alt Hacker NewsYet at the same time federal government allowed home insurance to be non-actuarial (aka insolvent) for natural disasters like hurricanes. So essentially the rest of the country subsidise residents in disaster-prone areas. So Californians pay to make home insurance lower for Floridians.
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cucumber3732842 • yesterday at 11:56 PM
>So Californians pay to make home insurance lower for Floridians.
More like some the people in Ohio or Maine or Wisconsin pays for both. CA and FL are both natural disaster dense compared to the colder states.
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Uh, what's the transmission mechanism for this?
It's true that the National Flood Insurance Program does this, but that's only for flooding (which, admittedly, is a big part of hurricane damage...). Flood coverage is however not a standard rider on homeowner's insurance policy products, and I'm also unsure whether it can ever be. I've only ever seen it offered as an additional policy product.
The concern over pricing below the actuarially fair value is well-placed[0], but I'd urge being precise.
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0: https://home.treasury.gov/news/press-releases/hp548