This interesting opinion piece in the SF Chronicle analyzes why, in the opinion of the writer, our home insurance system is broken. The primary thought is that average home insurance prices in CA are much lower than those in other states, whereas risk is higher. As a result, insurance companies are more at risk of financial losses in CA, and therefore not incented to offer policies:
“Research from the International Center for Law & Economics found that California is the worst in the nation for both home and auto insurance rate suppression. Even though California is an expensive and disaster-prone state, the average cost of homeowners insurance, $1,250 per year, is well below the national average of $1,915. While this sounds like a boon to consumers, in practice, insurance companies operating in California are overexposed to risk.”
Supporting data from Guidewire, referenced in the article:
The author of the piece, Kristian Fors, is a research fellow with the Oakland-based Independent Institute. She is also director of the California Golden Fleece Awards.
through Jim Hynes