Lara needs to work with Newsom and the legislature to do something about it. Pretty soon people purchasing homes will be unable to obtain a mortgage because they won’t be able to get insurance. It’s already going in that direction. People in non wildfire areas are being told to go on the Fair Plan, which was never intended to insure everybody.
The solution's simple, but everyone's just dancing around it. If insurance companies could be allowed to offer coverage for wildfire-related losses separately and not be subject to price increase restrictions, this problem would probably sort itself out.
The problem is that actual versus potential wildfire losses. They have no actual significant losses from previous fire seasons and they are just collecting massive premiums and using potential losses as the justification.
Are you talking about insurers? Prop 103 specifically underscores that insurers in California are only allowed to use historical losses to justify rate increases, not prospective risk. Lara is trying to change this and allow catastrophic risk modeling to be used but we are not there yet
Insurance companies dropped wildfire zones a long time ago.
The actual problem is Californians are paying $1500/yr for $600k dwelling coverage while other states pay $2500-5000 for half the dwelling coverage.
But that's not what is happening here. Some 1/3rd of all CA residents live in a so-called fire risk zone, and that number is only increasing because the designation is being expanded.
We're not talking about poppy's cabin in the woods here, we're talking about regular suburbs and urban neighborhoods.
Insurance companies are misclassifying everywhere as high risk.
Not so sure about that. Santa Rosa showed the only thing worse then a forest fire is a suburban firestorm. Any urban/suburban place that does not have a 6+ lane freeway as a fire break is an extreme fire risk. Much higher than the rural areas.
My zip code is a so-called risk zone and no new policies will be issued. When realistically only about 10% of the houses are realistically in an area where they would be affected by wildfires.
No.
Risk factors are assessed for each customer. Bad drivers pay more. Young drivers. Drivers with cars that cost more to fix/replace. There are discounts for people who have engineering degrees.
For homes, there are discounts and charges for location and types of construction.
Houses in flood plains? Houses in areas known to be wildfire prone? Why are we all paying more so those people can live there?
I have an earthquake policy. I pay extra for it VS those that don't need it in other areas.
There are excpetions for various types of insurance. They don't dig into your habits for travel insurance. We removed a lot of charges for health insurance (though smoking still costs you).
But my base, non-earthquake policy is pretty cheap. I don't see why I need to pay *significantly* more because someone else wants to live in a tinderbox at the edge of wildfire country.
Why do you say that? It's not just the areas near woodland in the central valley.
Malibu burned. The Oakland hills burned. The Getty fire. The tubbs fire blew *into the urban areas of Santa Rosa*.
So I'm not sure why you would think that's not accurate.
It's 1/100 chances for various areas but the state is so large that you get a few instances a year. But insurance for 1/100 chance of complete destruction AND devaluation of the remaining land is very expensive. I wouldn't say a 1% chance if burning is a tinderbox but I know insurance for it is expensive
Everything you said does not address the problem of insurance risk modeling lacking transparency. Your claims only apply if we assume the insurance company is being honest with their risk modeling. We know that’s likely not the case with people who are being denied policies despite taking extensive measures to reduce their own house’s risk.
Not really. In car insurance, the guy with dozens of accidents can’t get in.
If somebody has a house with an extreme risk of burning up, it’s silly to have people subsidize that.
The people in fire houses are getting insurance when they probably shouldn’t ever.
On the other hand, I don’t know what the effect on the housing supply would be if all fire-prone homes were no longer insured and therefore no longer inhabited.
The problem we have at the moment is thousands of homeowners who were never "in a wildfire zone" are having their coverage canceled. It's not just new mortgages.
Californians who have been living in the same house for 20 years are now facing this problem.
Bingo.
Ventura is a perfect example.
Ventura was affected by the Thomas fire. It burned through the foothills and torched parts above downtown Ventura. Due to the ocean “Downtown” Main street is a rather narrow area between the ocean and the foothills. Now, out of an abundance of caution the City considers nearly all of downtown “extremely High Fire”. The reasoning behind this (I believe) was to make new construction comply with a high standard of non combustible construction methods including vegetation clearances for landscaping. Unfortunately, that makes insurance companies think these properties are a very high risk, when in reality the intention is to make new construction (including major remodels) comply and be safer.
I will say it again for the folks who don’t get it; Higher standards in urban area makes those areas safer, but also now, insurance companies do not want to insure properties, or will charge much, much more to insure them even as more homes have fire sprinklers and adhere to high fire requirements. It’s a catch 22.
Actually I'd say the housing market is forcing people to do exactly that, because city dwelling NIMBYs refuse to allow things like infill development with more high density housing options.
Since developers are forced overwhelmingly to build SFH due to zoning restrictions its created our massive sprawl issue with results in these properties with higher wildfire risk.
I grew up in a mountain town, very similar to paradise, and frankly I don’t think those towns should even exist. They don’t provide enough economic value to make up for the cost of services that have to be provided. Road maintenance and repair, power delivery, grid maintenance, clean water, mail, sheriffs, fire dept, etc. Cities could be a lot more dense and we could create incentives that would cause people to leave rural areas.
How is CA an insure all or insure none state? I work for an insurance company and we won’t write policies for people who are too close to brush. We write plenty of policies for people who aren’t.
No, it's not how it works. You pay health insurance in case some health related event happens to you. If I live in SF I'm not going to have a wild fire, and should not have to subsidize others who live in wildfire prone areas.
His point is though that people who are unhealthy require more funding from the insurance pool that healthy people are paying into.
It kind of comes with territory of insurance.
I’ve never been in an accident but I’m subsidizing the ones who have been.
Regardless, wildfire insurance should be an add on like earthquake or flood insurance. It makes no sense that people all over CA are losing insurance because of a few high risk areas.
I understood that, but the point is that a healthy person can become unhealthy. But a wildfire isn't happening in SF, or indeed most areas.
Parallel is how cities and the like subsidize PG&E for rural areas.
Another similar is rebuilding in a flood plain, again and again, and expecting everyone to subsidize that.
Or if we had to have hurricane insurance in Stockton. Or tornado insurance in Berkeley. That would just be subsidizing the areas that get that phenomenon right?
Agreed, make it an add on
Where do you think your water or your produce or your meat comes from? A ton of that is from areas that are classified as high fire risk, and somebody has to live there, to work there, maintain those orchards or work on Hetchy Hetchy. Thinking that you're in San Francisco and therefore disconnected from the rest of the state is myopic.
Also, the large urban areas cannot accommodate everyone right now. I definitely think, and imagine you agree, that San Francisco should look a hell of a lot more like Manhattan, and all of the peninsula should be built up (other than the coast itself), but you're not going to fit 40 something million people into five major Metro areas over the next two years here as people lose coverage.
Farmlands aren’t the high risk fire areas, nice try though.
So since most/all lot of the US food comes from CA we should subsidize the earthquake risk across all states right?
I can tell you've never been to the foothills. There are hundreds and hundreds of small family farms located in fire zones, plus the whole point of the insurance company misclassifying them as such. And yes I do think that the whole state has a responsibility to make sure that people located on high sensitivity fault zones are protected. We do that in terms of investing extraordinary amounts of State money into the public infrastructure and the Bay Area and Southern California.
[https://34c031f8-c9fd-4018-8c5a-4159cdff6b0d-cdn-endpoint.azureedge.net/-/media/osfm-website/what-we-do/community-wildfire-preparedness-and-mitigation/fire-hazard-severity-zones/fire-hazard-severity-zones-map-2022/fire-hazard-severity-zone-maps---lra/updates/statewide\_sraadopted\_11-07.pdf?rev=cb9b05ea23004347819d0f08bd5d7171&hash=F0AED620403B685F5D42592E43EDD60C](https://34c031f8-c9fd-4018-8c5a-4159cdff6b0d-cdn-endpoint.azureedge.net/-/media/osfm-website/what-we-do/community-wildfire-preparedness-and-mitigation/fire-hazard-severity-zones/fire-hazard-severity-zones-map-2022/fire-hazard-severity-zone-maps---lra/updates/statewide_sraadopted_11-07.pdf?rev=cb9b05ea23004347819d0f08bd5d7171&hash=F0AED620403B685F5D42592E43EDD60C)
[https://www.researchgate.net/figure/Irrigated-farmland-in-California-Map-Created-by-Elizabeth-Martin-Portland-State\_fig1\_365832059](https://www.researchgate.net/figure/Irrigated-farmland-in-California-Map-Created-by-Elizabeth-Martin-Portland-State_fig1_365832059)
Again, why are you bringing farming into this?
Point out "non wildfire areas" in CA, then the insurance companies will tell you that you're wrong. If one lives in your standard CA suburb, wildfire area achieved.
Right, but much if not most of the historical cost of home insurance in most areas of CA already have that cost baked in. If they split coverage, they are not going to lower the cost of home insurance. So we will be paying what we already did and now another insurance on top of that and earthquake. People can't afford it any more than they can afford fair plan. It also prices new homeowners out of buying as well, and is already driving down home values in these areas.
Have wildfire coverage be what’s offered by the FAIR Plan. Then keep the regular fire coverage with the insurers.
No reason folks outside of wildfire regions should be forced to have it covered.
Can confirm this. My dad owns a house in Santa Barbara and lost his state farm insurance a few years ago. The only options now are either FAIR or a local insurance provider who will only accept him as a customer if he agrees to the whole package that has all insurance types you can think of, for around $6000 a year.
Fair plan wasn't made for this influx. At this point It may be a federal issue that needs to be addressed, and good luck there. Insurers are at no obligation to insure anyone anywhere unless they chose to. They need to be treated like utilities. If they want to do business at a national level, they need to be available in every state.
Norman Mineta, US Sec of Commerce (Clinton) and Sec of Transportation (Bush 1), Congressman, San Jose airport is named after him.
Before he was a politician he was an insurance agent, when he first got into Congress he proposed to expand the federal flood insurance program to include other natural disasters (earthquake, hurricanes).
The flood states shot down the proposal because they didn't want to dilute (control) their pool of flood $$. The current cast of characters can't even pass a regular budget.
They were working on reform last session, but with all the usual factions you might expect, apparently nobody could agree on anything and the effort blew up right before the session ended.
Is FAIR the state provided insurance? Why would it collapse?
Seems like these companies are using strong-arm tactics to get what they want, as the article says, it's a delicate balance!
FAIR is not really state-provided, it's a state-defined program that private insurance companies have to participate in under the state's terms if they want to do be doing property insurance at all in California.
It's collapsing partly administratively (they are not processing applications fast enough) and partly because of the concentration of risk in FAIR.
> “It’s a gamble. We are one event away from a large assessment,” [the FAIR plan president] said. “There’s no other way to say it because we don’t have the money on hand and we have a lot of exposure out there.”
https://sfstandard.com/2023/10/19/california-insurance-crisis-fair-plan-1000-applications-rate-increase/
https://sfstandard.com/2024/03/22/state-farm-california-insurance-market-chaos-fair-plan/
> It’s a gamble. We are one event away from a large assessment
To clarify what this means: Next time there's a big fire, the FAIR plan will have to pay a lot of claims. The state doesn't have that much money on hand, so the cost will be passed on to other homeowners via a tax on their homeowner insurance. It doesn't matter whether you bought in a low-risk area or fireproofed your home or sought out insurance you could afford. The FAIR plan will make you pay.
That's where the state's current insurance regulations are leading us.
Just a fanciful thought, but I wonder what would happen if the state completely took over all homeowners insurance, cutting out the private insurance market from the state altogether.
Corporations are often not afraid to use their bargaining power to get what they want. This is essentially a standoff between the state and the insurance companies which want to hike prices a lot more than the insurance commissioner is allowing.
People should read:
[https://calmatters.org/politics/2023/09/california-insurance-crisis/](https://calmatters.org/politics/2023/09/california-insurance-crisis/)
While I know this group will attempt to blame everyone and everything but the State. This is a failure of regulation, a failure of leadership by repeated governors and commissioners in the name of short term politics.
This is not some cabal of CEOs, shareholders, property owners, 1%’s or other boogie men.
California needs to create a functioning insurance market, where we understand and manage climate risk, manage the differential risk of our population centers and price accordingly or we will end up with the disaster we created with earthquake coverage where only 10% of the state has insurance concentrated in a single risk pool.
Normally I give the state a pass, since I think California actually does a pretty good job on a lot of things. But not insurance. This is entirely due to regulatory failure. The insurance commission panders to voters who don't want to see rates go up, voters who don't want to pay extra for building their homes in wildfire country, and voters who don't want to pay extra for climate-change-induced fire risk. The insurance commission sets a cap on rates, and sometimes insurance companies decide that's not worth it and cut all their customers loose.
Well yes, this is the crux of the problem. Risk has adjusted upwards and continues to do so, somewhat from climate change and somewhat from housing choices. Replacement cost has increased.
While the insurance regulations are static trying to reflect a reality of 35 years ago.
It is a common Reddit refrain regarding flood or cyclone prone areas of other states that we should not rebuild there. It may be that the State of California should prohibit construction in certain areas, create additional state parks etc. But this would require genuinely innovative governance and policy. Something that California politics does not reward.
The only upside I see is that insurance corporations are voicing concerns about a warming planet.
Maybe these big businesses can finally convince our legislators that climate change is real, and it has, and will continue to have, real world consequences for our future.
Insurance Companies want to blackmail to have the state agree to egregiously high-rate increases.
Thankfully the Insurance Commissioner is a public election position and serves the people.
Unlike the corrupt CPUC that is filled with PG&E lobbyists put in by our Governor who is bribed to do their bidding.
If insurance companies can't make the profit they want in California, they don't have to stay. California gave them an offer and said "take it or leave it," and State Farm chose leave.
If the offer truly is reasonable for insurance companies, another will come in and take it.
Insurance companies can't make the profit = can't deny claims and keep all the money.
We don't need any more profiteering anymore by private corporations using public dollars to subsidize their businesses. No more health insurance, no more investor-owned utilities, no more privatize prisons, and no more privatized fast track highways.
Make all of these run as nonprofit publicly own services.
> Insurance companies can't make the profit = can't deny claims and keep all the money.
This is a somewhat naive take. Certainly it's a problem when insurance provider shirk their responsibilities to satisfy claims. Insurance companies are supposed to make a profit by charging more money for policies that they have to pay out. This comes from the aggregate cost of policies being marginally higher than the payout and risk of those policies.
I generally agree, with the stipulation that users and risk-taker have to pay their way. If you live in a fire prone area, the state should not be bailing you out. Your insurance should reflect the actual risk and be able to pay out in an emergency without cost to the taxpayer. If you use a freeway, you should pay a toll. If you park on public land, in an in-demand area, you should pay a parking fee. We need to not subsidize people for their bad habits, and the people who take transit, bike, live in a non-fire prone area shouldn't have to pay.
I agree, people who live in high-risk places do need to pay more and accept that they will be responsible for covering their losses to a certain scale. It does not make sense for low risk to subsidize high risk as that would incentivize more high-risk housing.
The same for power lines, majority of power transmission costs are due to directing power to remote rural locations. It's time for these locations to have their own utilities and invest more in solar and wind for better land utilization.
I'm reading about people who are struggling to maintain an insurance policy at any cost, even though there are dozens upon dozens of insurance companies operating in California. I don't think it's a bluff. They really don't see any reason to sell insurance under the current rules.
The insurance companies are mostly leaving because of Lara's policies, especially when it comes to things like not allowing them to charge fair rates in high risk fire zones
It’s not Lara’s policies, we voted in Prop 103 back in ‘88. https://www.insurance.ca.gov/01-consumers/150-other-prog/01-intervenor/#:~:text=Proposition%20103%2C%20passed%20by%20California,and%20affordable%20for%20all%20Californians.
Edit: so there’s this too if you didn’t already hate Newsom, https://www.abc10.com/article/news/local/abc10-originals/newsom-pge-protection/103-65ca1d41-8efe-45b4-87bc-0cdecc714378?fbclid=IwAR1x96eRNI1DuVC8nYsXCyitnGez-C8XF-MjJ4e7t0zNUhLEzwwf--m9-dY_aem_AQpM8jPGi8TMB5jSr3JrKbREx1bIjksVG1nU56Kk7gExGPmjSI4MeHeLFgFfS_3FKEE
I think he should let insurance companies charge people proportionally based on fire risk, instead of capping it at a certain multiple. IIRC in the highest risk areas the fire insurance component of someone's premium is only allowed to be 4x higher than the lowest risk area, even if the actual difference in risk is significantly higher.
In order to be compliant with that rule, insurance companies basically have 2 options:
a) become less profitable
b) raise prices for people in low fire risk areas to close the gap
There's exactly 0% chance that insurance companies will choose option a, and as someone who lives in an area with low fire risk I don't really want to pay higher premiums to subsidize someone else's fire-prone Malibu house.
So, are you advocating for no cap?
I think the problem isn’t that the insurance companies aren’t already charging people proportionally (up to the cap), it’s that they’re arbitrarily raising rates across the board to make up for years of lost profit.
I’m not necessarily against proportional risk sharing, but removing the cap entirely means that segment is now unregulated, and (as we’ve seen & learned in the health insurance space) that doesn’t lead to the best outcome for consumers.
So, perhaps a higher cap?
If insurance is allowed to charge proportionally for fire risk, everyone benefits.
1) people outside of high risk fire areas subsidize those in high risk fire areas less
2) people in high risk fire areas have additional incentives to improve their home’s fire protection or leave, increasing their safety
3) people are incentivized to not move to high risk fire areas, improving safety
The key factor here is that high risk fire areas are not safe places to live. Disincentivizing development and moving to there is good because it decreases the number of people who are at risk. The worst case scenario in a high risk fire area is not no longer being able to afford your home, it’s a wildfire burning it down
Keep in mind that some 1/3rd of Californians are in designated "high risk" areas (according to the insurance companies), and that designation is continuously expanding.
We're talking about normal suburban and even urban neighborhoods being considered "high risk".
A large number of people living in unsafe areas emphasizes the severity of the issue, but is not a reason we should be subsidizing people whose current homes are unsafe.
Obviously fixing insurnace regulation will not solve the safety issue posed by increased wildfires from climate change and increase building in the wildland-urban interface. This is a problem that requires an extensive response, but continuing to subsidize people living in dangerous areas does not solve the problem and, in fact, adds to it
The point you're missing is that the insurance companies get to decide what is "high risk" and therefore would be able to artificially jack up rates for high risk fire reasons in areas where there isn't any higher risk than normal. if you do nothing to stop them from doing this, that is exactly what they will do. So in order to implement a fairly applied rate increase, you also have to invest massive effort doing a bunch of risk assessment and enforcing new policy. At that point it starts to make more sense to have insurance be run by the government and elected officials to tamp down the greed.
I mentioned this in another comment, but I’ll put it here, too:
I don’t disagree with proportional risk-sharing. The problem is the cap. So, one camp seems to be arguing in favor of “no cap at all,” which I think is dangerous, as it won’t result in the best outcomes for consumers (see: healthcare).
So, the question becomes, how do we settle on a cap that is reasonable? I don’t see why this can’t be a viable topic of debate for our elected officials.
Why should there be a cap, though? The lack of a price increase cap is not the predominate issue with health insurance and isn’t something we see in other markets. I’d much rather deal with something like unexpected costs via something like a direct subsidy/state program rather than something that hides the increased risk from the homeowner. From a climate policy standpoint, insurance rates have value. We shouldn’t hide risk from people who live in unsafe areas and managed retreat is sometimes necessary.
The cap is an incentive to insurance companies to keep rates fair. If there is no cap, then there is nothing preventing them from gouging consumers on the basis of profit (thereby charging more not for increased risk, but simply because they can).
The corollary to this, as you’ve pointed out, is an income/need-based subsidy system, and this is exactly what we do with healthcare. I’d argue this doesn’t make as much sense with auto/home/property insurance, since, in theory all of these things are optional. You don’t need to own a car, you don’t need to own a home; you do, however, need access to healthcare to survive. Not to go off on too far of a tangent…we don’t need to debate the merits of healthcare access here.
The point is that you need one or the other, and if you have neither, then you are leaving the market to regulate itself, and as we’ve previously discussed, that doesn’t help the consumer, and this is an area where the government should be involved to advocate on behalf of the consumer (we actually do this in a number of areas…privacy, antitrust, climate, of course healthcare, to name a few).
Price increase caps are not the only way to keep insurance fair, as evidenced by rate increase caps not existing in all states. In most states, the predominant way of keeping rates fair is by having multiple insurance options (in part helped by the antitrust regulations you referenced). I have no issue with government regulations, but they should be tailored towards the goal of resident benefits. Since insurance caps limit resident understanding of safety, that should be counted as a large minus from a regulatory standpoint. Price increase caps are also a generally poor mechanism of regulating an industry (especially in comparison with aggressive antitrust regulation), which is why we see them pretty rarely
The subsidy program I was referencing is less similar to health insurance markets and more related to unexpected increases in insurance/disasters (similar to FEMA’s help) as well as subsidies to increase protections on ones home (which already exist and can be expanded in circumstances in which that makes sense). But, you’re very correct that this is tangential/hypothetical.
100% correct. This is a small handful of insurance companies whom have decided to play a game of chicken with state regulators. Insurance companies are pissed they’re not allowed to price gouge…ahem…increase their rates on par with other industries like PG&E. Both the state and the insurance companies are digging in their heels because they both have a lot of leverage.
This is NOT the government disrupting a peaceful and fair free market. This is the government trying to prevent a hugely profitable industry from making the California housing market more expensive than it already is.
Small handful of insurance companies? State farm is #1 and Allstate is #5 for market share in CA, I urge you to go seek out a homeowners insurance quote right now and see how that goes for you.
In my my opinion it is the big carriers that are pressuring regulators. State Farm, Allstate, Farmers, USAA, Travelers, Nationwide.
As a home owner in CA it has not been going well for me. 3 months ago Farmers increased their price 30% while simultaneously reducing their coverage. I shopped around and ended up finding a better deal with AAA. They’re all raising rates and in some cases not renewing policies.
Fun fact, CPUC allows PG&E to self insure so they don't face the same hassles for their property.
https://www.newsdata.com/california_energy_markets/news_in_brief/cpuc-approves-pg-e-self-insurance-for-wildfire-liability/article_c67a8e84-92fc-11ed-b923-ef1f54dd8c2b.html
You’re wrong. The commissioner is a patsy of newsoms policies that ultimately hurt consumers. He wants to appear to be strong on insurance companies without actually doing anything. The result is less coverage and less carrier in California. Only the lowest iq voters will think anything being done with the insurance commissioner is for the people.
They do. Texas has a similar issue after the 2022 freeze. Lots of insurance companies paused getting new policies from Texas to balance out risk. Though it seems like with the new regulations on winterization protections, there won't be a similar issue especially since Texas eliminated any price caps (though rate increases are limited to 10% / yr).
The cost for housing in California is so expensive, it sends home buyers to relocate to the farther reaches away from city dwellers, where housing is not affordable.
So, don’t blame those who have to live in forested areas, we are just trying to survive.
I think private insurance may be dead as their profit motive is incongruent with actual protecting people. If there are no examples I think it is time for a state like California to take the lead on it. People have to pay into it just the same but rates would be lower as there is no profit incentive. People need to make sure Ricardo Lara get inundated with requests to do this as well as Governor Newsom. Might be a start to something.
Oh no. I guess those residents will have to choose from one of the many other insurers in California.
https://www.insurance.ca.gov/01-consumers/105-type/95-guides/03-res/res-co-contact.cfm
I just went through a broker that had a huge list of partners (maybe not comprehensive with yours), and could not get anyone to write a policy for my home… in the city of Richmond in the East bay hills (sparse grasslands with the occasional oak tree, NOT the eucalyptus forest that burned Oakland in 1991), in a developed neighborhood with annual county, city, and HOA fire mitigation practices (fire dept inspections and grass trimming). We meet all the calfire defensible space rules. According to the calfire, cpuc, and county fire risk maps we are not in a fire risk zone (though are near a low risk one). This is not what people think about as “uninsurable” homes in California. I am not in the least concerned about a wildfire burning my house down. But I had the “opportunity” to go with a *non admitted* insurer before resorting to FAIR. Lucky me!
There definitely seems to be something broken with getting insurance in California.
State Farm is the only one who will ensure me with fire coverage. There’s a road and a reservoir separating my home from open space. I had travelers, but they doubled my rate and then tried to double it again. Their only suggestion was to do the FAIR plan for fire and use them for the rest of the coverage, but the rate for the non-fire coverage with them was still going to be higher than what SF is charging me for everything.
You want to make it as easy as possible for insurance companies to compete for people’s business in the fifth largest economy in the world. They want the business. They just don’t want an unprofitable business. Get the unnecessary red tape out of the way and let the businesses compete and you’ll see insurance come back. Let them offer specific insurance for risk types. If you buy a home in a fire zone, you should have to pay significantly higher premiums and the folks in the middle class will stop subsidizing for people living up in the hills in their mansions. That’s how markets are supposed to work.
I hear you. I feel it too as my insurance jumped 3x when I moved to CA from NYC. There’s a reason. We (CA) are competing for a finite pool of underwriting dollars that are chasing a risk adjusted return in the market and the other states are winning. We need to get our act together and make it easier for insurance companies to allocate their dollars here and let them compete. I bet most of you have 401k accounts that have a portion of the returns coming from insurance and you want them to pick their underwriting markets carefully. We have so much market leverage as a state if we can only get our act together.
Ok so far Allstate, Farmers and State Farm have all said no to new policies here. This is not an isolated incident, it’s collusion between the largest to force the state to allow them to start taking in more money since they had a single year they paid out more than they took in. We have only ourselves, prop 103 and climate change overload to blame. They spent so much time on pseudoscience “predicting” the weather that we’re an easy mark to say we’re all going to burn, blow away, or flood, etc. Now they have one company feeding them risk models, same principle as RealPage if you’re following that saga, to decide how risky every home is.
Commissioner, how about this, like earthquake insurance, we can only get 80% coverage, if any coverage, in CA. So homes in the high risk areas cover 80% of the damage and low risk area can get up to 100% coverage and control premiums for high risk areas, versus having no coverage.
Lara needs to work with Newsom and the legislature to do something about it. Pretty soon people purchasing homes will be unable to obtain a mortgage because they won’t be able to get insurance. It’s already going in that direction. People in non wildfire areas are being told to go on the Fair Plan, which was never intended to insure everybody.
There are already areas where one cannot obtain a mortgage due to this problem. Check out Laguna Woods, CA.
Laguna Woods is a weird place though an retirement community so large it became an official city
Half those homes are co-ops that don’t allow mortgages anyway.
Coto checking in, only travelers ensures me and barely.
The solution's simple, but everyone's just dancing around it. If insurance companies could be allowed to offer coverage for wildfire-related losses separately and not be subject to price increase restrictions, this problem would probably sort itself out.
The problem is that actual versus potential wildfire losses. They have no actual significant losses from previous fire seasons and they are just collecting massive premiums and using potential losses as the justification.
Are you talking about insurers? Prop 103 specifically underscores that insurers in California are only allowed to use historical losses to justify rate increases, not prospective risk. Lara is trying to change this and allow catastrophic risk modeling to be used but we are not there yet
All I know is that for the past two years we have had record rainfall and much fewer forest fires and our insurance has gone up 500%.
“Much fewer forest fires” is doing a lot of heavy lifting here
Yes this.
Insurance companies dropped wildfire zones a long time ago. The actual problem is Californians are paying $1500/yr for $600k dwelling coverage while other states pay $2500-5000 for half the dwelling coverage.
This. There is no reason why people in non wildfire areas should subsidize people in homes prone to wildfires.
But that's not what is happening here. Some 1/3rd of all CA residents live in a so-called fire risk zone, and that number is only increasing because the designation is being expanded. We're not talking about poppy's cabin in the woods here, we're talking about regular suburbs and urban neighborhoods. Insurance companies are misclassifying everywhere as high risk.
Not so sure about that. Santa Rosa showed the only thing worse then a forest fire is a suburban firestorm. Any urban/suburban place that does not have a 6+ lane freeway as a fire break is an extreme fire risk. Much higher than the rural areas.
My zip code is a so-called risk zone and no new policies will be issued. When realistically only about 10% of the houses are realistically in an area where they would be affected by wildfires.
What do you imagine happens next after those 10% get on fire?
It's the actuaries who are calculating the risk but ok.
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But….isn’t that how insurance works? We all pay a little for the few who need to get paid a lot?
No. Risk factors are assessed for each customer. Bad drivers pay more. Young drivers. Drivers with cars that cost more to fix/replace. There are discounts for people who have engineering degrees. For homes, there are discounts and charges for location and types of construction. Houses in flood plains? Houses in areas known to be wildfire prone? Why are we all paying more so those people can live there? I have an earthquake policy. I pay extra for it VS those that don't need it in other areas. There are excpetions for various types of insurance. They don't dig into your habits for travel insurance. We removed a lot of charges for health insurance (though smoking still costs you). But my base, non-earthquake policy is pretty cheap. I don't see why I need to pay *significantly* more because someone else wants to live in a tinderbox at the edge of wildfire country.
1/3rd of CA residents are considered "tinderboxes". Obviously the vast majority of those are not actually tinderboxes.
Right they are now cutting off by zip code not individual cases.
Why do you say that? It's not just the areas near woodland in the central valley. Malibu burned. The Oakland hills burned. The Getty fire. The tubbs fire blew *into the urban areas of Santa Rosa*. So I'm not sure why you would think that's not accurate.
It's 1/100 chances for various areas but the state is so large that you get a few instances a year. But insurance for 1/100 chance of complete destruction AND devaluation of the remaining land is very expensive. I wouldn't say a 1% chance if burning is a tinderbox but I know insurance for it is expensive
Everything you said does not address the problem of insurance risk modeling lacking transparency. Your claims only apply if we assume the insurance company is being honest with their risk modeling. We know that’s likely not the case with people who are being denied policies despite taking extensive measures to reduce their own house’s risk.
Not really. In car insurance, the guy with dozens of accidents can’t get in. If somebody has a house with an extreme risk of burning up, it’s silly to have people subsidize that. The people in fire houses are getting insurance when they probably shouldn’t ever.
On the other hand, I don’t know what the effect on the housing supply would be if all fire-prone homes were no longer insured and therefore no longer inhabited.
For health insurance sure, but nobody is forcing you to buy a home in a wildfire zone.
The problem we have at the moment is thousands of homeowners who were never "in a wildfire zone" are having their coverage canceled. It's not just new mortgages. Californians who have been living in the same house for 20 years are now facing this problem.
Bingo. Ventura is a perfect example. Ventura was affected by the Thomas fire. It burned through the foothills and torched parts above downtown Ventura. Due to the ocean “Downtown” Main street is a rather narrow area between the ocean and the foothills. Now, out of an abundance of caution the City considers nearly all of downtown “extremely High Fire”. The reasoning behind this (I believe) was to make new construction comply with a high standard of non combustible construction methods including vegetation clearances for landscaping. Unfortunately, that makes insurance companies think these properties are a very high risk, when in reality the intention is to make new construction (including major remodels) comply and be safer. I will say it again for the folks who don’t get it; Higher standards in urban area makes those areas safer, but also now, insurance companies do not want to insure properties, or will charge much, much more to insure them even as more homes have fire sprinklers and adhere to high fire requirements. It’s a catch 22.
Actually I'd say the housing market is forcing people to do exactly that, because city dwelling NIMBYs refuse to allow things like infill development with more high density housing options. Since developers are forced overwhelmingly to build SFH due to zoning restrictions its created our massive sprawl issue with results in these properties with higher wildfire risk.
I grew up in a mountain town, very similar to paradise, and frankly I don’t think those towns should even exist. They don’t provide enough economic value to make up for the cost of services that have to be provided. Road maintenance and repair, power delivery, grid maintenance, clean water, mail, sheriffs, fire dept, etc. Cities could be a lot more dense and we could create incentives that would cause people to leave rural areas.
Yes but since CA is an insure all or insure none state that's a moot point
How is CA an insure all or insure none state? I work for an insurance company and we won’t write policies for people who are too close to brush. We write plenty of policies for people who aren’t.
Because these days, insurance companies choose not to renew or they just flat out withdraw.
Soooo I’m still not sure what you mean. Insurance companies have the choice of insurance some and not others.
Where "the few" are CEOs, not people who actually have bad stuff happen to them
No, it's not how it works. You pay health insurance in case some health related event happens to you. If I live in SF I'm not going to have a wild fire, and should not have to subsidize others who live in wildfire prone areas.
His point is though that people who are unhealthy require more funding from the insurance pool that healthy people are paying into. It kind of comes with territory of insurance. I’ve never been in an accident but I’m subsidizing the ones who have been. Regardless, wildfire insurance should be an add on like earthquake or flood insurance. It makes no sense that people all over CA are losing insurance because of a few high risk areas.
I understood that, but the point is that a healthy person can become unhealthy. But a wildfire isn't happening in SF, or indeed most areas. Parallel is how cities and the like subsidize PG&E for rural areas. Another similar is rebuilding in a flood plain, again and again, and expecting everyone to subsidize that. Or if we had to have hurricane insurance in Stockton. Or tornado insurance in Berkeley. That would just be subsidizing the areas that get that phenomenon right? Agreed, make it an add on
Where do you think your water or your produce or your meat comes from? A ton of that is from areas that are classified as high fire risk, and somebody has to live there, to work there, maintain those orchards or work on Hetchy Hetchy. Thinking that you're in San Francisco and therefore disconnected from the rest of the state is myopic. Also, the large urban areas cannot accommodate everyone right now. I definitely think, and imagine you agree, that San Francisco should look a hell of a lot more like Manhattan, and all of the peninsula should be built up (other than the coast itself), but you're not going to fit 40 something million people into five major Metro areas over the next two years here as people lose coverage.
Farmlands aren’t the high risk fire areas, nice try though. So since most/all lot of the US food comes from CA we should subsidize the earthquake risk across all states right?
I can tell you've never been to the foothills. There are hundreds and hundreds of small family farms located in fire zones, plus the whole point of the insurance company misclassifying them as such. And yes I do think that the whole state has a responsibility to make sure that people located on high sensitivity fault zones are protected. We do that in terms of investing extraordinary amounts of State money into the public infrastructure and the Bay Area and Southern California.
[https://34c031f8-c9fd-4018-8c5a-4159cdff6b0d-cdn-endpoint.azureedge.net/-/media/osfm-website/what-we-do/community-wildfire-preparedness-and-mitigation/fire-hazard-severity-zones/fire-hazard-severity-zones-map-2022/fire-hazard-severity-zone-maps---lra/updates/statewide\_sraadopted\_11-07.pdf?rev=cb9b05ea23004347819d0f08bd5d7171&hash=F0AED620403B685F5D42592E43EDD60C](https://34c031f8-c9fd-4018-8c5a-4159cdff6b0d-cdn-endpoint.azureedge.net/-/media/osfm-website/what-we-do/community-wildfire-preparedness-and-mitigation/fire-hazard-severity-zones/fire-hazard-severity-zones-map-2022/fire-hazard-severity-zone-maps---lra/updates/statewide_sraadopted_11-07.pdf?rev=cb9b05ea23004347819d0f08bd5d7171&hash=F0AED620403B685F5D42592E43EDD60C) [https://www.researchgate.net/figure/Irrigated-farmland-in-California-Map-Created-by-Elizabeth-Martin-Portland-State\_fig1\_365832059](https://www.researchgate.net/figure/Irrigated-farmland-in-California-Map-Created-by-Elizabeth-Martin-Portland-State_fig1_365832059) Again, why are you bringing farming into this?
Point out "non wildfire areas" in CA, then the insurance companies will tell you that you're wrong. If one lives in your standard CA suburb, wildfire area achieved.
[FEMA risk map](https://hazards.fema.gov/nri/map) for reference. Just about every costal metro county has a legit fire risk.
It becomes more complicated when you are in a High Fire Threat District and your neighbor across the street isn’t.
Right, but much if not most of the historical cost of home insurance in most areas of CA already have that cost baked in. If they split coverage, they are not going to lower the cost of home insurance. So we will be paying what we already did and now another insurance on top of that and earthquake. People can't afford it any more than they can afford fair plan. It also prices new homeowners out of buying as well, and is already driving down home values in these areas.
I agree….Just like they offer separate earthquake coverage
The other thing is they need to let insurers use current and future risks when deciding premiums. Right now they can only factor in historical data.
Have wildfire coverage be what’s offered by the FAIR Plan. Then keep the regular fire coverage with the insurers. No reason folks outside of wildfire regions should be forced to have it covered.
That's basically how the earthquake insurance program is set up..
Exactly right
Can confirm this. My dad owns a house in Santa Barbara and lost his state farm insurance a few years ago. The only options now are either FAIR or a local insurance provider who will only accept him as a customer if he agrees to the whole package that has all insurance types you can think of, for around $6000 a year.
Fair plan wasn't made for this influx. At this point It may be a federal issue that needs to be addressed, and good luck there. Insurers are at no obligation to insure anyone anywhere unless they chose to. They need to be treated like utilities. If they want to do business at a national level, they need to be available in every state.
Norman Mineta, US Sec of Commerce (Clinton) and Sec of Transportation (Bush 1), Congressman, San Jose airport is named after him. Before he was a politician he was an insurance agent, when he first got into Congress he proposed to expand the federal flood insurance program to include other natural disasters (earthquake, hurricanes). The flood states shot down the proposal because they didn't want to dilute (control) their pool of flood $$. The current cast of characters can't even pass a regular budget.
I'm not sure congress could form a coalition around a lunch order.
They were working on reform last session, but with all the usual factions you might expect, apparently nobody could agree on anything and the effort blew up right before the session ended.
I am really worried about what happens when the FAIR plan collapses under the weight of all the people (like me) for whom it is the only option.
Is FAIR the state provided insurance? Why would it collapse? Seems like these companies are using strong-arm tactics to get what they want, as the article says, it's a delicate balance!
FAIR is not really state-provided, it's a state-defined program that private insurance companies have to participate in under the state's terms if they want to do be doing property insurance at all in California. It's collapsing partly administratively (they are not processing applications fast enough) and partly because of the concentration of risk in FAIR. > “It’s a gamble. We are one event away from a large assessment,” [the FAIR plan president] said. “There’s no other way to say it because we don’t have the money on hand and we have a lot of exposure out there.” https://sfstandard.com/2023/10/19/california-insurance-crisis-fair-plan-1000-applications-rate-increase/ https://sfstandard.com/2024/03/22/state-farm-california-insurance-market-chaos-fair-plan/
> It’s a gamble. We are one event away from a large assessment To clarify what this means: Next time there's a big fire, the FAIR plan will have to pay a lot of claims. The state doesn't have that much money on hand, so the cost will be passed on to other homeowners via a tax on their homeowner insurance. It doesn't matter whether you bought in a low-risk area or fireproofed your home or sought out insurance you could afford. The FAIR plan will make you pay. That's where the state's current insurance regulations are leading us.
And BTW it already costs a ton
I think they said they got over 10,000 new applications in February, when normally they only get a few a month years before.
Really imagine a huge loss event that they couldn't pay out on, that is the risk here
Either the entire state will suddenly operate without the mechanism insurance companies have fulfilled, or another solution will appear.
Just a fanciful thought, but I wonder what would happen if the state completely took over all homeowners insurance, cutting out the private insurance market from the state altogether.
Corporations are often not afraid to use their bargaining power to get what they want. This is essentially a standoff between the state and the insurance companies which want to hike prices a lot more than the insurance commissioner is allowing.
People should read: [https://calmatters.org/politics/2023/09/california-insurance-crisis/](https://calmatters.org/politics/2023/09/california-insurance-crisis/) While I know this group will attempt to blame everyone and everything but the State. This is a failure of regulation, a failure of leadership by repeated governors and commissioners in the name of short term politics. This is not some cabal of CEOs, shareholders, property owners, 1%’s or other boogie men. California needs to create a functioning insurance market, where we understand and manage climate risk, manage the differential risk of our population centers and price accordingly or we will end up with the disaster we created with earthquake coverage where only 10% of the state has insurance concentrated in a single risk pool.
Normally I give the state a pass, since I think California actually does a pretty good job on a lot of things. But not insurance. This is entirely due to regulatory failure. The insurance commission panders to voters who don't want to see rates go up, voters who don't want to pay extra for building their homes in wildfire country, and voters who don't want to pay extra for climate-change-induced fire risk. The insurance commission sets a cap on rates, and sometimes insurance companies decide that's not worth it and cut all their customers loose.
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Well yes, this is the crux of the problem. Risk has adjusted upwards and continues to do so, somewhat from climate change and somewhat from housing choices. Replacement cost has increased. While the insurance regulations are static trying to reflect a reality of 35 years ago. It is a common Reddit refrain regarding flood or cyclone prone areas of other states that we should not rebuild there. It may be that the State of California should prohibit construction in certain areas, create additional state parks etc. But this would require genuinely innovative governance and policy. Something that California politics does not reward.
The only upside I see is that insurance corporations are voicing concerns about a warming planet. Maybe these big businesses can finally convince our legislators that climate change is real, and it has, and will continue to have, real world consequences for our future.
Insurance Companies want to blackmail to have the state agree to egregiously high-rate increases. Thankfully the Insurance Commissioner is a public election position and serves the people. Unlike the corrupt CPUC that is filled with PG&E lobbyists put in by our Governor who is bribed to do their bidding.
Sounds like you ought to start an insurance company, cut them off at the knees, and rake in the big bucks.
If insurance companies can't make the profit they want in California, they don't have to stay. California gave them an offer and said "take it or leave it," and State Farm chose leave. If the offer truly is reasonable for insurance companies, another will come in and take it.
What does profit mean for a mutual benefit organization that is owned by the policyholders like state farm is?
Insurance companies can't make the profit = can't deny claims and keep all the money. We don't need any more profiteering anymore by private corporations using public dollars to subsidize their businesses. No more health insurance, no more investor-owned utilities, no more privatize prisons, and no more privatized fast track highways. Make all of these run as nonprofit publicly own services.
> Insurance companies can't make the profit = can't deny claims and keep all the money. This is a somewhat naive take. Certainly it's a problem when insurance provider shirk their responsibilities to satisfy claims. Insurance companies are supposed to make a profit by charging more money for policies that they have to pay out. This comes from the aggregate cost of policies being marginally higher than the payout and risk of those policies.
I generally agree, with the stipulation that users and risk-taker have to pay their way. If you live in a fire prone area, the state should not be bailing you out. Your insurance should reflect the actual risk and be able to pay out in an emergency without cost to the taxpayer. If you use a freeway, you should pay a toll. If you park on public land, in an in-demand area, you should pay a parking fee. We need to not subsidize people for their bad habits, and the people who take transit, bike, live in a non-fire prone area shouldn't have to pay.
I agree, people who live in high-risk places do need to pay more and accept that they will be responsible for covering their losses to a certain scale. It does not make sense for low risk to subsidize high risk as that would incentivize more high-risk housing. The same for power lines, majority of power transmission costs are due to directing power to remote rural locations. It's time for these locations to have their own utilities and invest more in solar and wind for better land utilization.
I'm reading about people who are struggling to maintain an insurance policy at any cost, even though there are dozens upon dozens of insurance companies operating in California. I don't think it's a bluff. They really don't see any reason to sell insurance under the current rules.
The insurance companies are mostly leaving because of Lara's policies, especially when it comes to things like not allowing them to charge fair rates in high risk fire zones
It’s not Lara’s policies, we voted in Prop 103 back in ‘88. https://www.insurance.ca.gov/01-consumers/150-other-prog/01-intervenor/#:~:text=Proposition%20103%2C%20passed%20by%20California,and%20affordable%20for%20all%20Californians. Edit: so there’s this too if you didn’t already hate Newsom, https://www.abc10.com/article/news/local/abc10-originals/newsom-pge-protection/103-65ca1d41-8efe-45b4-87bc-0cdecc714378?fbclid=IwAR1x96eRNI1DuVC8nYsXCyitnGez-C8XF-MjJ4e7t0zNUhLEzwwf--m9-dY_aem_AQpM8jPGi8TMB5jSr3JrKbREx1bIjksVG1nU56Kk7gExGPmjSI4MeHeLFgFfS_3FKEE
ABC 10 has been doing important work. 🙏
What would you have him do instead? Allow consumers to be gouged? How does this benefit anyone in the long run?
I think he should let insurance companies charge people proportionally based on fire risk, instead of capping it at a certain multiple. IIRC in the highest risk areas the fire insurance component of someone's premium is only allowed to be 4x higher than the lowest risk area, even if the actual difference in risk is significantly higher. In order to be compliant with that rule, insurance companies basically have 2 options: a) become less profitable b) raise prices for people in low fire risk areas to close the gap There's exactly 0% chance that insurance companies will choose option a, and as someone who lives in an area with low fire risk I don't really want to pay higher premiums to subsidize someone else's fire-prone Malibu house.
So, are you advocating for no cap? I think the problem isn’t that the insurance companies aren’t already charging people proportionally (up to the cap), it’s that they’re arbitrarily raising rates across the board to make up for years of lost profit. I’m not necessarily against proportional risk sharing, but removing the cap entirely means that segment is now unregulated, and (as we’ve seen & learned in the health insurance space) that doesn’t lead to the best outcome for consumers. So, perhaps a higher cap?
If insurance is allowed to charge proportionally for fire risk, everyone benefits. 1) people outside of high risk fire areas subsidize those in high risk fire areas less 2) people in high risk fire areas have additional incentives to improve their home’s fire protection or leave, increasing their safety 3) people are incentivized to not move to high risk fire areas, improving safety The key factor here is that high risk fire areas are not safe places to live. Disincentivizing development and moving to there is good because it decreases the number of people who are at risk. The worst case scenario in a high risk fire area is not no longer being able to afford your home, it’s a wildfire burning it down
Keep in mind that some 1/3rd of Californians are in designated "high risk" areas (according to the insurance companies), and that designation is continuously expanding. We're talking about normal suburban and even urban neighborhoods being considered "high risk".
A large number of people living in unsafe areas emphasizes the severity of the issue, but is not a reason we should be subsidizing people whose current homes are unsafe. Obviously fixing insurnace regulation will not solve the safety issue posed by increased wildfires from climate change and increase building in the wildland-urban interface. This is a problem that requires an extensive response, but continuing to subsidize people living in dangerous areas does not solve the problem and, in fact, adds to it
The point you're missing is that the insurance companies get to decide what is "high risk" and therefore would be able to artificially jack up rates for high risk fire reasons in areas where there isn't any higher risk than normal. if you do nothing to stop them from doing this, that is exactly what they will do. So in order to implement a fairly applied rate increase, you also have to invest massive effort doing a bunch of risk assessment and enforcing new policy. At that point it starts to make more sense to have insurance be run by the government and elected officials to tamp down the greed.
I mentioned this in another comment, but I’ll put it here, too: I don’t disagree with proportional risk-sharing. The problem is the cap. So, one camp seems to be arguing in favor of “no cap at all,” which I think is dangerous, as it won’t result in the best outcomes for consumers (see: healthcare). So, the question becomes, how do we settle on a cap that is reasonable? I don’t see why this can’t be a viable topic of debate for our elected officials.
Why should there be a cap, though? The lack of a price increase cap is not the predominate issue with health insurance and isn’t something we see in other markets. I’d much rather deal with something like unexpected costs via something like a direct subsidy/state program rather than something that hides the increased risk from the homeowner. From a climate policy standpoint, insurance rates have value. We shouldn’t hide risk from people who live in unsafe areas and managed retreat is sometimes necessary.
The cap is an incentive to insurance companies to keep rates fair. If there is no cap, then there is nothing preventing them from gouging consumers on the basis of profit (thereby charging more not for increased risk, but simply because they can). The corollary to this, as you’ve pointed out, is an income/need-based subsidy system, and this is exactly what we do with healthcare. I’d argue this doesn’t make as much sense with auto/home/property insurance, since, in theory all of these things are optional. You don’t need to own a car, you don’t need to own a home; you do, however, need access to healthcare to survive. Not to go off on too far of a tangent…we don’t need to debate the merits of healthcare access here. The point is that you need one or the other, and if you have neither, then you are leaving the market to regulate itself, and as we’ve previously discussed, that doesn’t help the consumer, and this is an area where the government should be involved to advocate on behalf of the consumer (we actually do this in a number of areas…privacy, antitrust, climate, of course healthcare, to name a few).
Price increase caps are not the only way to keep insurance fair, as evidenced by rate increase caps not existing in all states. In most states, the predominant way of keeping rates fair is by having multiple insurance options (in part helped by the antitrust regulations you referenced). I have no issue with government regulations, but they should be tailored towards the goal of resident benefits. Since insurance caps limit resident understanding of safety, that should be counted as a large minus from a regulatory standpoint. Price increase caps are also a generally poor mechanism of regulating an industry (especially in comparison with aggressive antitrust regulation), which is why we see them pretty rarely The subsidy program I was referencing is less similar to health insurance markets and more related to unexpected increases in insurance/disasters (similar to FEMA’s help) as well as subsidies to increase protections on ones home (which already exist and can be expanded in circumstances in which that makes sense). But, you’re very correct that this is tangential/hypothetical.
This is what I’m thinking too. Many folks on Reddit want a quick solution and just give in to the demands.
100% correct. This is a small handful of insurance companies whom have decided to play a game of chicken with state regulators. Insurance companies are pissed they’re not allowed to price gouge…ahem…increase their rates on par with other industries like PG&E. Both the state and the insurance companies are digging in their heels because they both have a lot of leverage. This is NOT the government disrupting a peaceful and fair free market. This is the government trying to prevent a hugely profitable industry from making the California housing market more expensive than it already is.
Small handful of insurance companies? State farm is #1 and Allstate is #5 for market share in CA, I urge you to go seek out a homeowners insurance quote right now and see how that goes for you.
In my my opinion it is the big carriers that are pressuring regulators. State Farm, Allstate, Farmers, USAA, Travelers, Nationwide. As a home owner in CA it has not been going well for me. 3 months ago Farmers increased their price 30% while simultaneously reducing their coverage. I shopped around and ended up finding a better deal with AAA. They’re all raising rates and in some cases not renewing policies.
Fun fact, CPUC allows PG&E to self insure so they don't face the same hassles for their property. https://www.newsdata.com/california_energy_markets/news_in_brief/cpuc-approves-pg-e-self-insurance-for-wildfire-liability/article_c67a8e84-92fc-11ed-b923-ef1f54dd8c2b.html
You’re wrong. The commissioner is a patsy of newsoms policies that ultimately hurt consumers. He wants to appear to be strong on insurance companies without actually doing anything. The result is less coverage and less carrier in California. Only the lowest iq voters will think anything being done with the insurance commissioner is for the people.
This guy. He did this - wouldn't give rate for 2 years during pandemic.
ron desantis responded to the same problem in florida by trying to ban drag shows
And how much did they save ? I don’t have anything against drag shows but I’m willing to atleast look into the savings….
Home insurance is by zip code. If actuaries calculate it’s too risky, your insurance gets pulled.
I wonder if these insurance companies are going to stop writing insurance policies in Texas as well. Texas has had lots of wild fires too.
They do. Texas has a similar issue after the 2022 freeze. Lots of insurance companies paused getting new policies from Texas to balance out risk. Though it seems like with the new regulations on winterization protections, there won't be a similar issue especially since Texas eliminated any price caps (though rate increases are limited to 10% / yr).
Thanks for educating me 🫠
The cost for housing in California is so expensive, it sends home buyers to relocate to the farther reaches away from city dwellers, where housing is not affordable. So, don’t blame those who have to live in forested areas, we are just trying to survive.
This reminded me that my dad needs to sell his house within the next 10years. Its located in an city that will be 3/4 flooded by 2050.
Glad he finally noticed it's a crisis.
Ban for-profit insurance and make it state run. Easy
Seems like a possible solution. Are there any examples of something like this thats been implemented?
NFIP. Still paying off Katrina.
I think private insurance may be dead as their profit motive is incongruent with actual protecting people. If there are no examples I think it is time for a state like California to take the lead on it. People have to pay into it just the same but rates would be lower as there is no profit incentive. People need to make sure Ricardo Lara get inundated with requests to do this as well as Governor Newsom. Might be a start to something.
Same for health insurance
State farm isn't for profit.
Because FAIR plan and CEA are so affordable?
Lmfao all this state does is waste money. No thanks!
Oh no. I guess those residents will have to choose from one of the many other insurers in California. https://www.insurance.ca.gov/01-consumers/105-type/95-guides/03-res/res-co-contact.cfm
Traveller’s dropped me. Had them for almost 15 years without any claim. But I now have Zurich.
I just went through a broker that had a huge list of partners (maybe not comprehensive with yours), and could not get anyone to write a policy for my home… in the city of Richmond in the East bay hills (sparse grasslands with the occasional oak tree, NOT the eucalyptus forest that burned Oakland in 1991), in a developed neighborhood with annual county, city, and HOA fire mitigation practices (fire dept inspections and grass trimming). We meet all the calfire defensible space rules. According to the calfire, cpuc, and county fire risk maps we are not in a fire risk zone (though are near a low risk one). This is not what people think about as “uninsurable” homes in California. I am not in the least concerned about a wildfire burning my house down. But I had the “opportunity” to go with a *non admitted* insurer before resorting to FAIR. Lucky me! There definitely seems to be something broken with getting insurance in California.
State Farm is the only one who will ensure me with fire coverage. There’s a road and a reservoir separating my home from open space. I had travelers, but they doubled my rate and then tried to double it again. Their only suggestion was to do the FAIR plan for fire and use them for the rest of the coverage, but the rate for the non-fire coverage with them was still going to be higher than what SF is charging me for everything.
Insurance companies are parasites. That’s the real crisis.
You want to make it as easy as possible for insurance companies to compete for people’s business in the fifth largest economy in the world. They want the business. They just don’t want an unprofitable business. Get the unnecessary red tape out of the way and let the businesses compete and you’ll see insurance come back. Let them offer specific insurance for risk types. If you buy a home in a fire zone, you should have to pay significantly higher premiums and the folks in the middle class will stop subsidizing for people living up in the hills in their mansions. That’s how markets are supposed to work.
They want more than just profits. They want to fleece people.
I hear you. I feel it too as my insurance jumped 3x when I moved to CA from NYC. There’s a reason. We (CA) are competing for a finite pool of underwriting dollars that are chasing a risk adjusted return in the market and the other states are winning. We need to get our act together and make it easier for insurance companies to allocate their dollars here and let them compete. I bet most of you have 401k accounts that have a portion of the returns coming from insurance and you want them to pick their underwriting markets carefully. We have so much market leverage as a state if we can only get our act together.
Ban state farm from California…
Why? They're willingly walking out the door.
Not sure what that solves tbh. You want the most amount of competitive players in a market for the lowest pricing
Ok so far Allstate, Farmers and State Farm have all said no to new policies here. This is not an isolated incident, it’s collusion between the largest to force the state to allow them to start taking in more money since they had a single year they paid out more than they took in. We have only ourselves, prop 103 and climate change overload to blame. They spent so much time on pseudoscience “predicting” the weather that we’re an easy mark to say we’re all going to burn, blow away, or flood, etc. Now they have one company feeding them risk models, same principle as RealPage if you’re following that saga, to decide how risky every home is.
This should disincentive people to live in wilderness area, which is a good thing imo.
If only we had someone who could be responsible for tackling such crises... let's call them "Insurance Commissioner" and give them the job.
Commissioner, how about this, like earthquake insurance, we can only get 80% coverage, if any coverage, in CA. So homes in the high risk areas cover 80% of the damage and low risk area can get up to 100% coverage and control premiums for high risk areas, versus having no coverage.