alt Hacker NewsDo we know why the insurance companies can't simply raise the insurance price to match the risks in those areas that are prone to natural disasters? I mean in general, not as in California where the government imposes strange policies. Speaking of the policy, why wouldn't California allow the insurance company raise the premium by region? Doesn't such policy benefit the rich at the cost of the poor as the rich love to live by the hills, lakes, or beaches, which is very much against the ideology of California?
Replies
If your house burning down was a near certainty within a few decades, the real cost of insurance would be buying a new house + profit margin.
Insurance only really works when most people don’t suffer a catastrophic event and can cover the few who do.
It's more complicated than that, as always. Here's some (incomplete) background on Florida:
https://www.civilbeat.org/2024/03/how-floridas-home-insuranc...
Re: California, I don't understand the context for your question, or why you would think the California government is more strange than any other US state government. There's no universally-accepted "ideology of California." It's a big state with a huge, diverse population.
tl;dr, though: California does allow insurers to do that, but is using currently an antiquated set of rules that don't allow for modern risk management approaches. It's been rewriting those rules recently to fix this; I think the new rules are supposed to be in effect starting this year.
California's ideology is to protect at all costs the people who already live among its hills, lakes, and beaches. Insurance and property tax hikes are threats insofar as they could drain your wealth. The (other, new) rich are a threat insofar as they could become your neighbors and ruin the view. The state protects you in both directions.