>Part of this is because the state requires that a certain portion of insurance be written in the fire zones
Existing regulations incentivized insurance companies to write policies everywhere in the state. By not allowing insurers to raise premiums without posting a loss ensures that companies had to seek new policies to increase profits.
>Reducing urban coverage also reduces their obligation to write unprofitable fire zone coverage. Allowing prices there to reflect actual risk is good for urban policy holders too
Insurance companies are not required to provide insurance to anyone, this is why California guarantees insurance coverage through the fair plan. If an insurance company ultimately chooses to not offer a policy because the risk is deemed too high, the state plan is more expensive which effectively means high risk premiums are priced accordingly. Existing regulations had this covered
The reason California has good rates for homeowners insurance is because we leverage the collective bargaining power of the state as a whole. California is sufficiently large in population and in size to leverage those advantages. The California market is the largest in the country and the size of California is sufficiently large in area to ensure an insurance company can effectively manage its risk. Other states and other markets cannot do what California did with regulations. It’s not like insurance companies on the gulf coast where one hurricane impacts 100% of the client base.
We made a terrible choice to deregulate. The risk maps that insurers are now allowed to draw are not required to be published. There is no guarantee that rate increases will be made based on risk management. We should fully expect that rate adjustments will be made based on profitability.
Now that we have lost the collective bargaining power of the state, everyone will be paying more. It doesn’t matter where you live in the state.