07/21/2023
a good explainer from the NY times about CA insurance market
https://messaging-custom-newsletters.nytimes.com/template/oakv2?campaign_id=228&emc=edit_pc_20230721&instance_id=98135&nl=peter-coy&productCode=PC®i_id=77915976&segment_id=139950&te=1&uri=nyt%3A%2F%2Fnewsletter%2F0f152a6a-c8d1-5ef7-8f52-0c85407c2267&user_id=9ca969be90728ebc41a3782027fb1307
In California, the bigger problem has been a culture of keeping rates low at all costs. California is the only state that won’t allow insurers to use rising reinsurance costs to justify rate-hike requests. It’s also the only state that won’t let insurers base their requests on projections of rising costs. Regulators look backward at claims experience over the previous 20 years. So even though climate change is likely to cause more losses from wildfires, mudslides and the like, the state excludes it from consideration. Proposition 103, passed in 1988, allows public interest groups to contest requests for hikes of 7 percent or more. That drags out and sometimes stymies the approval process. Delays in the process are especially costly when inflation is running hot. No wonder insurance companies are cutting back in the state or getting out.
As different as California and Florida are, they share one big problem: Insurance companies are curtailing business in the two states. Some aren’t writing new policies. Others are going further and not renewing policies as they expire. I’m picturing vans pulling out of Sacramento or Tallahassee ...
