That's the feeling I got. What is the point of continuing to service existing customers, including paying for the agents who no longer have any new business to sign, if they aren't ever planning to reopen shop?
Do you know what kind of legislative changes they're hoping to make?
Agents typically are responsible not only for generating new business but also servicing the policies they sell and they are compensated with commission for the life of the policy.
Further, they didn’t close down the shop they just stopped putting a certain type of inventory on the shelf - they will continue to sell auto and other types of insurance that are less exposed to wildfire or are otherwise rate adequate.
I had to come back to this comment and congratulate you on your pun. Light a fire under the ass of legislators so they can do something about wildfire insurance. Ha!
Very offtopic, but using your real name and making such statements implying that you are representing your company in this very matter (and going against their narrative) is rarely a wise thing to do.
> this happens usually when you are a C-level executive
I hope this not true for most people. I feel like most people I work with respond well to honesty as opposed to varnished corpo-speak. I’m a new senior engineer and have just started speaking in a relatively unguarded way if that makes any difference.
Don't mix up internal honesty with public shit-talking. The former is welcome at almost all places.
I'm sure there are some companies that tolerate it when an employee criticizes them (or call them dishonest/disingenuous, as in this case) in an open, external forum, but this is most definitely not the norm. If you work for such a company, then lucky you, I guess?
I think "welcome at almost all places" is dramatically overstating it.
I think you are more likely to get in trouble for shit talking internally than externally, if only because the people who care are more likely to hear.
"Y-y-yes, I specifically emphasized that I work at State Farm so I know what's really going on, but I used 'they' to emphasize that this post has nothing to do with State Farm".
But I guess this subthread is getting longer than it deserves to be. I'm not saying OP did anything wrong, but people use throwaway accounts with a reason. Employees have been terminated for much dumber reasons.
"A moratorium on insurance price increases during the pandemic only heightened tension within the insurance industry."
Insurers have no control over either construction costs nor wildfire risk. All they might do is adjust premiums to accurately reflect those costs. By raising premiums they discourage people from continuing to live in fire-prone and/or high construction cost areas.
Instead we put a price cap, taking away that mechanism, leaving insurers at the mercy of rising risk and costs, and preventing people from feeling the incentives to change things.
Frankly, if the state of California believes it knows better than the insurers how to fairly price risks to its citizens’ homes, it should offer that insurance itself.
As they’re doing with energy, they could implement progressive premium schemes for income redistribution purposes.
The richer public services and lower inequality should keep the state’s population boom thundering on.
the unspoken and incredibly politically toxic truth is that a lot of people's homes, including many whole towns, are simply at too high of a wildfire risk to continue existing. there is no price that makes them a good risk for an insurer, and the state would rather those people moved somewhere else because they don't have enough firefighting resources to protect all the outlying sprawl.
a price cap on insurance means that properties in the urban cores should be able to continue to get policies, and properties in the woods will be essentially uninsurable. if you can reduce the number of houses being built in the woods, you can let a wildfire burn without having the bad press of losing so many homes.
> there is no price that makes them a good risk for an insurer
To a naive mind that doesn't know much about insurance this sounds untrue. I'd be willing to insure houses myself with as many funds as I could get at 33% of the property value per year, for example.
Say 10% of your claims are against some natural disaster, and they will either not get triggered at all, or all get triggered at the same time. That's an uncomfortable situation - this is what is called catastrophe risk. Ideally as an insurer you want lots of uncorrelated risks and the strong law of large numbers is on your side.
Insurers typically outsource such catastrophy risks (to some extent anyway) to reinsurers, ie insurers to insurers, but (a) that's not a hard guarantee of risk mitigation and (b) they still have to pay for it.
I can imagine that in this whole quagmire, and considering what people would pay for insurance, it's easier to just pass.
How much do you need in savings to handle the maximum number of properties destroyed in a once per hundred year, bad year? If the number is greater than 100% of home value, clients are better off holding savings funds.
Have we considered whether standard best-practice wilderness management, like controlled burns, can address issues like this, or is that still ignored/dismissed?
good topic but ugly truth behind it -- a US Interior agency near New Mexico had a scheduled controlled burn on the books.. apparently they can schedule things multiple years in advance.. but .. the drought got worse and covid hit. The department had personnel and morale problems.. lots of uncertainty.. they stalledxxxxx "waited patiently" for two more years as the drought got still worse but the documents describing physical risk were not updated.
The Federal department executed the burn and it went wild, and is the largest fire in recorded history in that area now, taking out an entire town plus other structures and causing the evacuation of Los Alamos National Laboratories at the same time. you can find the details easily.. there is a 70 page "final report" from the agency perspective. This is reality.
The simple reality is that not only does human incompetence get in the way of safety here, but burns probably just aren't a very viable option.
Historical controlled burns (https://en.wikipedia.org/wiki/Native_American_use_of_fire_in...) worked because they happened frequently and kept fuel in check while encouraging trees that were resistant to or even dependent on low grade fires. Fuel loads are dramatically higher than historically however.
Now we've also got massive areas of forest dieback due to climate-driven bark beetle outbreaks. Trees that do survive burns but are stressed by them are more vulnerable to pests, just like drought stress. https://www.fs.usda.gov/ccrc/topics/bark-beetles-and-climate... So controlled burns even done effectively may still result in unwanted tree dieback.
A much safer potential cure here would be a massive increase in targeted grazing on federal land to reduce understory fuel loads, but this is also a nonstarter politically in many areas especially in National Parks. We are still maintaining this myth of virgin wilderness untouched by the hand of man.
State and federal government simply isn't competent enough to handle this given the political realities in a democratic system. Basically what's going to happen is that the most vulnerable communities will get scorched out of existence, and we're just going to have to live with the impact of more wildfires until nature sorts itself out. Americans just can’t psychologically accept being told they don’t get to develop anywhere they want.
> Fuel loads are dramatically higher than historically however.
Yup! I live in the Sierras. Everyone in this thread talking about controlled burns needs to say "California has just spent a century pursuing a policy of fire suppression" a few times.
The fuel loads are insane, these fires have been turning into giant firestorms with their own weather systems in a matter of 2 or 3 hours during the summer. I've watched it happen a few times, frightening. I suspect you can't solve this problem with fire because even if you are burning the brush wet there is still enough fuel to dry the forest out and burn it to ash.
I personally think the state should tell insurers that they only have to provide insurance in wildlands if the home/property meets stringent fire safety rules around defensible space. My house isn't even in the coniferous forest (I live in the chaparral) and it has set backs, greenzones, the works. I get so frustrated when I'm watching news coverage of the fires and the house is surrounded in pine duff and has giant pine trees right next to it.
> much safer potential cure here would be a massive increase in targeted grazing on federal land to reduce understory fuel loads
Yeah, my dad, a California native, who studied forestry at Davis always says that the solution in millions of goats. Ironically this spring the local Sacramento news reported that there was a shortage of goats to clear brush and that was just for commercial landscaping in the greater metro area. So not only is not feasible because of green hand wringing but also because we just don't have adequate goats.
How do we get more goats? Clearly they can reproduce until we have too many goats for the brush that needs to be cleared, but then do Americans like goat meat?
The simple answer is that either we pay for them using the money we would have spent on controlled burning, or we give away the grazing rights for free at least.
Most ranchers who do brush control grazing get paid for doing so. This is the opposite of the federal policy today, where ranchers have to pay for grazing rights on BLM land. Not to mention the fact that some places we used to graze sheep on like Yosemite or Sequoia National Parks have a blanket ban on commercial grazing.
that's not the start of a conversation that finds solutions. Obviously there is lot of hurt and urgency, also there have been a lot of bad bills, also there is a lot of private land grab on public property, also the existing policies have led us here.
AND.. when I read the actual research, there is far more already known, than anyone at the negotiating table seems to know.. so you get bullies and spies, angry side comments and behind-the-scenes demands..
far, far too late to just call the other side of the table uncomplimentary names, if you are serious about this.
Conservation groups like the Mountain Lion Foundation or the Sierra Club are legitimately terrible at advocating for balanced, holistic solutions. They’re the literal definition of special interest groups.
There should be alignment of interests between environmental groups and rural people who don't want their communities destroyed by wildfire. Neither of them want the forests burned down. Instead, these groups pursue a singleminded focus on attacking anything that doesn’t comply with their dogmatic pursuit of wilderness untouched by anything other than recreation.
controlled burns require weather conditions that allow them to be done safely, as well as people knowledgeable enough to keep them controlled. and the amount of the time in the year when temperatures are cool enough and the ground is dry enough keeps shrinking. controlled burns are only really a solution for a very small percentage of a space as big as california if you want to do them safely. What they sometimes do up here in canada is just monitor and let the fires burn out of control as long as they're not moving towards a populated area, to reduce fuel in a large area. but you can only do that as long as the area is truly unpopulated, if one person builds a cabin in the woods you have to move to suppression.
as i understand it, there's been a fair bit of progress in the last couple years regarding best practice for wildfire protection in populated areas. you can do a lot by removing underbrush and building firebreaks around a town, as well as relatively simple measures like disallowing cedar-shake roofs. there's probably a future where properties in towns that implement strong wildfire protection plans can continue to be insured, and towns that don't cease to exist. but that only solves the problem for towns, i don't see what can be done for properties in the woods outside a town's firebreak.
In california you also have to deal with CARB (Air Resource Board) and get allocated burn days. They are so few that even when conditions allow no burns happen because of this logistical nightmare: https://www.kqed.org/science/1927354/controlled-burns-can-he...
Firefighting resources are already stretched thin. Adding more bureaucracy on top of these tough logistics make any preventative burns impossible to plan since CARB can just deny it the last minute.
CARB performs a useful function (acid rain anyone?), but if you asked most people in CA, I suspect wildfires will come in a lot higher on the list than smog from occasional burns. With uncontrolled fires, even more smoke and who knows what else goes into the air already.
I’m sorry I have but one upvote to give, but those who aren’t local don’t seem to have any notion of how stringent environmental and air quality regulations are in California in this arena.
Nobody wants the LA smog of the 1970s back, but controlled burns are largely impossible much of the year due to their effects on air quality.
Wildland firefighters - of whom I count several among my cousins - are between a rock and a hard place on this issue. They spend more of each year in “fire season” in part because they cannot pollute the air during “not fire season” with controlled burns.
Thank you and your family for their service and protection to all of us!!!
Hopefully one day we get a study that shows the fires end up spewing even more pollutants than any controlled burn, so the net effect of not doing these controlled burns is likely a lot worse.
Of course they are too chicken shit to take more aggressive action against the real emissions problem: cars.
Allowing new pollution spewing gas guzzlers to continue to be produced and sold until 2035 is absurd. They should ban production in 5 years and ban use by 2035.
For personal vehicles that would hit the sector of population least able to afford an EV. Incentives and cash for clunkers type programs work better than forcing a financial burden on folks.
The problem is that the last article is from 2016. All the investment is still going to long battery ranges and such, when if we built infra like this, trucking companies would switch due to much lower costs.
I’d imagine that it is feasible to defend any area with greater than x people per square mile from fire, aye? At some point you could install multiple fire hoses per block, build river beds to create fire breaks, and clearcut the surrounding area, no?
That depends on where you are talking about. In SoCal with the Mediterranean climate and relatively few forests, it would probably work. Brush clearance is already a thing and it’s possible to step it up a lot more and enforce on absentee land owners that don’t do it.
NorCal with the thick forests, you’d need to clear cut so much, you’d be irreversibly altering the landscape and will probably get other bad things for it, such as erosion and landslides. The vegetation will also try to grow back aggressively (NorCal is a lot wetter than SoCal). So you’d end up doing this over and over again. It’s unlikely to be economical.
The northeast is full of managed landscapes. It’s not necessarily cheap to do, but it’s also not expensive. However we do not generally have landslide risks.
We wouldn’t debate fire risk with a city as dense as Manhattan. There is a cutoff where the population density and size makes fire prevention/risk management economical.
My understanding is that the current liability structure makes most potential controlled burns effectively impossible. I think you’d need an act of Congress to limit liability as long as certain easily justiciable standards were met.
Except the state normally (I have no idea of the current situation with California) won't let the insurance companies accurately price the high risk areas because the voters will scream at the insurance bill.
Eventually it reaches a point where the state puts so much burden on the insurance company that they decide it's uneconomic to operate there and leave. Any insurance company refusing to write should be interpreted as a whack with a clue-by-4.
Yep, in New Zealand, we're already looking at managed retreat in seaside / riverside communities that are proving untenable in the face of increasing erosion/flooding events due to climate change.
We have a national disaster insurance entity[0], but coverage from them is tied to insurance from an insurance company. So as insurers start to refuse to insure houses at proven high risk of natural disaster, then the EQC coverage isn't applicable either.
It will suck for some communities, but it's the reality of climate change that some of those changes are gong to suck.
And I just can't believe that California, like Australia, has allowed so much residential development in ecosystems where fire is a natural part. Not sure if it's the triumph of hope over facts, or just plain ostriching.
Politically though if those houses are uninsurable, if there is a big fire, the government will bail the homeowners out, so it’s effectively zero cost fire insurance.
Nah, if you bulldoze the trees, you get fire-based shrubs in however many years and those aren't necessarily better.
Also, California cities don't even have the money to bulldoze the trees in an N-mile radius around them. California did log the entire Sierra Nevadas a hundred years ago, yes but those trees were valuable and there actually weren't as many of them (due to the fire ecology). A hundred years of fire suppression forestry and logging have turned the Sierras into a giant thicket - filled with small trees and shrubs with no market value, not easy to remove and ready to explode.
Are you saying they didn't log all those trees? I don't know the specifics, but I know that where I am up in Oregon there is very little of the old growth left. Almost everything got logged at one time or another. We still have plenty of forests, but they are all second growth.
I think that’s unrealistic. If you want to get rid of the fuel for fires, the best way is prescribed fires. If things get that bad, we’ll just see the regulations around prescribed burns loosened, the way they should be anyways.
So that one was almost entirely fraud driven - there literally were contractors going around door to door after the hurricane, offering free roofs regardless of damage.
My guess is that it's a structural dynamic - something like a hurricane is bound to trip the cat reinsurance thresholds for all the insurance companies, which means they have very little incentive to actually verify claims/monitor fraud, since it's the reinsurers eating that cost.
A less distorting mechanism is for CA to provide re-insurance to cover the massive catastrophic risk, while allowing providers to service the everyday risk.
CA already backstops earthquake insurance in a similar way.
You do lose the market signals about the real cost to insure when you do this though. Ultimately we have to change where we build but that's a HUGE undertaking and it's unclear where the political will for that will come from.
Source on the fact that CA backstops earthquake insurance? I have heard over and over again that earthquake insurance isn’t worth the exorbitant price because the carriers will be bankrupt in any actual catastrophic quake.
Wait, no. That's the worst world. The state will simply pour taxpayer money into this and people will keep extracting it and throwing into a literal fire.
Please God no. I already lose more than I get to the government in taxes on every marginal dollar I make.
Don’t worry, every decade or so there’s a good reason for Congress to rescue the states from their foolish fiscal decisions (see also: public employee pensions).
Somehow, though, the “bailout” boogeyman is never called out for the states, even though they got hundreds of billions of essentially no-strings-attached “Covid relief” dollars from the Feds.
Subsidies to state governments are inevitable while the federal government retains monetary authority, and uses it to create continual monetary inflation.
The idea that individual states could have fiscal responsibility and no funding from the feds would require that the federal reserve stop that fountain of new money. But the economic priests have decided that this must never happen, lest the plebs stop having to work as much.
I believe OP was sarcastic in their comment about California nationalizing industries and making fees based on equity. In particular the "population boom thundering on" was quite obvious sarcasm, given that California has been in a steady decline.
We have this in Florida, a non-profit insurer of last resort. Eventually, we will have a year with enough hurricane damage that it will wreck the entire economy, because so many homes have been built that cannot be reasonably maintained.
Isn’t capping insurance a regressive scheme when it comes to insurance. Poorest areas aren’t located high fire risk areas. These are single family homes. It’s like how Florida and federal flood insurance subsidizes insurance for beach front homes.
CA has required since the 80s that insurers that offer homeowner insurance also offer earthquake. However, after the ‘94 Northridge earthquake, 93% of insurers had either stopped offering or greatly restricted their property insurance underwriting in CA.
Now the CEA sells two thirds of the earthquake insurance policies in CA.
So if the insurance companies don’t step up and underwrite, CA may very well do just what you said.
> if the state of California believes it knows better than the insurers how to fairly price risks to its citizens’ homes, it should offer that insurance itself.
Technically not a State agency. They force registered insurers to participate in a pool and insure homes. It should be called "California Forced Plan" or something worse.
In practice, it's a horrific thing. I know people paying $6,000 per year for home insurance when, in other parts of the State you can insure a home for $800 per year.
Fires, you say?
Yeah, no, not a single bush burned in their neighborhood in 30 years.
What happens is that some incomprehensible grouping of State, City, County...whatever agencies get together and declare entire regions as high fire hazard zones. That's pretty much a license to rape and pillage.
The whole thing is, from my perspective, a horrific authoritarian overreach.
Why do I say this?
Look at those areas and research how many homes exist in them compared to the rest of State. Then get data on how many homes per year burn down due to brush or forest fires. That part is important. You cannot count homes that burned down because a 3D printer caught fire in the garage or someone started an oil fire while cooking and could not put it out.
If you are going to classify an entire region as an extreme fire danger region, you'd better have lots of fires caused by events well outside anyone's home. You know, brush fires.
The truth of the matter is that the numbers don't justify any of this. They are taking advantage of people.
There are approximately 12 million housing units in California [1]. Out of those, between 2005 and 2022, some 65,000 structures were lost o wildfires.
That averages out to about 0.03% properties lost per year to wildfires.
And that number is deeply skewed by abnormal way-out-of-the-norm activity during three out of 18 years. If we take out these three data points we go from 65K properties lost down to 20K. Which means somewhere in the order of 0.01% of properties lost to wildfires under normal circumstances.
So, somewhere between 0.01% and 0.03% lies a sensible estimate. And for this ridiculous number they castigate a massive portion of the CA population with this high fire risk rating that causes their premiums to explode.
There's a lot more to this [3]. If you look at home fires at a national level (over 300K per year), the leading causes are cooking and heating equipment. And yet, once again, with 140 million housing units in the US, that number represents 0.2% of the housing units per year.
In other words, if we are going to talk about averages (not always a good idea), the national average for homes burning down due to fires not related to wildfires, is TEN TIMES greater than the percentage of housing units burned down in CA due to wildfires.
Conclusion: People are getting robbed. Insurance companies are just fine.
the State does in fact provide a reinsurance scheme of sorts - disaster designations and the release of funds...the Federal government provides a reinsurance scheme under that when they designate Federal disasters and release funds
not sure the State is equipped to take over the first level of insurance...go to the DMV some time and ask if that is who you want to deal with when you have roof damage from hail etc
As always, it is politically expedient to attempt to control prices, and usually wins votes from people who are interested in only short term results or do not understand how markets work.
Adjusting supply and demand, however, inflicts a lot more pain, so it ends up being a last resort, if even that.
Indeed, and they insist on doing so in the most fine-grained, bureaucratic way imaginable:
> Established in October 2022 and touted as a first of its kind, the state program requires insurance providers to discount policies for property owners who mitigate wildfire threats by installing fire-rated roofs, enclosing eaves and creating ember-resistant zones. Insurance companies have 180 days to submit a wildfire risk assessment or score, which the state can appeal.
the same thing applies to eviction moratorium, there are a lot of financial institutions, big and small, are targeting mom and pop landlords who cannot withstand the non paying tenants. The owners sold at a cheaper price given the promise of no headache and the institutions have lawyers on retainers. Seen this played out many times, I even got involved in a JV deal for one. It's insane how californians complain about high rent prices, with insanely high risk like this of course there needs to be a high return, not to mention the nimby limiting the supply.
Lots of people where I live can't get their current homes covered by home insurance, as a fire destroyed 1,000+ homes a few miles away in a matter of hours.
The situation sucks, but their continuing to live there and be insured has to be subsidized by somebody somewhere. The area is clearly insanely risky to the point where no premium justifies offering coverage.
If coverage was offered, who should be the one subsidizing it? Private companies? No way, they never would. Government? That's just a regressive policy funneling money to a relative well-off (homeowners) group of people.
>The area is clearly insanely risky to the point where no premium justifies offering coverage
Perhaps this was lost, but areas where insurance companies are deeming too risky to live is growing given climate change is real and weather patterns are shifting - sometimes drastically - to create more powerful storms.
This is just going to continue to happen in a game of Russian Roulette.
Nor should they. If they could pay that ridiculous rate then they wouldn’t have a problem not having insurance. You’re presenting it as someone that buys a 300k house and gets a $1500/mo mortgage doesn’t “want” to pay $8500/mo in home insurance.
It’s better insurance just isn’t available at any price. You can know going into the purchase that the home will be uninsurable so your financial picture needs to account for that.
Also in general I don’t believe you can get a mortgage without home insurance? So people buying these properties would have to come in cash.
>but their continuing to live there and be insured has to be subsidized by somebody somewhere
I think insurance companies cover customers because the customers pay for the insurance.
You're saying that because profits for insurance companies aren't at the level the insurance companies want, that they can say - because it's illegal to own an uninsured home, where people can and can not live?
That seems like an overreach of power of a private company.
They don't need to abandon their homes, but those homes are becoming uninsurable without heavy subsidies (like FEMA flood insurance). Houses should simply not be built in many of these places.
Maybe. Or maybe if their municipality got serious about fire breaks, fire prevention, and invested in their fire department they would be insurable again.
Does it matter? The problem isn't that the fire started, that's always going to happen sometimes, the problem is how much it spread and how much damage it did.
I can't remember the specific terms of my mortgage, but as I recall, the first level was 'you must have home insurance with certain parameters including having us as a named insured, etc; if you don't, we will obtain home insurance at your expense'. But I don't know what the recourse is if home insurance is unobtainable.
Certainly, it would be a lot harder to get a new mortgage underwritten, which makes refinancing mostly impossible and makes selling difficult.
Given that the property would be difficult to sell, I'd imagine even if the contract allows it, lenders wouldn't foreclose for lack of insurance if insurance is unavailable.
Really, I think the way to move forward on the issue that so many homes are built in areas they shouldn't be is to make available insurance policies that cover permanent relocation, rather than rebuilding in place. You can still live there until it burns down, at which time, you must move elsewhere and the lot is deemed unbuildable for the forseable future. With some sort of provision to manage windfalls from changes in conditions allowing safe construction in the future. (It's not fair if you force people out, but ten or twenty years later, let people in again; OTOH, maybe one hundred years later, it will make sense?)
> But I don't know what the recourse is if home insurance is unobtainable.
The recourse is usually foreclosure when the borrower doesn’t meet the essential terms of the mortgage agreement. It doesn’t matter why the borrower can’t get insurance any more than it would matter why the borrower couldn't make payments on the loan.
about a decade ago, purchased a home half a mile away from a river. For the last 50 years, the river bank has been has been slowly moving outwards out due to erosion. I bought the house for a million, it's now worth two.
Last year, a thousand houses a few miles downstream fell into the water. This year, my insurance company cancelled my coverage, and I can't find anyone else who will insure me. What I'd like is for premiums to be raised for people who bought their homes in a safe area, to pay me my million dollars in profit when my house falls into the watter. This is my Current home. Am I supposed to just abandon it because no one will buy it?
So, the answer to your question, is yes. Home prices go up and down. Yours is now worth zero because of your bad decision. It is not the job of other people, to pay you for your mistake.
they should not. the fact that you did not understand this is what I was saying, suggests a lack of practice in social interaction. now this is not meant as a personal attack. think of it like this: you are teaching an arithmetic class - something for which fully functional members of society need to have the skill. you explain that 5+2*2=9. someone corrects you that it is in fact 14. what would you suggest this person do?
this also applies to basic language skills. i suggest that whatever advice you have for the previous hypothetical person, you apply to basic social interaction in your own life.
but maybe I'm wrong, and you did not read the comment to which I was replying. in that case, I suggest that when you read a comment, you should see the comment it's rebutting, prior to posting yours. this also, is a basic social skill.
I'll start you off: I do not own a house at all as I travel internationally and move around too much to stay in one place over a few years. I would also never purchase one in a risk zone, since there are thousands of others available w/o the risk, and they don't cost more.
Unpopular opinion: Good. Now if the state of CA would also institute policy that homeowners affected by disasters will not be bailed out we can get somewhere productive. Want to live somewhere with a massive and well-known chance of wildfire, mudslide, or earthquake destruction on top of absurd property prices? Fine, you own the risk (and associated cost) of that. Incentivizing bad decisions is not a viable long-term strategy.
I would say the same should go for Arizona, Florida, and Texas, all of which will see an increase in risk from climate change. Feel free to move there, but don't ask for a handout when you get punched in the face economically. The evidence is clear, although mandatory disclosure of the climate risk during a real estate transaction is a gap to be closed.
> Homeowners are flocking to the likes of Florida and Texas, despite the growing threat of climate-related weather disasters, according to data from LexisNexis Risk Solutions reported by the New York Times.
> Property insurance costs are rising across the country, with premiums up an average of 21 percent since 2015. Those bumps are significantly higher in states that carry more climate risk, however, including Florida (57 percent) and Texas (40 percent).
> The president of one of the world’s largest insurance brokers warned Wednesday that climate change is destabilizing the insurance industry, driving up prices and pushing insurers out of high-risk markets.
> Aon PLC President Eric Andersen told a Senate committee that climate change is injecting uncertainty into an industry built on risk prediction and has created “a crisis of confidence around the ability to predict loss.”
> Reinsurance companies, which help insurers pay catastrophic losses, “have been withdrawing from high-risk areas, around wildfire and flood in particular,” Andersen told the Senate Budget Committee.
> He added, “Just as the U.S. economy was overexposed to mortgage risk in 2008, the economy today is over exposed to climate risk.”
> Now an insurance crisis that has swept across the Gulf Coast is spilling into Texas, where increasingly scarce property coverage has forced tens of thousands of coastal homeowners to buy policies from a state-chartered insurance program.
You're getting downvoted, but the data is on your side. People will knowingly buy homes in areas with high risk because they know insurance or the government will bail them out, so home prices don't properly reflect the risk.
For example, houses in New Orleans should be nearly $0 because of the risk, but since FEMA will rebuild your house in a flood, they aren't. There are houses there where FEMA has paid out 10x the current value because they've been destroyed so many times.
I understand people have attachments to their place of birth or upbringing, and that's fine. But the house prices should reflect that. Imagine instead of the home costing $300,000 and you have to get a loan for that, the house costs $300 but they give you a loan for $300,000 to rebuild if it gets destroyed. This would cause people to gravitate towards homes that are less likely to be destroyed because then you don't have to take on the $300,000 loan. It's standard risk aversion.
I think you misunderstood my intent. People should live wherever they want, but should bear the risk-associated cost of that choice. Which is not what happens today - State Farm is exiting the market because CA artificially limited premiums, and Florida keeps bailing out homeowners and insurance companies when hurricanes wreck the coast.
No, I understood your intent, but I don't really agree that it makes sense to individualize risk like this so that one person gets completely ruined by freak occurrences. Maybe if we're talking about particularly high-risk zones, but the entire state of California, inhabited by 44mn people and spanning more than half the West Coast, should be left out to dry?
> I don't really agree that it makes sense to individualize risk like this so that one person gets completely ruined by freak occurrences.
An earthquake in California is not a freak occurrence. A fire in a fire prone area is not a freak occurrence. A hurricane in Florida is not a freak occurrence. A sink hole in Florida is not a freak occurrence. People not living in those areas should not be forced to subsidize those that do. It's not like people are being dropped in large numbers yet or that State Farm was the only insurer.
> Maybe if we're talking about particularly high-risk zones, but the entire state of California, inhabited by 44mn people and spanning more than half the West Coast, should be left out to dry?
Maybe California makes it too hard to refuse service to only certain people and this is the only way to handle it? Do you honestly believe they would leave money on the table if they didn't have to? There are other insurers there.
Yeah I suspect this story is being oversold like every second California catastrophe story (remember when we were going to have no bacon?). But as far as the “oughts” of it that’s where I stand.
> State Farm is exiting the market because CA artificially limited premiums
I don't know if this is California's intention, but I think limiting premiums is more effective at discouraging homes existing in hazardous areas than high insurance where the rich would simply lay the insurance. When fires burn through inhabited areas, state agencies have to attend to them to save lives, independent of insurance premiums. This costs the state money.
I recall reading several years ago that a climate researcher had chosen the Midwest, which intuitively makes a certain sense — not very hot, no ocean coasts to worry about, lots of fresh water.
As someone from the midwest, I can confirm that midwesterners tend to be pretty smug about climate change. ("It'll make our winters milder!" is a common sentiment.).
Atlanta. Not a lot of natural disasters there, far enough from the ocean to be insulated from rising sea levels as well as hurricanes. Too warm for ice storms.
That piece is so so bad. There were several “wow that’s ridiculous” rebuttals after it was published. Some about how Seattle is really far away from the coast (and therefore would see far less shaking than implied), some about how tsunamis will dissipate in the Sound, some about how we’ve been building everything to survive this for decades.
My ex-partner’s a geologist. She hated that article.
Not sure how convincing I find assurances that an ex-girlfriend of yours and some other, unnamed people disagreed with it. Either way, it’s a seismically active area, there are volcanoes, there are landslides, and the PNW has not been untouched by wildfires.
This is all fun and games until insurers just stop insuring Midwest homes in tornado zones, flood planes, etc. Not sure why this idea is being upvoted simply because it’s about California.
> DOI Commissioner Ricardo Lara in September 2022 invoked a law [...] prohibiting insurance providers from canceling or refusing to renew plans for properties affected by wildfires until 12 months after the fire. [...] A moratorium on insurance price increases during the pandemic only heightened tension within the insurance industry.
When you fix it so a business is guaranteed to lose money, they stop doing business in the state.
It seems they’re trying to make it so insurers simply can’t cancel your policy out from under you. Note how it specifies “renew”. These were people already paying for wildfire insurance and the law prevented them from being screwed over. Insurers just want a way out of paying up unless they can renew your contract into an absurdly marked up premium.
Anytime there's a shortage, you can be sure a government policy is behind it.
The irony of all the bureaucrats bullshitting about climate change to cover for a policy outcome of their making is not lost on me. Never change, California.
In terms of the insurance industry at least, California isn’t too far out of the ordinary compared in terms of bureaucracy and red tape (especially compared to, say, some eastern states with powerful and aggressive regulators such as NY or MA).
Of course, the judicial environment is separate from the regulatory apparatus, and it seems eminently plausible that CA courts are much more willing to protect consumers from bad faith claims practices, etc.
That all being said, catastrophic[1] wilfdire claims are a huge problem in the P&C insurance industry because they make the actuarial math much more difficult, and CA has had quite a few over the past couple years. Where I live in CO, none of the well-known insurers will, as a rule, write home policies in the mountain regions for similar reasons in spite of the relatively friendly regulatory environment.
[1] a term with a rather precise meaning in insurance, referring to a single event which causes a large number of expensive and highly correlated claims
Yep. The cost for our master policy jumped 4x in 2018. This was right after PG&E burned huge chunks of California (including entire cities) to the ground. That's not a bureaucracy issue that's an "oh shit everything's a lot more likely to burn down than we realized" issue.
The forests are supposed to burn. They burnt for centuries before 1900.
The reaction when houses burn should be "should have built using fireproof materials" or "that happens when you live in a forest" not "here's billions of dollars from more-responsible people".
By fueling 'climate change' anxieties the California supermajority and the monopoly power company PG&E mask their deadly incompetence with massive media spends, stoking fear and with the inevitable result of insurance being withdrawn and businesses leaving the state.
It's a shame there's no credible political opposition in the state, the infrastructure is crumbling, street dwelling drug tourist visitors are out of control, we are not on top of water storage during the heavy rain cycle years that occur every 5-7 years.
And knowing that the insurance companies still priced coverage significantly lower before they saw that PG&E was willing and able to start burning things on their own. California's approach to forest management didn't change dramatically between say 2016 and 2019 but the cost for homeowner's insurance sure did.
Insurance is socialization of risk. It's much more cost efficient to socialize costs for infrequent bad events than it is to require anyone who might suffer said event to make themselves immune to it. The cost for making fireproof all homes that may burn is astronomical, as would be ensuring all homes could survive flood, tornado, hurricane, etc etc.
The adjustment in cost is simply facing the reality that more homes are burning nowadays. They pay for your flood insurance as much as you pay for their fire insurance, and their premiums are moving up faster than yours..
It's not that expensive, reinforced concrete with brick facade and metal roof is fireproof. I happen to know ICF costs 5-10% more than stick-built, so that's about the premium you should expect. But why would people bother when we have to bail them out?
Your analogy is sound but your conclusion is not. There are many home owners that live by the shore that can’t purchase flood insurance from any provider. Similarly with life insurance, if I die engaging in certain risky behavior, it voids my insurance policy.
The purpose of insurance is to socialize losses. But if a few participants in the insurance pool engage in outsized risky behavior, that’s not fair to the rest of the pool that chose significantly less risky decisions.
The conclusion holds since there are a great many homes in CA alone that cannot be insured against fire. They were built before that was an option, or were otherwise grandfathered in after fire codes were established. Same with floods and other threats
These 3 little pig arguments fall a bit flat to me.
You may have not seen what a forest fire, like those NorCal gets, does to a house. The insurance companies will have to pay just as much to replace a yard with some scorched brick in it where a family of four used to live, with their cars, possessions, appliances, etc. The house is ruined whether the walls survived the 1000 degree heat or not, because everything in and around it is lost.
Now there's certainly a class of old wooden houses on grasslands that are vulnerable to becoming infernos from stray sparks.
Assuming they weren't always that vulnerable (and that's what we're talking about here: new risk), I'm just not clear who would pay for it to be torn down and rebuild with (magical?) bricks. Did the homeowners have to do periodic risk assessments and decide when to do this? Who would pay for it? What's their motivation? They have insurance after all. They'll just rebuild.
If the insurance companies were caught off guard by this, how is a home owner to know and preemptively rebuild?
Literally the top of the article you'll see wildfires and rapidly growing construction costs as the major factors. In the Bay Area, my HOA's insurance carrier doesn't have any general contractors willing to participate in their repair program. Try finding a licensed contractor on your own, most won't get out of bed for anything under six figures even if you're okay with unpermitted work.
Labor is scarce, demand is high (wildfires), and materials are expensive. I know a few folks in the trades out here and one is constantly at his lake house, the other is constantly on vacation or touring with his band.
That site's definition of "judicial hellhole" seems to be approximately "place they think is too easy for plaintiffs in personal injury or consumer protection lawsuits".
For example, a big part of why they ranked Pennsylvania as a top judicial hellhole is that the venue rules for medical malpractice lawsuits was changed from "must file in the county where the alleged injury occurred" to "can file where the alleged injury occurred, where the doctor lives, or where the provider operates a hospital or office".
Some reasons Georgia is #1 are a big verdict against Ford in a suit saying F-250s have weak roofs that greatly increase the danger in a roll over accidents and a state Supreme Court ruling allowing a lawsuit to proceed against Snapchat from an accident where someone going 107 mph (they were trying to generate a post using Snapchat's Speed Filter that would show over 100 mph).
That is really quite fascinating.
Prop 65 in particular, I was vaguely aware it was a headache for businesses in particular but I wasn't aware it created such incentives for citizens and lawyers to act.
I can't help but wonder if simply requiring a list of ingredients for all products would be a better way to achieve similair ends.
One of the problems is few insurance carriers offer a cash out option if your house is destroyed, flooded, and needs to be rebuilt then it must be rebuilt in the same place. Then it goes into do you have these options or this secret option where they do their job to not pay you anything. Calculate the depreciation value…etc
“If you have the Cash-Out Option or Agreed Value, congratulations! If you face a total loss, you will receive the replacement cost amount on your home whether you decide to rebuild there or not. If you do not, you will only receive the replacement cost amount if you decide to rebuild in the same spot. If you decide to cash out and move, you will receive the depreciated amount.”
Fire risk and building costs were the stated reason my insurance went up 50% last year. And I'm not in a high risk zone... the only way I can cut it by any useful amount is by increasing the deductible to $10K+
A carrier leaving the market doesn't bode well. It is hard to enough to get on the property ladder for first time buyers, the challenge may soon become staying on it.
Your deductible should be for the largest amount of cash you can reasonably part with. Statistically you will make it out better with a higher deductible but lower monthly premiums.
I had a flood in my house with a 5k deductible and when we told the restoration company we were going private on the services they magically reduced the price by 50% and we only paid 3k out of pocket. You also have to take into account that trades will jack the prices on insurance claims which is going to be baked into your monthly rate, so if you can go private when possible you can also save money in the long run.
When I first bought the house, I went down the curve of deductibles, at each step asking "what's the payback period for the difference in deductible between covered losses that would exceed $50K?" At the short end of the scale, it was in the 5 year range, then went to 8 at $5K, was over 12 at $10K, and over 17 at $25K. That's how I originally settled on $5K.
Based on this thread, I just went back and re-priced them (my insurance has a nice-enough online quoter for basic transactions like this). The curve had shortened some and so, while I could pay $25K out of pocket, I upped my deductible to $10K and doubled my personal liability coverage. Starting next month, I'll be saving a little over $500/yr and have a more personal liability coverage to boot.
Amusingly, there are coverages that have a $500 deductible. Who the hell wants to even talk to an insurance company over a loss that doesn't significantly exceed a $1K deductible? My insurance discounts include a $495/yr discount for "no claims in the last 5 years". If I had a $500 deductible and had even a $2500 loss, I shouldn't submit it if it would remove that discount for 5 years...
I can understand this for e.g. cars. In case of minor damage the insurance isn't involved, leading to a significantly lower price with deductible.
Are there cases of minor damage to burning houses? If it burns it burns? The price with deductible would only be lower proportionally to the maximum possible damage.
Homeowner insurance covers a lot more than fires (and a kitchen fire could easily be a partial fire, as some friends of mind discovered last year). Theft, hail damage, trees falling, pipes bursting, etc all are likely to be covered partial losses.
$10k seems insane to me because you are almost certainly guaranteed to be out of pocket for things that your insurance won't cover. In my case I had an issue that the HOA's master policy covered but my own HO6 didn't so there was zero loss of use coverage. Short-term furnished apartments run close to $7,000/month out here (typical minimum lease is three months), so even if you have a situation where your own insurance is providing loss of use coverage you're likely to blow through that pretty damn quickly.
So, sure, you can absorb a ten thousand dollar deductible. Can you afford another twenty grand (or more) on top of that for some place to live while your home is repaired/rebuilt?
Deductibles are fiction for home owners insurance in California. After each of the recent natural disasters, the permitting departments dragged their feet, causing years of delay before homeowners could rebuild.
At the same time, the disaster created a construction labor shortage, and the price of construction increased 20-30% between the insurance payout and permit approvals.
Stricter regulations are required. In particular, it should be illegal to block permits for equal or improved structures, and the insurance companies should be on the hook for the total cost of reconstruction/buying a new home up to the day the homeowner moves in (minus deductible).
I don't understand. Are you saying a $10k deductible is bad? Why? Are you saying it's too high or too low? You mention problems due to things not covered by insurance. How would changing the deductible improve things there?
$10,000 is way too high. For any given covered event the deductible is the amount of money you're on the hook for.
What I'm saying is that for anything major you're likely already going to be out of pocket for thousands, perhaps tens of thousands of dollars in costs that your insurance company won't cover in addition to the deductible. Maybe you have ten grand to piss away on a deductible. Do you have twenty? Thirty?
Living in a house with smoke damage while it gets repaired is significantly more harmful to your quality of life (especially if you're WFH) than driving a car with accident damage.
If you’re going to have the insurance for 50 years, expect to have 1 claim, and the difference in price between a $5K and a $10K deductible is $250/yr, which choice of deductible is “pissing away” more money?
If you can predict your claims why bother paying for insurance at all until you need it? We're both commenting on a post about an insurer that's bailing because they are having to pay out more than they can afford in the face of increased natural disasters. The most relevant information I could find claimed that the average Oregon homeowner makes a claim roughly once every nine years (or somewhere over five claims in your timeframe).
If you have $30k of expenses, and $10k are the deductible, you should try to fix the other $20k, since they're bigger. For example, try to buy a second insurance that will cover those other $20k, or switch to a different insurance company that will put the $20k in the covered category.
Focusing on reducing the $10k deductible to e.g. $2k, but leaving the other $20k to remain seems like a backward strategy to me.
In my case I'm dealing with a condo, so no standard master policy nor any HO6 policy would cover loss of use. An umbrella policy might cover it, and you could certainly find something bespoke but it would hardly be worth the cost.
For a single-family home I would've been covered but the amount of loss-of-use coverage is generally tied to the rest of the coverage you've got which is tied to the value of your home. With the cost of 'short term' housing (at least in the Bay Area) you're likely to blow through your limits pretty quick even if you ignore all of the other costs related to loss of use (commute, food, utilities, etc.).
Keep in mind the vast majority of homeowners insurance policies aren't "we're going to make you whole", they're "we'll pay for certain, named events up to a dollar amount". The things that your carrier excludes are likely to be things that every other carrier in your state will exclude.
Besides the bet that you'll save money with a $10,000 deductible falls apart once you make a second claim in fifty years. The best numbers I could find suggest that homeowners typically file a claim every 9–10 years. You've likely already blown through the projected savings by the second decade, by year fifty? The lower deductible would've been much cheaper.
I've been wondering if there is any alternative to the traditional home insurance market, apart from just dropping it completely. I'm not in a fire area, nor really any other increased risk, yet premiums just keep shamelessly going up 20-30% / year. I'm sure it looks necessary to the underwriters, but from my perspective it seems like I'm getting lumped in with a lot of people who seem to think insurance is a substitute for a bank account. To me, insurance is for catastrophic losses like a structure fire, or withstanding legal attacks like someone suing you for hurting themselves. But I see a trend of people using it for what are small scale (ice dams) or even what should be routine house expenses (got a 25 year old roof? why patch it when you can get a roofer to tell your insurance that you have wind damage and get a whole new roof!).
Even choosing the highest deductibles doesn't really lower premiums significantly. There just doesn't seem to be a way to express to an underwriter "really, I'm only going to call you if my house is a total loss". It's probably just the same oligopolic/info-cartel consolidation that is plaguing the rest of the economy. But it sure is frustrating.
Also on the topic of insurance, it really irks me that insurances are allowed to have caps on liability coverage. The entire point of insurance is to cover long tail risk. Instead they upsell you on additional coverage that still doesn't cover the long tail risk.
This is what I have done. Cash and semi-liquid investment vehicles are king if you have enough to cover the worst case. I get called a "crazy person" whenever lack of coverage comes up at friend & family gatherings, but I honestly don't feel any anxiety over it.
Worst case scenario, my home burns down or experiences some other total loss and I have to pay 100% out of pocket to put a roof back over my head. Yeah this sounds kinda bad, but there are a lot of statistics in my favor here. I WFH full-time, so the probability of me not being at home when something "weird" happens is diminishingly small. Additionally, I can't recall the last time I saw a fire truck heading to an actual structure fire in my community. These newer homes are kinda safe by default. Water/wind damage is a concern, but I've been through enough hurricanes to know that TWIA coverage is the biggest scam ever perpetuated on homeowners in the gulf coast region.
> Worst case scenario, my home burns down or experiences some other total loss and I have to pay 100% out of pocket to put a roof back over my head
Worst case is your house fire burns down the neighbourhood. This is why while self-insuring your own property is fine, liability is something even billionaires insure.
Worrying about being sued because of a structure fire spreading in a modern suburban development is pretty out there, IMO. If we really want to get into worst case, there are all manner of things that no sane person would ever insure against.
What kind of coverage does the typical home owner have along axis of "my house fire also was the eventual reason that 20 other homes burned down"?
Not typical, but umbrella insurance is the path to covering something like this.
That said, I do agree with you with regards to insurance. Health, car, house, etc insurance all seem to be closer to payment plans rather than actual insurance for catastrophic events. If there were viable options that had 10k or even 50k deductibles that noticeably lowered premiums, I would sign up.
Liability insurance is really valuable. You’ll lose your home to a semi-clever person who finds a reason to sue you. I used to sell insurance. My district manager told a story about how the insurance company had to pay because a homeowner’s dog barked at a guy off the property, the guy tripped & got injured, sued the homeowner for a nontrivial amount, and won. You can self insure if you want to, but don’t be surprised when shit happens and you wonder why your having to liquidate your assets.
> Does your home insurance include enough liability coverage for a whole neighborhood?
No, but it has enough that I can outsource the litigation to an insurance company.
I personally know one case, granted in apartments, where the lack of renter’s insurance permanently financially disabled, and one where it caused years of grief.
This is what I've done for the past decade. I was talking to a friend about it and he said, "so basically your plan is... fuck it... let it burn?". Which sounds about right.
How much would you expect an unlimited liability policy to cost?
My homeowners policy, in an area with pretty minimal disaster risk, is roughly inline with or somewhat below the national average (per dollar of property insured) and my premium went down by $1 compared to last year.
The spike in labor costs is part of the issue, for sure. But that explains one or two years, rather than the continual 20-30% increases I've seen for a bunch of years in a row.
Unlike fires earthquakes and other real catastrophes that can’t just be legislated away, unlimited liability absolutely can be. But so long as juries are willing and able to render absolutely ridiculous verdicts, the insurers can’t feasibly cover all your risk.
Do you own your home outright? If you don't, the mortgage issuer (i.e. the real owner) would likely not play ball with catastrophic coverage.
I've managed to keep my premium low by increasing the deductible to the max and also not increasing the covered amount (replacement cost). Even though I own the property, I'm not balsy enough to completely drop coverage. But, I also don't live in an area where the land is 80%+ of the value. For reference, I pay probably about a quarter of a percent of the insured value per year with a $3000 deductible, which seems pretty darn reasonable compared to comprehensive/collision car insurance.
> routine house expenses (got a 25 year old roof? why patch it when you can get a roofer to tell your insurance that you have wind damage and get a whole new roof!).
25-30 years is about the lifespan of a shingled roof depending on climate.
I agree it’s routine maintenance. It’s also 10k-20k in some areas. I much prefer insurance being used for a large issue vs using it to have a tree removed because it was hit by lightening 1-3k.
Sure, but the whole roof doesn't vanish when it's at the end of its lifetime. Rather you start to get more leaks and whatnot and can pay to patch those spots, and/or start thinking about replacing the whole thing.
The silver lining could be a reduction in the endlessly repeated "Jake from State Farm" commercials that accompany so many TV programs here. It's actually hard to find any major insurance company that doesn't advertise ceaselessly on television, I can only think of Traveler's.
KQED radio in San Francisco has been sponsored for years by Progressive with a message about their pay-as-you-go auto insurance that is not available in California and never has been. The non-availability of State Farm policies might not kill off their commercials.
As a climate refugee from Paradise, CA, I agree. The insurance rates tripled between 2018 and 2020.
I think this is unfair and un-business-wise in another sense because it fails to account for regional and local risks. Here's the best all risk estimate map by the US government[0].
Many locations shouldn't be occupied, while Alpine and Sierra counties are low risk. Switch to census tract view, and it's clear there are many low risk in Sacramento/Citrus Heights away from fires and floods (downtown by the river floods). There are also pockets of low risk around San Diego and randomly around semi-populated areas.
> State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.
If you understand the insurance & re-insurance business - can you explain these three factors in a bit more depth?
Naive guesses: insurer offers a policy that agrees to rebuild a destroyed home -- so they're exposed to construction costs, if those costs rise above their projections. Unanticipated increases in construction costs increase the liability and reduce the expected profitability of each insurance policy. Increased risk of catastrophe might also increase liability of each insurance policy for homes exposed to those catastrophic risks, and also increase the risk to the whole portfolio of a catastrophe destroying many homes at once, causing many policies to come due at at the same time. A catastrophe might also do interesting things to market rates for construction costs.
I'll admit I don't understand insurance in CA specifically... But I have a decent general knowledge of a lot of insurance concepts from a past partner.
Your naive guesses look to me to be on point.
Another thing to consider, at least in the case of 'Replacement Cost' (What it would cost to build a house with similar features) versus 'Actual Cash Value' (What the house was worth on the market.) In the case of 'Replacement Cost' there is the issue that any changes to code must be factored in (i.e. a house built in 1980, may have wiring/plumbing/etc that had been grandfathered in but could not be approved as a new build today.)
Increased risk of catastrophe is also a result of the root causes of massive losses from wildfires not being addressed at a government level.
"State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market."
I guess though I'm kind of curious why they don't just raise their rates to the account for the actual cost of insuring there? I assume probably some regulation or volatility...
I'm not sure why state farm is doing this and citing wildfires. Most insurers already won't cover fire in the fire-prone areas of the state, so you have to get a separate plan just for fire through Cal FAIR which tends to be crazy expensive. The traditional insurers will cover everything else, like theft. So you end up with two plan, paying about 3x what you would normally.
But State Farm insures a lot of areas that others already consider too risky. They could be more targeted about reducing their coverage area. If your home is in the middle of LA I don't think it's prone to wildfire risk.
>The change does not apply to personal auto insurance or existing home insurance policies in the state.
This is a little misleading.
My family has State Farm, and they recently sent a letter informing us they will be inspecting our property.
My guess is they are looking for things that could increase the risk of fire or risk of losing/damage to the house during a fire and will ask us to remediate any issues they find.
This is understandable, but their current statement is likely misleading because they are likely implementing other, additional/different policies for existing home insurance policy holders.
It's common for carriers to stop writing insurance in places, but apart from Florida I haven't seen large carriers like State Farm pull out of entire states in this way.
The Gulf South has been having a tough time with a string of catastrophic storms and flooding. Since 2005, Louisiana has been struck by 10 hurricanes. Flood policies have become so incredibly expensive that some people are simply saving money and throwing it into an account because it makes more sense than paying $8K+ to get a home insured for a year.
Insurance carriers pulled out of WA during the LTC crazy in 2020.
The state passed a law that was basically, pay 0.8% tax for the rest of your life or buy private LTC care for 30 days and avoid paying the tax forever.
The insurance providers were not happy to see people joining for 1 mo and then canceling.
I havent work in the P&C industry for many years so I have no special knowledge here, but given the past half decade of CA wildfire seasons and what the climate scientists have to say about what’s coming down the line, it seems pretty plausible that the catastrophe modeling for CA fire risk looks similar to FL’s hurricane risk.
Insurance should be for actual cost of replacement minus a fixed deductible (by law). As it is, homeowners policies are unlikely to actually allow you to obtain a new home.
the 2017 and 2019 fire seasons in California were predicted and extensively documented, but not prevented. Reading a bit, and definitely not a fan of Big Insurance Inc., it does seem like the system is breaking from several directions at once. no easy answer, political problems for the ones that speak out..
years back, some insurers wanted to stop issuing home policies for people near the Santa Cruz Mountains due to fire risk. Dianne Feinstein applied pressure in the Senate and with some concessions, it all went away.
They pull out to light a fire under the ass of legislators. And then they resume business as usual.