The sinking of California’s insurance industry

September 4, 2023

Stacy Korsgaden


What does the captain of the Titanic and California’s Insurance Commissioner have in common? When California’s insurance industry steamed toward a looming “iceberg,” Ricardo Lara, California’s “Captain of insurance” was asleep. In May we struck the iceberg.

State Farm declared they would stop writing new home policies in California: “State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.”

Reinsurance is the insurance insurers purchase from larger companies to cover potential losses. It’s insurance for insurance companies and it’s becoming prohibitively expensive and less available.

How did Captain Lara respond? In a Consumer Alert issued by his department, “climate change challenges” were blamed. Have you noticed when anything goes wrong, climate change is the first to be blamed? No one talks about disastrous climate change policies, like restrictions on clearing dry brush and dead trees.

I am for gorgeous forests like anyone else. But we’re not helping our forests when we let them erupt into fire.

A second point said current customers would not lose their coverage and there are about 115 other insurance companies still writing new residential policies. Yes, thankfully, many will keep their policies, for now. And  there are still other insurers. But for how long? Already more are reducing services or leaving the state.

The alert also cited the state’s FAIR Plan as a “last resort.” Do we really want government to be the only source for our coverage? The FAIR plan is already expensive and if it becomes the only insurance available, prices will skyrocket. Customers will deal with bureaucrats rather than local agents.

When I became an agent, the first thing I learned was insurance is a business. When my company insured a home, the risk was assessed, a contract was signed, the premium was collected, and a policy was born. My job was complete.

But back at corporate, there were smart people called “actuaries.” They performed statistical calculations to determine the risk of loss and determine a premium that when pooled with other premiums covered any potential losses, paid expenses, and yielded profits.

Everyone counted on the actuaries to be correct because we had to keep our promises. Company executives were motivated to keep premiums down because of competition.

Since those days, the calculations for fire and other risks have exploded. And more trouble is coming down the pike. Ballot initiatives have wreaked havoc. Before, actuaries never had to adjust for a government that wouldn’t lock up thieves and criminals.

So what happens when more insurance companies stop writing coverage or simply leave the state? The buyer for the new home can’t purchase if he can’t insure. The realtor loses his commission. The new car the realtor planned to purchase goes unsold. The car sales rep can’t purchase the new blinds she wanted. The local contractor is idle. His little girl goes to school without a new coat. The effects rips through our economy.

With an all-hands-on-deck approach, this can be remedied. Wise management of our forests would renew our environment and reduce risks. A shift from hostility to civility with respect to regulations, specifically addressing Proposition 103 which handcuffed insurance companies, would also help to right our ship.

The Titanic’s Captain Edward Smith had warnings. He went to sleep in his quarters. Captain Ricardo Lara had warnings. He did nothing. The iceberg hit. He does nothing.

Why isn’t Captain Lara communicating with the public? Why isn’t he pounding our legislators to act? Why isn’t he relentlessly pestering our governor?

He is sleeping or worse, ignoring reality, as the insurance industry is sinking. What will it take to rouse him?

The author, Stacy A. Korsgaden, began her business with Farmers Insurance in 1989. She was a President’s Council agent for 14 years of her career, which means she was one of the top 150 agents in the country out of 15,000 agents at the time. She is still a licensed insurance agent, but her focus today is as a financial advisor. Stacy lives in Grover Beach in San Luis Obispo county and is active in her community.


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Then there are the loans with high interest plus expensive insurance, this equals a not qualified perspective buyer and very hungry realtors. The local cash buyers are limited but there still lies the insurance cost for those who choose to insure the improvements too. Also, there is the high full-cash-value property taxes that many do not want with their forever home. Best to stay in your first home with your first partner, don’t be a part of the problem and have awesome vacations

and she’s promoting “lobbying” private insurance; which, we all know about.

This is the same Stacey that attended the January 6th Trump Rally in DC.

Not only did she attend, She bragged about it. What’s frightening are the automatic up or down votes completely based on political agenda. People that watched former POTUS order his minions to attack America are STILL supporting him. We watched him attack America and Stacy was there.

58% of the forests in California are Federal but Stacy wants big government to employ THOUSANDS of forest rakers. Federal and State workers with rakes. then what? Take them to the dump? Have you ever seen a forest fire? It’s not the ground on fire although everything on the ground burns. fire rises. 84% of forest fires are started by humans. Raking would not stop careless people from starting fires. Since 1975 162 Hurricanes or tropical storms hit Florida alone. How can ANY insurance companies survive that? back when someone bought a $75K house, it’s now worth $1,000,000 so the cost exponentially escalates and it’s NOT an insurance commissioner doing the wrong thing. Grow up. Yes, let the down votes begin.

California hit that iceberg two decades ago….

How on earth do we stop fires? Lightning doesn’t care who’s in office. This “Manage forests” baloney is embarrassing. The former president said the Governor was at fault for “not raking” anyone that’s ever raked anything knows it’s continuous for certain periods. Monday we rake 33,000,000 acres. Up hills too steep to climb, down crevices too steep to walk and then a gust of wind blows leaves and needles on the ground and then Wednesday it’s time to start over. 33,000,000 acres.

But wait, isn’t that socialism? The government paying people to work?

The people that live in the Hurricane tracks that have have multiple claims on homes destroyed but pay a tiny fraction of what they collect are straining the system. As you mentioned, it’s a business. Now you want the state government to get involved in a business. I think you were just bored and had to complain about something.

The typical Government Bull especially Dem’s that don’t worry you will always be able to get ins just like they said for Obama care if you have a ton of money for it. Friend is Quote in fire danger area per CDF as it burned there before and it’s not a fire area across the road in all the brush as it hasn’t burned there yet so no one will insure but the STATE !! at a whopping $4000 plus a yr and then you have to get another policy on top of that to cover everything another $1000 will insure you what a ripoff

Everyone who has ever had insurance has been taken for a ride by these jokers. You pay premiums your whole life then you have to fight for a single claim. This reads like a cry baby who doesn’t like capitalism. It’s not like we have a choice when the premiums are raised, we get a bill. Quit the whine and adapt the business plan to be competitive in this new environment. The rest of us business owners do it all the time.

Overpriced inefficient insurance system

Thank you for your viewpoint. Yes, this is a VERY serious situation, MUCH larger than the insurance industry, as it has for home owners in stormy states like Florida. This is a huge subject, which can be VERY contentious. But, also, everyone in our nation, and the world, are facing increasingly unprecedented changes in our natural environment and living conditions. Like it or not, our way of life is changing dramatically, and not for the good. These changes are seriously impacting our nation’s usual standards of infrastructure construction, maintenance and improvement. I have worked in the public electric power supply industry for over 40 years, and have witnessed very challenging times as power companies have wrestled with how to make significant changes in operational designs at the same time of how incorporate improvements in the face of powerful pressure by the public (customers) to keep rates low. One area of focus that has become a very popular topic over the past ten years is “undergrounding” of power lines, which has been slowly growing in application, but not nearly as fast as is needed given the rapidly changing environmental conditions. Huge aspects of undergrounding are the huge financial cost involved and associated unpopular physical impacts it causes for communities as undergrounding construction is performed. We truly need to eliminate above-ground power poles. As I have felt for most of my adult life, the cost of our average everyday lifestyle would be increasing dramatically as infrastructure deteriorated, which is occurring dramatically throughout America. Over the past 50 years our nation has been reckless in its maintenance and improvement of our infrastructure because the public has not wanted to pay for it. There is a popular old saying “Pay Me Now or Pay Me Later”. America’s time has finally come to pay the piper, as we are now dealing with the “… pay me later”. Combine that with increasing devastating climate changes and catastrophic weather events, which dramatically challenges our old ways of thinking, living and building. Case in point — The U.S. Southeast is steadily becoming more and more dangerous and damaging to live in as hurricanes and thunderstorms and tornadoes grow in size, intensity and frequency — How can property owners continue to recover from more and more damaging storms over and over again, becoming overwhelming in cost and living impacts. Why should our federal government continue to provide rebuilding assistance as the increasing costs become enormous, for events that are beginning to occur more and more every year. Another very popular and wise saying goes “Insanity Is Doing the Same Thing Over and Over Again and Expecting Different Results”. Historically, humans have been extremely poor (and blindly arrogant) in learning from history and our mistakes. We are handing our children a damaged and failing world.

“We are handing our children a damaged and failing world.” Well, I defy anyone to dispute that part, at least.

Excellent points, but I don’t see anything changing. The jokers in the Republican

“Freedom” caucus of the House of Representatives are already plotting to shutdown the federal government if they don’t get significant cuts in the Bipartisan Infrastructure Bill and the Inflation Reduction Act, legislation which is already spending important money to rebuild and harden our infrastructure—amazingly, Ron DeSantis of Florida has refused over $300 million in energy efficiency money to his state. If the Republicans in the House succeed and, God forbid, they take back the White House next year, it will soon be impossible to find homeowner’s insurance in many parts of California and the rest of the nation.

“I was watching the firemen the other day, and they were raking areas. They were raking areas.” Donald Trump told Fox News from the Oval Office on Friday (11/16/18) before he left for California. “They’re raking trees, little trees like this nut trees, little bushes, that you could see are totally dry. Weeds. And they’re raking them. They’re on fire. That should have been all raked out. You wouldn’t have the fires.”

Excellent thinking. The debate on climate change is over. The question is how to effectively prepare. Undergrounding utilities is cheap compared to the cost of our homes, business and ranches, a bargain.

Stacey, are you advocating for controlled burns as “wise forest management”? Who takes the risk? What did Proposition 103 do?