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Is is a band-aid that is only going to allow the underlying issues to further fester.
Insurance companies profit by charging more in premiums than they pay out in claims. This is just going to accelerate them either pulling out of the state altogether, or if barred from doing so (and good luck with that in court); they will hike the premiums so high that no one would pay.
“No one will pay” — people with mortgages are required to pay or they lose their house
To clarify, I meant more that no one will be able to pay; especially if their insurance premiums end up costing more than their monthly mortgage!
In a situation where the risk is assessed to be that there is another fire in the Palisades region within the next 10 years - and that there is a >50% chance of critical structural damage, then in order to cover all of the associated costs and operational expenses, your home premium would be ~10% of your home’s value!
Is it? If every state implemented this, insurance companies would have to be honest about their coverage or find another way to make money.
If we ban companies from making billions off of deceptive tactics the services won't completely disappear. Plenty of people willing to do the job for multi-millions. The system is totally unsustainable because theyve been taking billions with no intention of actually paying, they need to be stopped. (See healthcare).
Insurance companies need to charge more than they pay out in order to be able to cover wages/salaries of their employees (assessor’s, customer service, sales etc.). So if an insurance provider’s risk model for the Palisades is that there is a >50% chance that the house will burn down again in the next 10 years - then they will need to charge like ~10% of the home’s value per year just to break even (ie. no profits for shareholders to leech off of).
The insurance premiums would be higher than the mortgage, and that’s assuming the insurance companies would firstly be able to sell such a coverage plan (ie. can it even be afforded), and that they don’t view the risk of miscalculating and making a loss as too great and pulling out of the market altogether.
Now don’t take this as a blanket defence of the insurance industry at large. There are plenty of companies (especially in the health sector) that are some of the scummiest on the planet - but asset insurance companies already largely work off making a very small amount of money off a large number of policies.