The frame here is misguided. It sees insurance companies as engaging in a war against consumer protections and, fair enough, they explicitly are. However the reason they are engaged in that campaign is any companies that don't feel like fighting have shut down or left the state [0]. Very similar principle to how a starving animal might get a bit aggressive. It isn't normal to have an actively adversarial relationship with your insurers - mine charge a fair market price and I'm happy, they're happy. Everyone a winner.
> California home insurance companies’ return on net worth ... was three percentage points higher than the national average ... [and] the last five years were even better.
This is a fairly classic statistics mistake. If you shrink the insurance market by making it risky and difficult for businesses then the accessible low-margin types shut down and the boutique, highly expensive ones are the last to cling on. High profits in simple businesses like insurance are a sign of unhealthy markets. If anyone could go in and charge what they liked, the rate of profit would be so low that without investing the float insurers would be making a loss.
> Regulation in California has kept rates down for homeowners while earning the insurance industry a healthy profit
This is a big claim to make unsubstantiated. If it were so profitable, business wouldn't be pulling out.
Looking just at 2022 and 2023, Californian insurers wrote $28.8bn of fire and homeowner policies and experienced a 56.5% loss ratio [1]. If the LA fires cost insurers $30bn [2], that's almost five years' underwriting profits. Over the last ten years, California's homeowner insurers have paid out $108 in claims and expenses for every dollar of premium they brought in [3]. Show me the "healthy profit."
> the FAIR Plan, California’s high-cost, low-benefit state insurer of last resort
Even this stingy model will need a bail-out [2].
This analysis is deeply flawed, starting from the premise that insurers are screwing consumers and then trying to work backwards.
I understand people's frustration at expensive premiums, but increasing the regulatory burden, and instituting price ceilings will only further reduce the number of options available. Also, insurance is a highly competitive industry, with institutionalized competition (enforced by brokers), and it's a bit ridiculous to pretend that clients are loyal to providers.
This article presents a very interesting contrast to the article and discussion at https://news.ycombinator.com/item?id=42732728, which basically asserts that insurance companies are not to blame and some places are actually becoming uninsurable.
Maybe, just maybe, it's possible that some places are becoming too expensive to insure and insurance companies are exploiting every loophole they can to maximize their profits?
The article you linked is correct. Insurance companies can't price risk fairly here in CA because they need state regulator approval to increase rates. This is due to good old prop 103.
We should all be able to agree that the actuarial math backing their rates is good. What they do after when it comes to fighting policy payouts is another story
The Rolling Stone article claims that insurance companies are currently not required to disclose their math, and are fighting tooth and nail against being required to share it.
> insurance companies are currently not required to disclose their math
I started my way towards becoming an actuary. If actuarial work requires public disclosure, it stops being worth investing in for competitive advantage.
This entire article is Exhibit A for why Californian homeownership is fucked.
I'd be happy to build there without insurance. There are plenty of ways houses can be wildfire proof in the same way they can be made to withstand hurricanes and earthquakes.
Don't take my word for it. There are plenty of professionals and agencies who explain how it can be done[1]. I'm not saying there aren't tradeoffs, but it is definitely possible.
> how can you make a house resist major fires such as the LA Fires?
Not an expert, but the main ingredients seem to be to create a defensible space free of combustibles (trees, brush, foliage, wood piles, wooden fences, etc.) within a perimeter of the house and build the exterior fire-safe materials (tile, slate, sheet iron, aluminum, brick, or stone).
> Why aren't multimillionaires doing that?
I don't think the wealthy have anymore risk foresight than anyone. Almost everything in the system is discouraged from emphasizing catastrophic risk: buyers want a fancy looking traditional house (not a barren yard and unconventional building materials), real-estate agents want to close on as expensive a property as fast as they can, and the municipality is discouraged by owners/voters from forcing expensive fire-safe changes. It's human nature not to learn hard lessons until they directly affect you.
When properties in Florida become uninsurable due to climate change: Haha those stupid Republican climate deniers should have known better than to build their homes in a disaster area!
When properties in California become uninsurable due to climate change: This is a capitalist conspiracy by the big corporate insurance companies and the ruling class to exploit a tragedy for profit!
Don't acquire anything you can't self-insure! Yes even "you", presumably Well To Do hackernews reader, that kinda shoulda knowa better. Stop wasting your money paying insurance, and purchase within your means.
> California home insurance companies’ return on net worth ... was three percentage points higher than the national average ... [and] the last five years were even better.
This is a fairly classic statistics mistake. If you shrink the insurance market by making it risky and difficult for businesses then the accessible low-margin types shut down and the boutique, highly expensive ones are the last to cling on. High profits in simple businesses like insurance are a sign of unhealthy markets. If anyone could go in and charge what they liked, the rate of profit would be so low that without investing the float insurers would be making a loss.
[0] I admit to making an assumption here. I did at least check for some sort of data although I don't hold myself to any particular standard of interpreting it - https://www.atlas-mag.net/en/article/distribution-of-insuran...