California E&S Insurance

It certainly seems that way from the consumer's perspective -- but there's a lot happening behind the scenes that isn't obvious. In California, which continues to be on a 2-decade-long drought, Wildfires pose such a massive risk for property insurers that significant losses. Losses large enough to threaten solvency. Fire models help but simply put, insurers diversify to survive and shy away from properties that could pose huge losses. This is completely permissible under California law-- so long as you don't unfairly discriminate or charge unreasonable rates, insurers can and do select with whom they do business with. If no one was able to insure this property in the primary market, they had to go to a secondary, far more expensive market -- one where insurers often don't have huge diversified risk portfolios and thus, must charge far higher rates to be profitable. An insurer that doesn't charge adequate rates is in violation of California law and every insurer that goes insolvent equates to massive issues for customers and the overall insurance market. It's in the best interest of everyone that insurers charge adequate rates. Lastly, and most importantly, in California, insurers must demonstrate and get prior approval from the California Department of insurance as to why they charge certain rates. It's highly, and very strictly monitored to not be excessive. They can't, and aren't allowed to, charge excessive rates just for the hell of it. It doesn't work that way. So yes, insurance increasing does increase cost of living, but blaming it solely on insurers is at best, reductionist. I didn't even get into other things that hike rates like insurance fraud, attorneys, repair inflation, and all kinds of other cost-increasing factors.

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