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Is the world becoming uninsurable?

(charleshughsmith.substack.com)
512 points spking | 4 comments | 17 Jan 25 00:32 UTC | HN request time: 0.847s | source
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bluedevil2k ◴[17 Jan 25 01:50 UTC] No.42733208[source]▶
Like we see in California, when the government sets a price ceiling, insurance companies just leave. Same in Florida. If the free market truly was allowed run normally, the insurance rates in Pacific Palisades or on the Florida coast would be so high that no one could afford to live there. Is that a bad thing? If someone was living in a house near where they tested missiles, we'd call them crazy. At what point can we say the same about people building and rebuilding over and over in these disaster areas.
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lmm ◴[17 Jan 25 04:21 UTC] No.42734047[source]▶
Don't worry, the California government is responding to that by making it illegal to stop offering insurance in the state. That will definitely fix the problem.
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owlbite ◴[17 Jan 25 04:32 UTC] No.42734111[source]▶
Source? Many companies seem to be stopping offering insurance in the state just fine!

The most recent moves seem to be relaxing the pricing rules to allow major disaster pricing and recharging reinsurance rates in exchange for insurers offering more policies in high risk areas.

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nathanaldensr ◴[17 Jan 25 04:51 UTC] No.42734215[source]▶
https://www.clydeco.com/en/insights/2025/01/california-wildf...

> The Bulletin was issued pursuant to California Insurance Code section 675.1(b)(1), which states that an insurer “shall not cancel or refuse to renew a policy of residential property insurance for a property located in any zip code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency . . . based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”

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BeetleB ◴[17 Jan 25 05:19 UTC] No.42734351[source]▶
I imagine this won't apply if the insurer just leaves the state.
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1. PaulDavisThe1st ◴[17 Jan 25 05:30 UTC] No.42734392[source]▶
Yep. These are terms to operate as an insurance company in the state. If you don't want to do that, the rules have no bearing on you.
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2. qeternity ◴[17 Jan 25 17:53 UTC] No.42741138[source]▶
Which effectively means that anybody in a less risky area of California is just subsidizing those who live in the risky areas. Premia across the board will increase as a result.

Typical California redistribution...but this is from the bottom to the top.

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3. PaulDavisThe1st ◴[18 Jan 25 14:57 UTC] No.42748816[source]▶
> Which effectively means that anybody in a less risky area of California is just subsidizing those who live in the risky areas.

Do you not understand that this is precisely how insurance works?

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4. qeternity ◴[18 Jan 25 18:34 UTC] No.42750305{3}[source]▶
No. That’s not subsidization.

Of course insurance is about pooling risk. But subsidizing implies you’re doing it below market rates.

If I pay my market rate but still -EV insurance premium, I’m not subsidizing anyone. I’m just happy to pay for the convexity insurance provided.

If I have to pay 20% more than I otherwise would, because the insurance company can’t charge someone else 20% more, that is actual subsidization.

A subsidy distorts natural market forces. This is what I am talking about.

Don’t be so quick to be a dick.