California E&S Insurance

I agree that better regulation is needed, unfortunately regulators are hamstrung by voter proposition 103 that (regardless of its need/utility/efficacy at the time it was passed) has not aged well and does not let insurers do two key things: 1) use projections of climate change to help adjust rates, and 2) use "catastrophe" models to estimate tail end risk. Right or wrong, insurers are saying that their prices are 60% below what they need to be to capture their estimates of future risk. However regulators can not use modern insurance techniques (Florida for example maintains their own catastrophe model to keep a check on insurer's models), because of Prop 103. Potentially the state can step in and provide insurance, but what that means is that homeowners suddenly get a massive subsidy from everyone in the state, homeowner or not, unless the state insurance is also priced appropriately. Given how much homeowneds are already coddled and given huge financial advantages over renters (I know, I currently own my home), I don't think that's good social policy, unless the insurance is priced so high that it has profits that can be used for other tax purposes (maybe building subsidized housing, for example). Home insurance in California is already extremely cheap compared to other states, considering our housing prices. Most Californians do not know how much of a deal they have been getting over the past decades.

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