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.
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.
> 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.
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.
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.
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!
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.
[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...
Insurance companies are not doing well in terms of profits: https://www.spglobal.com/marketintelligence/en/news-insights...
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.
What are the odds insurance companies have bots scanning social media for videos with fire alarm chirps in the background?
> 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.
[1] https://www.insurance.ca.gov/01-consumers/120-company/04-mrk...
[2] https://abcnews.go.com/Business/los-angeles-fire-losses-reac...
[3] https://www.iii.org/sites/default/files/triple-i_trends_and_...
[4] https://www.insurancejournal.com/news/west/2025/01/16/808564...
Worth keeping in mind in these discussions that insurance companies exist to make money off of the "float" (interest on money they hold): https://www.npr.org/sections/money/2010/03/warren_buffett_ex...
They can have underwriting losses every single year and still be fine.
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.
I dare all the “progressives” to start selling insurance. Put your money where your mouth is!
Or I guess everyone can just double down on price controls and “good intentions” to save the day…
We’re about to see how poorly the FAIR plan managed their policy portfolio.
This is nonsense. Of course insurance is going to be expensive when billions of dollars of property burns down every other year.
You can't fix that problem by setting a price cap on insurance; you need to stop the destruction.
Or, you know, stop building in places that are pretty much guaranteed to be destroyed.
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.
Can insurance companies be forced to expose or open source their models?
They already are. Rate filings are all publicly available through the DOI website: https://www.insurance.ca.gov/0250-insurers/0800-rate-filings...
not in USA
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!
[dead]