California needs to critically evaluate and reform policies

February 4, 2025

Stacy Korsgaden

OPINION by STACY KORSGADEN

Insurance is the foundation of a robust financial strategy and is vital to securing a prosperous future for California. However, recent events, notably the wildfires in Los Angeles, have exposed severe systemic issues plaguing our state’s insurance industry. These issues highlight the cracks in governmental policies that have led to this crisis.

In recent years, many insurers have either exited or drastically reduced their operations in California, choosing to minimize their market presence. This is not a mere business decision; it’s a survival tactic. When companies forgo potential profits and sever longstanding policies and relationships, it prompts a deeper examination of the underlying causes.

Unlike government entities that can levy unlimited taxes to fund inefficient programs, private industries require sufficient financial reserves to fulfill their obligations. If these reserves are insufficient, companies fail. Thus, maintaining a healthy insurance market is crucial, especially in a state where home prices are among the highest nationwide.

The problems stem from long-standing issues unaddressed by Proposition 103 of 1988 and the subsequent regulatory framework established by the Department of Insurance. This legislation, intended to control rising insurance costs through price caps, acted more like a band-aid than a cure, addressing symptoms rather than underlying causes. As a result, California’s insurance market is akin to a patient prescribed medication that allows an unhealthy lifestyle to continue rather than addressing core health issues.

California’s current policies exacerbate these challenges, prioritizing environmental concerns over human necessities and handcuffing the insurance industry with aggressive regulations. These policies hinder insurers’ ability to accurately assess and price risks, leading to financial unsustainability. The result? A vital industry forced to retreat under the strain of untenable conditions.

It’s time to confront and reverse the socialization of economic activities and risk management. We must critically evaluate and reform these policies to ensure the long-term financial and economic stability of California and the welfare of its residents. The ongoing exodus of insurance providers is a glaring symptom of deeper governance failures that demand immediate and decisive action.

Stacy Korsgaden is a 35-year insurance and financial services professional and consumer advocate for insurance choice and customer protection. She can be reached at stacy@stacykorsgaden.com.

 


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Yes, California just doesn’t get that over regulation continues to drive up prices and taxes. Please CA just calm down on the over regulation and taxing us to death.


And the latest information says 1/3 of wild land fire arsonists are firefighters…. The overtime pay is incredible, yes I should have been a fireman if I’d only known, but I’m too smart, not paranoid or trumpy enough to survive amongst fireman.


Anybody know when the next insurrection is?


There are an estimated 1,041,200 full time and volunteer firefighters in the USA. About 100 are arrested for arson, ALL arson, annually.


About 20% of USA wildland fires are deliberately set. Out of that small percentage of fires, is the immeasurable number of how many of those 100 arrestees were responsible specifically for wildland fires.


Tossing out big fat percentages with no frame of reference or facts, is nothing more than scaremonger sensationalism at best, to outright lying at worst. Adding politics from left field, to mental disorders, is simply asinine.


No mention of climate change as one of the reasons why insurers are leaving California? Ridiculous.


No. Because insurance companies need to deal with reality.


If it’s all because of government regulations and not climate change fueling natural disasters, then why are insurance companies leaving Florida as well?


https://www.npr.org/2023/07/22/1186540332/how-climate-change-could-cause-a-home-insurance-meltdown


Because people keep building houses ON the beaches in Florida. An insurance company bets on the possibility of that house NOT getting destroyed. YOU, bet on the possibility it may.


You can only lose so many bets, before you leave the table.


There are also 10s of thousands of accidental arsonists living in every open space and setting nightly fires. There will come a day in the near future that none of us will be able to get fire insurance.


Maybe then, something will be done about the accidental fire starting unhoused populous living in the brush and creek beds.

My suggestion is to stop all payments and benefits to those without an address.

What we’ve been doing is enabling people to support their substance abuse and drug habits and how’s that been working out for LA?


So, the severity of the LA (or the Paradise) fires was caused by the “unhoused populous living in the brush?” Ridiculous.


Dentist office in slo, 3 wildfires in San Diego, 54%of fires in LA are caused by bums. Easy to verify. Not ridiculous. Falling asleep with a crack pipe on your chest can cause a fire.