CA insurance crisis: Thousands to lose coverage as two more insurers withdraw

State insurance regulators do have a legitimate purpose -- to prevent totally free-market (read, &quot;lawless&quot;) behavior by insurance sales companies which happens when people can promise something in the future, take money for it now, but not deliver (ala the golden age of past American business hucksterism). Insurance as a product (or snake oil) is highly prone to this malfeasance when unregulated. Just like lotteries.<p>But on the other hand, because state regulators are slow to react or adapt to changing circumstances, they essentially freeze the market and the parameters allowed for sales of insurance in the past, for circumstances that may no longer exist.<p>So, new risks and willingness to insure are not accounted for, and companies no longer find it profitable to do business with rules of the past, in the present.

To be clear: California home owners insurance.<p>One factor listed: post earthquake fires.<p>California has &quot;fire season,&quot; not a season I ever wanted in my life. I wonder how much this is actually kind of an issue of global warming without being called that. My understanding is fires are getting worse on the west coast thanks to climate change.

This is starting to happen in New Zealand - either increased rates or simply no coverage. For different reasons - flood &amp; slip events.<p>Re-insurance rates have gone through the roof through 3-4 weather events over the past 2 years. No signs of slowing down...

It&#x27;s not just the home insurance either. Last week, I bought a car and 3 of the big insurance companies refused to insure it without a 15 days waiting&#x2F;underwriting period (Geico which I&#x27;ve had for many years, State Farm and Progressive). It was pretty surprising, it seems like they are trying to stop offering insurance without explicitly getting out of the state or something. Thankfully, AAA gave immediate coverage.

&quot;When setting their rates, insurance companies [in California] cannot consider current or future risks to a property. They can only use historical data.<p>...<p>Insurance companies say that because they can’t consider climate change in their rates, it makes it difficult to truly price the risk for properties.&quot;<p><a href="https:&#x2F;&#x2F;apnews.com&#x2F;article&#x2F;california-home-insurance-wildfire-risk-premiums-047bdfa514ce93dac83c82735a15554a" rel="nofollow">https:&#x2F;&#x2F;apnews.com&#x2F;article&#x2F;california-home-insurance-wildfir...</a>

The FAIR plans are NOT fair. The insurance companies in the FAIR association have zero incentive to reduce rates, or even assist with mitigation recommendations. AB38 was supposed to fix this and force the insurance companies to recognize mitigation, but it is so overly broad, and watered down, that it means nothing.

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I live in CA. We have a separate optional earthquake insurance that is maintained by some CA authority that is pretty expensive to buy into. Wonder why that can&#x27;t be done with fires that originate from a forest if it&#x27;s such a high risk?

This is what happens when government officials are too severely ignorant of economics, and try to make things cheaper by decreeing prices. They decree a price for something that is below what it costs to provide, and all the sellers stop selling.

the basic elephant in the room is that in the years 2017, 2018 and 2020.. there were unprecedented losses due to fire.<p>The right way to look at this negotiation.. a power-play between goliaths.. is that losses occurred on a scale and severity that no one predicted.. now, years later the markets are trying to find a way to do business in insurance

Exactly what pretty much everyone expected (except for the people who were praying for a miracle from god)

The major reason insurers are leaving is because California has been considering enforcing Prop 103 recently, which has begun spooking insurance providers into leaving.<p>The Insurance Commissioner is also an elected position now, so there is an incentive for them to succumb to populist pressures to climb up the poltical ladder (eg. Governer, Senator, Congressmember)<p>Edit: listen to CharlesW. I&#x27;m incorrect on the fact that it wasn&#x27;t enforced until recently