Leslie VarneyJun 4, 2023
Dan Gillmor

As insurers refuse to write new homeowners insurance policies in California, a real estate crash is on the way.

If you can't get insurance, you can't get a mortgage. It's that simple.

Climate change will bankrupt people, businesses, communities, states, and nations.

https://www.sfchronicle.com/california/article/insurance-allstate-fires-18130622.php

Allstate has quietly stopped new home insurance policies in California

Allstate, one of the largest property and casualty insurance providers in California, hit pause on new policies in California last year.

San Francisco Chronicle
Jun 2, 2023 at 11:48pmWeb
Show threadBadtux the Snarky PenguinJun 2, 2023

@dangillmor So that's just Company
1. X - State Farm
2. Farmers Insurance
3. CSAA Insurance Exchange
4. Liberty Mutual
5. X - Allstate Corp.
6. Mercury Insurance
7. USAA
8. Auto Club Exchange
9. Travelers
10. Nationwide

So two of the top ten companies selling homeowners insurance policies in California have now stopped (marked with X). I guess that means more business for the rest of them. Capitalism!

Show threaddecitectJun 3, 2023
@badtux @dangillmor Capitalism, in the sense of privatize profits, socialize risks. Many more have pulled out of local zip codes, such that there may be 1-3 giving quotes. But none of them want large groups of insured in WUI zip codes because of risk of loss on their bottom line. So a few will raise rates, but stop at a quota of total policies in an area substantially less than a greedy capitalist would! Collectively they’re abandoning the market; leaving the economic risk to cities counties & states. This was the way with earthquake insurance. With climate change, its hrowing to fire, flood, wind (tornado, hurricane)…
Show threadJoe ❌👑Jun 3, 2023
@dangillmor Isn't this really a fight over regulation? The insurers want to raise prices by more than the regulators will let them. That seems to be it, because they are refusing to issue any new policies, even in areas where fire danger is almost nonexistent.
Show threadDan GillmorJun 3, 2023
@not2b That is certainly part of it, I agree.
Show threadHarikJun 3, 2023
@dangillmor Florida is facing a very similar problem. Insurers are leaving the state in droves, and policies are either being not renewed or jumping as much as 300% YoY.
Show threadKarl AuerbachJun 3, 2023

@dangillmor Some companies stopped providing coverage to new customers; other companies are simply leaving the state.

(Our insurer has left the state and we have 2 months to find an alternative - most likely we will be forced into the California fallback system, the FAIR plan. Fortunately we started that search before the announcements by the big companies and we are near the front of the FAIR application queue.)

The California FAIR plan, that people will use as their ultimate fallback, is a mandatory system in which existing insurers are required to participate. But when those insurers pull out of the state the FAIR plan will find itself with a very small set of remaining insurance company members, thus making insolvency of FAIR easily foreseeable.

Show threadDan GillmorJun 3, 2023
@karlauerbach It'll be exactly like the semi-bogus "earthquake insurance" market -- high premiums for coverage that won't end up covering more than an inadequate portion of likely losses.
Show threadKarl AuerbachJun 3, 2023

@dangillmor The Calif FAIR plan is pretty basic and they even admit that it is inadequate. So there's a sort-of-formalized system of extra cost add-ons, from 3rd party companies, to fill some of the non-fire related gaps (like personal liability.)

It's natural and understandable for for profit companies to abandon a market when there is a chance of loosing money. But it seems to me that after covering someone for 20+ years that there ought to be more than 90 days notice of non-renewal.

What makes it more annoying is that we live in a wooded area subject to a "heritage tree" policy - which means we can not clear a "defensive fire space" around the house without getting a permit from the city, assuming we can convince the city forester to grant a permit, and pay a fee.

Show threadlegraLeGraJun 3, 2023
@dangillmor
I am curious to see whether when private insurers pull out ... some state/ federal government program manipulates the market back to accepting big risk. (Hello NFIP, meet your new friend NF2IP)
Show threadWillnnAbelJun 3, 2023
@dangillmor Florida has the same problem
Show threadUshagatJun 3, 2023
@dangillmor
It is not climate change it is pollution pure and simple. The wording climate change allows the nay sayers to shrug it off. Pollution!
Show threadGed MaheuxJun 3, 2023
@dangillmor @Andrewhinton And California is just the first. Florida is next.
Show threadnedhamsonJun 4, 2023
@dangillmor The two large insurers are not the only insurers...
Show threadLinda CollinsJun 4, 2023
@dangillmor This has been happening in Florida for many years now. Alstate dropped us after 20 years without a claim after Hurricane Charlie. They didn't mind collecting money they gambled on but didn't want to pay when they lost.
Show threadKadinJun 4, 2023

@dangillmor Seems like it's peripherally about climate change, but it's mostly about the cost of rebuilding going up substantially and not being able to raise premiums to cover those increases as quickly as they have happened.

My guess is that the insurance regulators in California will eventually approve the requested rate increases and the companies will come back.

In a way, this means that the regulation is serving its purpose: it's keeping insurance profits low, as demonstrated by the companies being on the edge of exiting the market. If they were making money hand-over-fist, they wouldn't do that. But you can only squeeze them so tightly, before you need to give in and allow rate increases if you still want insurance.

But communities up in the woods in fire-prone areas are going to have some *astronomical* insurance premiums, looking forward.

Show threadThe Mïghty KräckenJun 4, 2023
@dangillmor A real-estate crash is the only way most of us will ever be homeowners.