people? what makes senators hate something that is pro the people? wouldn't that give them better ratings? I come from a dictatorship so sorry if this is a dumb question
    • cowsandmilk 2y ago
      > How about profit caps? What period do you put it over for property insurance? Profit caps work for health insurance because claims are typically not correlated. The percentage of your customers with cancer won’t 5x one year and go back to baseline the next. New drugs or treatments (or a drug going off patent) can cause correlated swings, but generally costs to health insurers don’t change a lot year to year. For property insurance, you need to bring in profits most years to fund the year when there are multiple category V hurricanes or large fires.
      • mgiampapa 2y ago
        The book of business has to be large and the pockets deep. Which describes our current insurance market and the government. The way we handle this now is with reinsurance.
    • csomar 2y ago
      Sure. Because the response of a failure in governance is more government? What you are proposing is "unfair". You are essentially suggesting that the rest of the country subsidize a subset who wants to live near high-risk areas. Me too want to live in a dense forest and also have my house by the edge of the river. You could make the argument for this for healthcare, since no one can choose which illness he is born with. But choosing your housing location is a "choice". And you can/should move somewhere else where it is less risky.
      • macinjosh 2y ago
        People choose to smoke, overeat, engage in risky activities that can cause injury near and long term (Rock climbing, riding motorcycles, football, MMA). Why should society pay for these choices?
        • throw0101a 2y ago
          > Why should society pay for these choices? Because it's the only way to get universal coverage, which if you don't have, means a portion of the population gets really sick, jams the ER, can't afford to pay the resulting bill (maybe declaring bankrupcy), and someone then has to eat/cover the cost. Often by hiking prices for those that do have coverage. Do a search for "ACA three legged stool": > It starts by requiring that insurers offer the same plans, at the same prices, to everyone, regardless of medical history. This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on. > So insurance regulation has to be accompanied by the individual mandate, a requirement that people sign up for insurance, even if they’re currently healthy. And the insurance must meet minimum standards: Buying a cheap policy that barely covers anything is functionally the same as not buying insurance at all. > But what if people can’t afford insurance? The third leg of the stool is subsidies that limit the cost for those with lower incomes. For those with the lowest incomes, the subsidy is 100 percent, and takes the form of an expansion of Medicaid. * https://archive.is/https://www.nytimes.com/2017/07/10/opinion/obamacare-repeal.html https://archive.is/https://www.nytimes.com/2017/07/10/opinio... This 'architecture' was developed by Jonathan Gruber: * https://cdn.americanprogress.org/wp-content/uploads/issues/2010/08/pdf/repealing_reform.pdf https://cdn.americanprogress.org/wp-content/uploads/issues/2... * https://en.wikipedia.org/wiki/Jonathan_Gruber_(economist) https://en.wikipedia.org/wiki/Jonathan_Gruber_(economist) It is a form of social safety net.
    • toast0 2y ago
      Most regulated insurance markets do have profit caps. California certainly does, but there was still a price cap added.
    • waterhouse 2y ago
      Profit caps presumably create perverse consequences. If the profit I'm allowed to make is proportional to X, then I'm incentivized to maximize X. If X is my costs, then... Maybe that's where these unbelievably high line items on medical bills come from.
    • JumpCrisscross 2y ago
      > How about profit caps? Transfers wealth from shareholders, patients and taxpayers to management, bankers and intermediaries. Broadly speaking, caps are stupid—akin to treating liver enzymes directly when they spike versus seeing them as the sign of deeper problems.
      • Spivak 2y ago
        I think that's a great metaphor for the situation, when you get a patient running a 105 fever you put them in an ice bath and then consider what underlying problem is ailing them. You do the first part so they don't die before the long-term treatment kicks in.
        • JumpCrisscross 2y ago
          Correct. Caps are fine as a short-term measure. In the long term, they’re putting a patient running a fever on immunosuppressants. The fever will go. But the patient will die.
    • JKCalhoun 2y ago
      Or maybe C-suite pay/benefits caps, ha ha.
      • hb-robo 2y ago
        I'm all for this, lol.
    • donavanm 2y ago
      > I feel like government stepping in and being the insurer with a sufficiently large pool of risk to spread around lets them set a fair rate without the need to make a return or answer to shareholders. Youre about 20-30 years late to the game, but arrive in time to see the conclusion does not match your assumption. See california for fire, florida for fstorm damage, and everywhere in the us for federal flood coverage. It doesnt work. CA FAIR has higher rates to account for increasing the coverage pool, but it doesnt look like premiums will cover the current or future loses. Which is the universal story when your policy attracts all the high risk/payout buyers. And FAIR, roughly, is setup to go recoup losses from all the _other_ insurance providers in the state. Even ones not insuring those policy holders _or that type of insurance_. Its just a layer of indirection to subsidize fire risk against all poly holders.
      • mgiampapa 2y ago
        In all of those examples you have the for profit private insurance leaving the market because it's not profitable enough. When you take away excessive profits and allow the governmental pool to compete with for profit insurance, risk is leveled across the pool and consumers pay less. If the big private insurance companies can't be more efficient or have better risk models than the government, well they should stop trying to sell policies.
        • Panzer04 2y ago
          The people are risk pay less, all of the other people forced to participate in your general insurance pay more. If I live in the middle of a city in an apartment block should I pay the same rates to insure against wildfire as someone in the middle of a dry forest? Probably not, but govenrment-mandated insurance programs force me to.
          • mgiampapa 2y ago
            Premiums should be based on risk, not flat. I don't know where you are drawing that line of reasoning from. Just because the government is providing coverage doesn't mean it's all the same rate. Every insurance product has a risk model to set prices. I was just advocating that we have a non profit minded entity with deep pockets do it vs private companies motivated by maximizing profit. Public benefit corps fit this model as do regulated utilities.
• Dig1t 2y ago
  There should be a way to build fire resistant buildings to reduce the cost of insuring them, likely this would be the solution in California without price caps. You can build out of concrete and use fire resistant materials like metal or tile for the roof and your house is nearly fireproof. These buildings would be realistically insurable in both California or Florida. They would cost more to build, not THAT much more though especially if land costs many millions, an extra 50k - 100k to build out of concrete is a very reasonable expense.
  • defrost 2y ago
    Steel frame, flame retardant insulation and cladding, rammed earth, .. these are all options. Flammable trees well away from a leaf free clean guttered (or no gutter) house are also no compromise requirements. See: https://research.csiro.au/bushfire/ https://research.csiro.au/bushfire/ and https://www.csiro.au/en/work-with-us/services/testing-and-certification/fire-safety https://www.csiro.au/en/work-with-us/services/testing-and-ce... for the rabbit hole of Australian Bushfire housing certification and testing. Burning Down the House: Trial by Fire CSIRO- https://www.youtube.com/watch?v=KBtawn7IAnI https://www.youtube.com/watch?v=KBtawn7IAnI
    • sdiupIGPWEfh 2y ago
      > flame retardant insulation Which are almost definitely known to the state of California to cause cancer.
      • defrost 2y ago
        Elsewhere fiberglass and mineral wool insulation aren't regarded as carcinogens. https://pubmed.ncbi.nlm.nih.gov/1947241/ https://pubmed.ncbi.nlm.nih.gov/1947241/ https://mesothelioma.net/fiberglass-connection-to-mesothelioma https://mesothelioma.net/fiberglass-connection-to-mesothelio...
        • inferiorhuman 2y ago
          mineral wool insulation aren't regarded as carcinogens A quick look turned up one mineral wool SDS with a Prop 65 warning for formaldehyde. https://www.jm.com/content/dam/jm/global/en/MSDS/200000002057_US_EN.pdf https://www.jm.com/content/dam/jm/global/en/MSDS/20000000205...
• zeroonetwothree 2y ago
  Clearly it’s not true that “no one” could afford to live there. And if demand was low then the housing would become more affordable
  • sadeshmukh 2y ago
    No one can truly afford to live there, if you price in the cost of insurance. The only reason people live there is because they haven't hit the 1/100 chance yet.
    • oefrha 2y ago
      There are plenty of very rich people living there who can afford the house burning down every single year. So false.
      • sadeshmukh 2y ago
        Afford doesn't mean you can technically throw money out the window. At some point, you are going to give up if the risk is high enough to have >2 events in your lifetime - time is also a cost to factor in, as well as loss of possessions. It's not quite that simple.
    • therealdrag0 2y ago
      If you’ve actually done the calculations with real numbers share the math. Otherwise stop assuming the conclusion.
      • sadeshmukh 2y ago
        The calculation was done by the insurers who refuse to insure the area, or must subsidize all insurance with nearby policies.
        • therealdrag0 2y ago
          Surely there are rates at which they’d would insure the area? And you have shared no data on who is or is not willing to pay those rates.
• epistasis 2y ago
  I've been trying to talk to people locally, a place with lots of homes built in the woodland-urban interface, about the risks of climate change and how insurance will have to change. Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything. When in reality, insurance is one of the rare areas where risks are very well assessed, not just by the initial insurer but also by a second party when reinsurance is purchased. And often those exits from the insurance markers are due to inability to purchase reinsurance. Of course, explaining anything in detail is likely to make people think you work in the industry (I do not) and get accused of being a shill. All of which proves to me that older generations had a much easier life because nobody so financially ignorant today is in any sort of position to be able to buy a home. All that said, I don't think it's actually a price ceiling. It's a limitation of what factors can be taken into account to set rates, and constitutional amendment from Prop 108 prevents the legislature from changing it.
  • Aurornis 2y ago
    > Unfortunately these discussions almost never go well, because it seems that most people have at best a surface level understanding of what insurance is and how it works, and everyone is convinced that it's a full scam and insurance companies are fabricating everything I have the exact same experience when discussing anything insurance related: People have wild assumptions about how much profit insurance companies are making. When I ask people how much cheaper they think their insurance (health, home, etc) would be if we forced insurance company profits to zero they usually have some extreme guess like 50%. When you point out that, for example, health insurance profits are low single digit percentage of overall healthcare costs they just don’t believe it. The discourse is so cooked that everyone who just assumes insurers are making unbelievable profits without ever checking. Like you said, when I try to bring numbers into the discussion I get accused of being a shill (or a “bootlicker” if the other person is young). The environment this creates has opened the door for some really bad politics to intervene in ways that aren’t helpful. I wouldn’t be surprised if the eventual outcome in a lot of these places is that politicians pass legislation putting the local government on the hook for insurance after they squeeze regular insurers so hard they have to back out to avoid losing money in those markets. The consequences won’t manifest for several years, potentially after the politicians have left office, but could be financially burdensome. Similar to how many local governments were very generous with pension plans because politicians knew the consequences would only be felt by their successors.
• jmclnx 2y ago
  >Like we see in California, when the government sets a price ceiling, insurance companies just leave Does not answer the question. With no price caps, no one will be able to buy insurance even if required by law. So that means if you own a house in a risky area, you will be unable to sell it and your values will fall. The price caps are to prevent that. But to me, there should be big incentives to prevent building and re-building in risky areas. So yes, the world in some areas are uninsurable. And other areas are becoming uninsurable.
  • gunian 2y ago
    Tangential but I have read about propaganda and social engineering but seeing human caused fires to control migration patterns is a level of diabolical I never thought I would live to see but can't blame them if the cheap rent and house prices don't do the job gotta do what you gotta do
  • Panzer04 2y ago
    Why is the burden on insurance companies to make up for individual poor decisions? In some cases it makes sense to socialise the losses, but I'm not convinced this is one of them.
    • jmclnx 2y ago
      Insurance Companies do need to make a profit and Local, State and Fed Gov is allowing building in very risky areas. Just look at Florida, that is a very risky area for weather and sea rise. So in reality the burden is falling on Insurance Companies. High rates will in a way prevent building in those areas.
      • desmosxxx 2y ago
        > High rates will in a way prevent building in those areas. good?
  • jobs_throwaway 2y ago
    > With no price caps, no one will be able to buy insurance even if required by law I very strongly doubt that say Elon Musk or Jeff Bezos wouldn't be able to afford market-rate insurance costs. They would just choose not to because its too expensive. Which is the point of letting the market set the rate
• JKCalhoun 2y ago
  > when the government sets a price ceiling, insurance companies just leave… > the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there… Seems like the result is the same — people will live there but without insurance.
  • orange_joe 2y ago
    worse, you’ll be paying to bail them out in the name of solidarity.
    • urhmbutwait 2y ago
      That’s insurance? Change the euphemism from government to private insurance to satisfy capitalism gods and keep their giant foot from squishing us… still “on the books” as a co-mingled pool of funds to shift around to solve problems. Aw …sad… other people exist and need resources too. Not just about your first world skin suit playing temp host to a run of the mill electromagnetic field effect.
      • typewithrhythm 2y ago
        People choose where they live, and should bear the cost relative to the amount of risk they chose to take. Government funding is not a magical blanket that somehow makes it moral to take from someone who made good decisions and give to another who made poor ones.
        • athrowaway3z 2y ago
          The dutch aren't insured against a dike breaking (Which has its own history). But the dikes have been collectively maintained through laws and regulation from a local semi-democratic system for 800 years (separate from government). It was a necessity as 1 delinquent could screw up everything. https://en.wikipedia.org/wiki/Water_board_(Netherlands) https://en.wikipedia.org/wiki/Water_board_(Netherlands)
• hnburnsy 2y ago
  Not just the rates are managed, but also deductibles. I'd gladly have a 5 figure deductble to keep my or miums lower, but regulators think this is unfair to some.
  • deleted 2y ago
    [deleted]
  • forgetfreeman 2y ago
    Given over half of all households in the country have less than $20k in savings I'd say concerns over equality of access may be well founded. Edit: No? The poors can go fuck themselves? Alright then I guess.
    • hnburnsy 2y ago
      How does just offering higher deductibles, hurt the 'poors'? Nobody said do away with lower deductibles. Are you saying they are not sophisticated enough to understand a proper deductible for their situation?
      • deleted 2y ago
        [deleted]
      • forgetfreeman 2y ago
        How does offering a deductible ranged well outside what the majority of households in the US can actually pay hurt anyone? If that isn't self-explanatory I'm not sure what to tell you.
      • consp 2y ago
        Higher deductibles generally lead to a lower overall money pool raising overall prices. They allowed that here in a far more regulated market and the effect was about 4pct higher prizes across the board. Effectively the people who cannot afford the higher deductibles are subsidizing the ones who can as the end result.
• EGreg 2y ago
  Can’t you say that about any part of LA? Once a fire gets going, it grows and can destroy any neighborhood. Call me crazy but if I was the mayor of LA I’d make them invest heavily in PREVENTION. Cameras and drones all over the place in the forests, to nip fires in the bud (and carch arsonists). I would also make sure that the live video footage would be used only for that purpose. It would use AI at the edge to flag every fire immediately and alert nearest authorities, and otherwise delete footage. There may be other AI at the edge uses added later by the regulators but I’d work to put in place heavy bars to overcome (eg 70% in a public referendum) before they are added. I would also invest heavily in mobile firefighting tools and materials. The firefighters using buckets is pitiful. But then again, LA hasn’t invested in itself for decades. It’s like the opposite of NYC: rich people don’t want to live in Downtown LA, they live in the equivalent of our Brooklyn, say Manhattan Beach and Sheepshead Bay by the beach. Because half of downtown looks increasingly more like skid row. Signage and streets are something out of the 70s literally. And there pretty much hasn’t been any new skyscrapers built since the 80s. The skyline is stuck in the Arnold Schwarzenegger movie era. I stayed in Freehand hostel which is actually pretty nice, even though there’s abandoned buildings and homeless all around. I met a drunk Andy Dick there by the pool one evening LOL. And you people from San Francisco — it ain’t much better over where you are. I visited Twitter HQ right when Elon took over. And let me tell you — there is a curious juxtaposition of City Hall, City Opera, The SF Philharmonic, and the fourth corner of that illustrious intersection is… a large abandoned alleyway with dumpsters. What? Imagine Lincoln Center in NYC having that. On my show I did a lot of interviews — with regulators, technologists, sociopolitical commentators like Noam Chomsky. But one of my most down-to earth interviews was in SF of a homeless guy w his dog. See it for yourself what I’m talking about: https://www.youtube.com/watch?v=rqjFeaDLuYQ https://www.youtube.com/watch?v=rqjFeaDLuYQ PS: to the silent downvoters… normally I don’t mind but this time you’re just doing it out of spite. Watch the video or say something. I bet you live there and don’t want to have these things pointed out. SF and LA were so great… so many movements started there. Lately people are fleeing and the homelessness is out of control.
  • Atotalnoob 2y ago
    Alleyways are good. They help prevent trash and smell from being on the streets people use. NYC doesn’t have them and the city smells terrible from all of the garbage
• lmm 2y ago
  Don't worry, the California government is responding to that by making it illegal to stop offering insurance in the state. That will definitely fix the problem.
  • owlbite 2y ago
    Source? Many companies seem to be stopping offering insurance in the state just fine! The most recent moves seem to be relaxing the pricing rules to allow major disaster pricing and recharging reinsurance rates in exchange for insurers offering more policies in high risk areas.
    • nathanaldensr 2y ago
      https://www.clydeco.com/en/insights/2025/01/california-wildfires https://www.clydeco.com/en/insights/2025/01/california-wildf... > The Bulletin was issued pursuant to California Insurance Code section 675.1(b)(1), which states that an insurer “shall not cancel or refuse to renew a policy of residential property insurance for a property located in any zip code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency . . . based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”
      • BeetleB 2y ago
        I imagine this won't apply if the insurer just leaves the state.
        • PaulDavisThe1st 2y ago
          Yep. These are terms to operate as an insurance company in the state. If you don't want to do that, the rules have no bearing on you.
          • qeternity 2y ago
            Which effectively means that anybody in a less risky area of California is just subsidizing those who live in the risky areas. Premia across the board will increase as a result. Typical California redistribution...but this is from the bottom to the top.
• nullc 2y ago
  > the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there I'm not so sure. The Pacific Palisades have astronomical real estate prices. (actually costly property in Florida isn't cheap either). I think the insurance costs would come out of the property prices. I say this on the basis that the prices the real estate sells for is already what the market will tolerate, if there are other costs to owning it-- then the remaining part the market will tolerate will be less. Perhaps a result of this is that it may only be realistic to construct lower costs 'disposable' cabins in areas with higher disaster risk... if so, that wouldn't sound like an unreasonable way to allocate resources.
• Tadpole9181 2y ago
  > Is that a bad thing? Is it a bad thing that we should consider most of the planet unlivable because disasters happen that aren't eternally and increasingly profitable to insure? Is it a bad thing that literally tens of millions of Americans would no longer have insurance? That you're asking double digit percents of the entire population to leave cities and just... what? Suddenly have new homes in a region with plentiful resources and access to water and food and an economy and no disaster potential? Is it a bad thing to compare entire states to missile testing grounds? Is this satire?
  • rcpt 2y ago
    Most of the populated areas are perfectly safe from fire. https://wildfiretaskforce.org/updated-fire-hazard-severity-zone-map-available-for-public-comment/ https://wildfiretaskforce.org/updated-fire-hazard-severity-z...
    • Tadpole9181 2y ago
      Let's add hurricanes, tornados, earthquakes, tsunamis, monsoons, etc. You're being intentionally obtuse.
• loeg 2y ago
  > Same in Florida. The Florida situation is actually markedly different. The main problem was extreme litigation-friendliness. Florida saw 80% of the nation's insurance lawsuits but only ~8% of the insurance business. They've also since passed some reforms (HB 837, 2023; SB 2-A, 2022).
• Ekaros 2y ago
  I think apt comparison would be collision coverage. How much would you charge from someone that collides a car each year. Probably more than cost of those collisions on average.
• bytwhytyte 2y ago
  Let's not forget insurance company greed. They are traded on the stock market and must provide returns to their investors. Let's not pretend they are not also part of the problem. Same with health insurance, it should never be for-profit, IMHO. But I do agree they should be able to set the premiums, otherwise they just go bankrupt. People should not live in idiotically constructed neighborhoods in danger zones if they can't afford it. But they shouldn't be gouged.
  • frinxor 2y ago
    Insurance companies are for profit. They run the analysis of how much they need to charge to break even, and aim to charge above that. If they charge too high, customers will look at the alternatives and switch to a competitor. You can replace "insurance" with any other business, the whole of capitalism is built upon this. Every stock on the stock market is trying to "provide returns to their investors" - each one is as guilty as the next - theres nothing special about insurance companies. If the argument is that insurance should be a federally provided service, then we must have a different conversation. Look at the FAIR plan. They are government created, and will get wiped out because of these fires, possibly because they weren't charging enough to begin with (and taxpayers will now need to bail them out). The math doesn't change whether its state backed or privately backed. If a home, on average, gets burned down every X years, then the insurance premium needs to be adjusted to be able to cover that. And here is the crux of the problem - if you take away the free market aspect of being able to adjust prices, and get forced to sell a product/service for less than what you need to, there will be a loss somewhere, in this order of operations: 1. loss at the insurance company --> insurance company goes broke or leaves the state 2. loss at the FAIR plan --> FAIR plan reserves get wiped out 3. loss at the state level --> taxpayers need to bail the situation out. Id argue that letting the free market work (at layer 1 above) is the proper way about it. If a house burns down every 10 years, let insurance charge 10% of that cost, because that is the actual risk involved in the system. House prices will naturally come down to reflect that reality of risk.
• stkdump 2y ago
  This logic makes absolutely zero sense. If a house is uninsurable, people will choose to live there without insurance. But if the house is insurable for a high cost people will not? They can still choose to not buy the expensive insurable and be in the same boat as inunsurable home owners.
  • e44858 2y ago
    Will banks give out loans for houses without insurance?
• ikrenji 2y ago
  why not have a 100 feet buffer clear of vegetation around housing? seems like an easy fix.
• cryptonector 2y ago
  The governments know this and yet set the insurance premium price ceilings anyways. At some point you have to consider that as indistinguishable from having a policy to drive people out: deny them insurance, wait for natural disaster, redevelop the now-very-cheap land however the government and its developer friends wants. Whether such a policy is adopted on purpose may not be possible to tell. You'll get called a conspiracist if you even hint that you wonder about it. But you know these people know -it's hard to believe that they don't- what happens when you set price ceilings.
• mym1990 2y ago
  Its interesting because the last 5 years in the US have seen a dramatic appreciation in housing prices, and also a seeming rise of risk of catastrophic events, and insurance companies are grappling with these 2 things. Ultimately maybe different insurance products could be provided that effectively offload some or all of the risk to the home buyer(which obviously is a not a good scenario for banks giving mortgages).
• munificent 2y ago
  But if they don't set a price ceiling, then insurance companies price gouge. You can't get a mortgage without insurance, so if insurers were allowed to freely control the price, they'd charge an arm and a leg since buyers are forced to buy. If insurance companies are allowed to freely raise their prices, then they would certainly love to do so because any homeowner with a mortgage would be absolutely stuck and have to pay whatever they demand or risk the bank taking their home back. I think you have an idea that the free market would naturally lead to an efficient insurance price that let's them cover disasters. But markets aren't magic, and insurance markets are anything but efficient. I don't think anyone really knows what the "right" price for homeowner's insurance is in places like Florida and California.
  • desmosxxx 2y ago
    The right price is the market price. There are multiple insurance providers and sufficient competition. And certainly the time to raise the limits is when companies are leaving the state?