They already have. This is a reworking of our current rules. It’s basically goes like this:
In California insurance must now provide some insurance in fire prone areas. In exchange California will allow them to use computer models to identify high risk customers and charge them differently. As well, California is promising to reworking our insurance coverage system for insurers. Basically saying in the event of a bad natural disaster California will help provide financial aid.
Lastly the system is encouraging companies to come back by giving in to some of the insurance companies demands. While it sucks, people like me (and there’s a heavy majority of Californians like me) will get lower rates because we live in cities with low wildfire and low flood potential. People in the mountains and along the coast and rural areas will be fucked, but they also wanted relaxed regulation like this.
It’s also substantially better than lots of southern states like Florida which has basically no insurance companies left and those that stay have people paying 12 grand a year for coverage. If I’m recalling correctly the average Californian pays like $1200. We’re far better off, so hopefully this helps a bit and doesn’t completely screw us. ¯_(ツ)_/¯
While it sucks, people like me (and there’s a heavy majority of Californians like me) will get lower rates because we live in cities with low wildfire and low flood potential.
It doesn’t sound to me like this is the situation.
Insurers can offer whatever they want, but if they want to be able to sell to non-high-risk people, they will also have to complete a sufficient number of sales to high-risk customers.
The rule will require home insurers to offer coverage in high-risk areas, something the state has never done, Insurance Commissioner Ricardo Lara’s office said in a statement. Insurers will have to start increasing their coverage by 5% every two years until they hit the equivalent of 85% of their market share. That means if an insurer writes 20 out of every 100 state policies, they’d need to write 17 in a high-risk area, Lara’s office said.
That will cause them to need to set lower rates in higher risk areas than they normally would to be able to complete sufficient high-risk-area sales. That will decrease competition to provide coverage in low risk areas, which will raise insurance rates there.
I’d expect this to be causing people who live in low-risk areas to be subsidizing people who live in high risk areas via higher insurance prices in low risk areas than would be the case in an unconstrained market.
That is, this is a good deal relative to an unconstrained market for people living in high-risk areas and a bad deal relative to an unconstrained market for people living in low risk areas.
I’d expect this to be causing people who live in low-risk areas to be subsidizing people who live in high risk areas
To be fair, high-risk people are subsidized in nearly every type of insurance. Often unintentionally (due to actuarial uncertainty) but sometimes it is an explicit goal.
For example, community rating was deliberately introduced to health insurance in order to cause lower risk people to subsidize high risk people (eg those with preexisting conditions).
They already have. This is a reworking of our current rules. It’s basically goes like this: In California insurance must now provide some insurance in fire prone areas. In exchange California will allow them to use computer models to identify high risk customers and charge them differently. As well, California is promising to reworking our insurance coverage system for insurers. Basically saying in the event of a bad natural disaster California will help provide financial aid.
Lastly the system is encouraging companies to come back by giving in to some of the insurance companies demands. While it sucks, people like me (and there’s a heavy majority of Californians like me) will get lower rates because we live in cities with low wildfire and low flood potential. People in the mountains and along the coast and rural areas will be fucked, but they also wanted relaxed regulation like this.
It’s also substantially better than lots of southern states like Florida which has basically no insurance companies left and those that stay have people paying 12 grand a year for coverage. If I’m recalling correctly the average Californian pays like $1200. We’re far better off, so hopefully this helps a bit and doesn’t completely screw us. ¯_(ツ)_/¯
As a comparative price point, I’m in the UK and pay about 80% less.
It doesn’t sound to me like this is the situation.
Insurers can offer whatever they want, but if they want to be able to sell to non-high-risk people, they will also have to complete a sufficient number of sales to high-risk customers.
That will cause them to need to set lower rates in higher risk areas than they normally would to be able to complete sufficient high-risk-area sales. That will decrease competition to provide coverage in low risk areas, which will raise insurance rates there.
I’d expect this to be causing people who live in low-risk areas to be subsidizing people who live in high risk areas via higher insurance prices in low risk areas than would be the case in an unconstrained market.
That is, this is a good deal relative to an unconstrained market for people living in high-risk areas and a bad deal relative to an unconstrained market for people living in low risk areas.
To be fair, high-risk people are subsidized in nearly every type of insurance. Often unintentionally (due to actuarial uncertainty) but sometimes it is an explicit goal.
For example, community rating was deliberately introduced to health insurance in order to cause lower risk people to subsidize high risk people (eg those with preexisting conditions).