Fires intensify 'insurance crisis'

Maybe we will be The Uninsurable States of America sooner or later? The tragic fires out west are a reminder that there are things that we don't control, that we have risks that are not unimaginable, that come to fatal fruition all too often. We need to do a social, communal, environmental, political, societal, economic, practical, and, most of all, personal rethinking of what risks are or are not worth it, what tradeoffs we are or are not willing to take in order to go forward. Who by fire? Who by water? These are real questions that are very scarily and tragically being answered. It feels like for all our development and technology and capabilities, we come up against real threats and risks either without thinking about them or thinking it just won't happen to us. But it is. So we have choices to make and think about and talk about...

Major insurers like?State Farm and Allstate?had stopped writing new policies in California due to fears of massive losses from #wildfires and other natural disasters. But this is about to change. California will require #home insurers to offer policies in high-risk wildfire areas. ?? Opponents of the rule say that could hike premiums by as much as 40% ?? The current tragedy is affecting an already very expensive #housing market. And sadly, this is still ongoing. This story in HousingWire: https://lnkd.in/gr5hjpHt Stay tuned!

Insured losses from the California wildfires could be among the highest ever according to Bloomberg Intelligence analysis.?The Palisades and Eaton fires have insured-loss potential of around $3 billion to over $10 billion. Matthew Palazola reports https://trib.al/tMcz54w

Those who will never get their homes back in LA. Between 2020 and 2022, insurance companies declined to renew 2.8 million homeowner policies in the state, according to the most recent data from the California Department of Insurance. That includes 531,000 in Los Angeles County. More on cnn.com. #losangeles #lafires#insurance #home #money

California Homeowners insurance companies make it impossible to maintain reasonable coverage. Developers are allowed to build in these zones that are virtually uninsurable to the common person. What's the answer? Does the state not allow permits to build in these areas, or does the state offer subsidized insurance to help do damage control for the current situation? Don't even get me started on the fire hydrants not having water because the county failed to fill the reservoirs. Thousands of people have lost everything: their homes, their pets, and the clothes on their backs. Step up California.

As if it wasn't hard enough already... By this point, you've probably heard about the surging cost of insuring homes in vulnerable areas. This certainly isn't going to help matters. I feel like we're close to a breaking point in places like California which are vulnerable to forest fires and with the coastal areas who experience major weather disasters. With such huge losses, the private market may no longer be a viable solution. Either another market will have to materialize, or people will have to start leaving these vulnerable areas. #insurance #propertyinsurance #catastrophe #forestfires #hurricane #naturaldisaster #reinsurance The Wall Street Journal https://lnkd.in/e6ygvU-u

Regulators almost always deal with unintended consequences when regulating markets, which react dynamically to the incentives created by government rules. Here is a case in today's paper: California regulators have pushed down the prices of home insurance to the point where most insurers have left the state and homeowners have very few options or no options at all for home insurance. If home insurance was properly priced according to risk, the outcomes of the wildfires in California would be far less financially devastating to homeowners. Here is a case where regulators have made financial costs of disasters worse rather than better, despite the best of intentions. Regulators are desperately trying to remedy the mistake with large increases in premiums but it is probably too late to rescue the home insurance market in California. "Despite those risks, its consumer-friendly laws for decades kept home-insurance rates relatively low, compared with the national average, industry data show. Leading insurers have pulled back from the state, leaving many in the path of the fires with only bare-bones insurance provided by a state-sponsored insurer of last resort—or worse, no insurance at all. Regulators have in recent months agreed home-insurance rate increases far in excess of the 7% cap that was long the norm in California. Allstate, for example, won approval for an average 34% increase that began taking effect in November. New rules will allow insurers to base rates on forecasts of future losses from wildfires, rather than—typically lower—historic damages. Premiums will in future also be allowed to take into account the cost of reinsurance, the coverage insurers buy for themselves."

The wildfires that continue to devastate many parts of Los Angeles are going to lead to a further financial crisis regarding homeowners insurance policies and likely lead to more of these companies either leave California entirely or demand much higher rates from homeowners to keep their policies. Industry Intelligence Inc.

Even before this week's devastating wildfires left thousands of structures in smoldering ruins across some of the most affluent Los Angeles neighborhoods, the state of California faced an existential insurance crisis. Carriers have been fleeing the state in recent years, driven out by increasingly costly weather events, including previous fires that have wiped out company profits. It's too soon to know the full cost of repair following this week's disaster, which has already destroyed entire neighborhoods and killed at least five. But as big insurers try to protect their profits from natural disasters, more and more Southern California homeowners will be left with inadequate or nonexistent coverage, industry experts say.