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CA insurance crisis: Thousands to lose coverage as two more insurers withdraw
- dadjoker 2y ago[flagged]
- polski-g 2y ago[flagged]
- sp332 2y agoWhat's the price fixing part?
- deleted 2y ago[deleted]
- alephnerd 2y agoCalifornia has been considering enforcing Prop 103 recently, which has begun spooking insurance providers into leaving. 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. Govenor, Senator, Congressmember) Edit: listen to CharlesW. I'm incorrect on the fact that it wasn't enforced until recently
- PHGamer 2y agoinsurance is a scam anyways. the only reason it works is because nothing is supposed to happen. howevever, shit has been happening (thanks to weak enforcement of laws) and their easy profit margins are being lost because asset values have balooned
- CharlesW 2y ago> California has been considering enforcing Prop 103 recently… Nope, it's been enforced since the start. Right after it passed, insurance companies refunding over $1.2 billion to consumers based on CDI enforcement. https://consumerfed.org/pdfs/whatworks-report_nov2013_hunter-feltner-heller.pdf https://consumerfed.org/pdfs/whatworks-report_nov2013_hunter...
- polski-g 2y ago> They include ideas such as changing the process for requesting rate hikes "Requesting" means that prices are fixed to whatever the government feels is "fair".
- deleted 2y ago[deleted]
- toomuchtodo 2y agohttps://archive.today/qDmVU https://archive.today/qDmVU
- tekla 2y agoExactly what pretty much everyone expected (except for the people who were praying for a miracle from god)
- alephnerd 2y agoThe major reason insurers are leaving is because California has been considering enforcing Prop 103 recently, which has begun spooking insurance providers into leaving. 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) Edit: listen to CharlesW. I'm incorrect on the fact that it wasn't enforced until recently
- dangus 2y agoHuh? Prop 103 is from 1988. The article cites wildfires and close proximity of buildings (again, wildfires) as reasons to withdraw.
- alephnerd 2y agoYep! But Lara only recently threated to bring in enforcement after negotiations with Insurers over liability failed [0] It's never actually been enforced before in CA. Edit: listen to CharlesW. I'm incorrect on the fact that it wasn't enforced until recently [0] - https://www.politico.com/newsletters/california-climate/2023/09/07/schrodingers-wildfire-insurance-deal-00114636 https://www.politico.com/newsletters/california-climate/2023...
- CharlesW 2y ago> It's never actually been enforced before in CA. Incorrect, it's been enforced since it passed. Soon after it passed, insurance companies refunded over $1.2 billion to consumers based on California Department of Insurance (CDI) mandates. You can find many more examples. https://consumerfed.org/pdfs/whatworks-report_nov2013_hunter-feltner-heller.pdf https://consumerfed.org/pdfs/whatworks-report_nov2013_hunter...
- underseacables 2y agoLara could make radical changes if he wanted to, but ever since the court sided with him twice against the FAIR association, the insurance companies have sort of gone to war against him.
- jimrandomh 2y agoThis 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.
- DoreenMichele 2y agoTo be clear: California home owners insurance. One factor listed: post earthquake fires. California has "fire season," 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.
- tehlike 2y agoAs far as i can tell, california forest management essentially ended up suppressing "good fires", and didn't do enough of controlled burns, which ended up accumulating a lot of fuel to cause large fires.
- DoreenMichele 2y agoIt's probably a lot more complicated than that. For one thing, California is a place that imported eucalyptus. This is a fire hazard. https://news.ycombinator.com/item?id=37442671 https://news.ycombinator.com/item?id=37442671
- tehlike 2y agoIf eucalyptus is now fact of the state, what needs to be done to reduce its impact?
- wbl 2y agoI find chainsaws work fine
- cqqxo4zV46cp 2y agoCalifornia could look to, I don’t know. Australia!? Instead of Americans again pretending that any problem they face is uniquely theirs.
- _DeadFred_ 2y agoSanta Cruz had huge wildfires when I was a kid in the 80s (it snowed ash even). The fire experts were pretty explicite that if the same policies were kept in place (preventing burn off) we would have those same fires 40 years later. It's 40 years later I wonder how that turned out.
- mistrial9 2y agothe basic elephant in the room is that in the years 2017, 2018 and 2020.. there were unprecedented losses due to fire. 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
- teeray 2y ago> is that losses occurred on a scale and severity that no one predicted The house made some bad bets, the players “won” a few hands, and now the house is backing those players off while they figure out how to rig the game again.
- infecto 2y agoNo, the elephant in the room is that in many states, including CA, insurance companies are severely limited at how much they can change their rates and what factors they can to determine risk/premiums. Edit: I think there has been a number of comments from the big underwriters that they are unable to underwrite risk properly. This is not just a CA problem either, Florida is also a huge issue.
- JumpCrisscross 2y ago"When setting their rates, insurance companies [in California] cannot consider current or future risks to a property. They can only use historical data. ... 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." https://apnews.com/article/california-home-insurance-wildfire-risk-premiums-047bdfa514ce93dac83c82735a15554a https://apnews.com/article/california-home-insurance-wildfir...
- theogravity 2y agoI 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't be done with fires that originate from a forest if it's such a high risk?
- bombcar 2y agoThe CEA is because earthquakes would bankrupt insurance companies because they strike multiple properties at once. Something similar could be done for forest fires but hasn’t been setup yet. The general consensus is CEA policies are underfunded and the expectations are that the feds will step in.
- infecto 2y agoBecause state run insurance is kind of a crock. These are programs put together for constituents to be pleased enough to vote in the next election cycle but will do little to help in an actual disaster. Its been years but the state run insurance had pretty limiting caps on both contents and the cost to rebuild. Seemed kind of pointless from a total loss perspective. Edit: I would guarantee that the state run plan is both underfunded and not charging appropriate premiums for the given risk.
- everybodyknows 2y ago> underfunded and not charging appropriate premiums Sure. But Sacramento has a secret disaster recovery plan: Appeal to Washington for a bailout.
- infecto 2y agoAnd that probably would happen.
- redserk 2y agoGenuinely curious, how so? Do they have frustrating claims processes or limit pay-out when an incident happens? I'm in another state and my home insurance has been increasing but nowhere near what it sounds like is happening in California and Florida.
- RowanH 2y agoThis is starting to happen in New Zealand - either increased rates or simply no coverage. For different reasons - flood & slip events. Re-insurance rates have gone through the roof through 3-4 weather events over the past 2 years. No signs of slowing down...
- supernova87a 2y agoState insurance regulators do have a legitimate purpose -- to prevent totally free-market (read, "lawless") 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. 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. 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.
- randallsquared 2y agoTaking money in exchange for future delivery and then not delivering is no more a “free-market behavior” than mugging is.
- konschubert 2y agoThat’s not how insurances work
- woleium 2y agoif only there was some way to ensure that the insurance companies pay, perhaps some kind of insurance insurance /s
- cookingrobot 2y agoThat’s called reinsurance, and insurance companies buy that to cover them when disasters are more than they can afford.
- ftufek 2y agoIt'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/underwriting period (Geico which I'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.
- underseacables 2y agoThe 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.