The fuck up with California house insurance.
Sorry about this but despite the simplicity of Econ 101 it is in fact true. When the price setters set prices nice and low then supply vanishes. This is simply what happens among humans.
The lack of property insurance in California is because the price of property insurance has been set nice and low. Something for all to remember for it applies to everything.
And here’s The Guardian with a report that maikes the case nicely:
And that’s for the lucky ones. Many top insurers, citing the destabilising effects of the climate crisis, have been refusing coverage to property owners in areas deemed high risk for wildfires and other natural disasters – areas including Pacific Palisades and Altadena that have borne the brunt of this week’s devastation.
Thousands of homeowners denied normal coverage may have to depend instead on an emergency state insurance program that is costly and complicated to join and caps its payouts at $3m per household – significantly less than the value of many affluent homes razed along with their contents to the ground this week.
Matters may only get worse once the accounting for the LA fires is over, as insurers ponder whether they need to raise premiums in California even beyond the sharp rate increases of the past several years.
California has been deliberately holding premiums down. Therefore there’s less insurance available. Yes, they reall do have price controls on insurance there.
That attitude infuriates consumer advocates, however. They accuse the big insurers of “climate change opportunism” and argue that the cost of deadly events like this week’s fires have long since been factored into the premiums they charge.
Those are the people responsible too – the “consumer advocates”.
Don’t let them get away with it. Always recall. Price fixing, prices fixed nice and low, always does lead to a shortage of supply.
Does everyone remember when Venezuela decided to set the price of toilet paper? It’s an essential, after all. So, the government set the price of toilet paper nice and low. At which point there was no toilet paper.
That.
Oh noes but ’tis Wobbly Gloaming as any fule kno.
Stop that and so will the fires cease.
Forever.
I have proof somewhere…
Otto: it’s in Michael Mann’s filing cabinet, honest.
TG,
And he’s not allowed to share the date because confidentiality agreement anyway. Honest, guv.
“… citing the destabilising effects of the climate crisis…”
So… not citing increased fire risk due to poor woodland management, not clearing away brush, and inadequate water supply because California is diverting water into the Pacific rather than let it flow naturally in order to protect some tiny fish species?
Indeed. I was rather amused when, a few years ago after those apocalyptic Australian forest fires, abos pointed out that the cause was eco-whitey not looking after the forests properly. This caused huge cognitive dissonance in progressive Aussie eco-whiteys, who shut up and started doing as the abos told them.
Are there any Californian redskins handy to do the same?
Those are the people responsible too – the “consumer advocates”.
I actually got the Samizdata Quote of the Day once ages ago when I commented that every time you see the phrase “consumer advocate” think “government advocate”.
– The lack of property insurance in California is because the price of property insurance has been set nice and low.
It’s okay, the state insurance commissioner has prevented the insurance companies from cancelling or non-renewing policies in affected and adjacent areas for a year. It’ll be fine . . .
Now that the fires have consumed the fuel these places will be a reasonable insurance risk for a few years.
It’s the bosky places where the fires aren’t that are at risk.
Little point here: $3 million may be well below the market value of many of these properties. It will not though be beneath the rebuild costs. Whisper it quietly, but the fire has probably done a few homeowners a big favour.
Trust me; I live in Liverpool, so I know a bit about this stuff
This has also been discussed at CapX:
https://capx.co/the-la-fires-a-story-of-political-failure
I lived in the area during the years Reagan was governor. (I am still trying to find out if my childhood home burned or not). During those years, the local, state and federal government did proper fuels management.
There would be controlled burns every winter to ensure that the brush never grew too thickly. Bulldozers cut wide firebreaks along the ridges. Much of this was in response to the Bel Air Fire in 1961. At the time there was considerable press about celebrities losing their homes, much like today.
Since the 1980s the amount of controlled burning has decreased to almost nothing. Outcries from the ecoloons and NIMBYs has stopped it. The only justice is that some of them no longer have a backyard because there is no house in front of it anymore.
For ages we were calling out the Gerbil Worming alarmists who were happily buying hugely expensive beach-front properties belying their claims they’d be underwater before the decade was out. We were looking in the wrong place. It’s the Gerbil Worming alarmists who have been buying multi-million-dollar properties in “climate-ravaged” fire plains.
Once the State rules that betting odds on football games must be set to even, I’ll make a killing!
Wait, where’d my bookie go . . .
“Little point here: $3 million may be well below the market value of many of these properties. It will not though be beneath the rebuild costs.”
Most of those homes were grandfathered in through decades of building code and zoning changes. There will be no similar rebuilding, because the grandfathering will end with “substantial reconstruction.”
That’s why we’ll never again see the packed-in rows of multi-million-dollar homes along Malibu beach. Rebuilding will not be allowed due to present codes and regs.
I gather that people in parts of the LA basin which are at serious risk of wildfire build houses with wooden roofs. Zat true?
When we lived in the desert’s edge fire-risk climate of South Australia our roof was corrugated iron, in the great Oz tradition. We also followed the local rag’s advice on how to reduce fire risk. And we swept up all our gum leaves every week.
I gather that Aussie fire precautions and procedures have made great steps backwards since those days, under pressure from the Greens.
Since there’s nothing remotely new about wildfires in those parts the climate change excuse is even more dishonest than usual. It’s bad government, due mainly to stupid, ignorant electors.
I must say if I lived in a wildfire-prone zone, if my house was a large part of my wealth, and if I couldn’t buy insurance, I’d incline to sell up and live elsewhere.
Similar to Australia following wildfires in Canada the indigenous groups have pointed out that following traditional practices would help and that it was the government stopping them.
Sadly this is the one time that they choose to ignore the indigenous leaders demands
‘Since the 1980s the amount of controlled burning has decreased to almost nothing. Outcries from the ecoloons and NIMBYs has stopped it.’
Thanks for the info MG.
ISTR some years ago seeing a report about a homeowner in Oz who’ been fined a fairly staggering amount of money by his local council because he’d had the temerity to maintain the underbrush and fire-breaks on his land – contrary to local ordinances… Come the near-inevitable bush-fires a year-or-so-later and his was the only house left standing in the area!