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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]It’s not just a Florida issue:
https://www.sfchronicle.com/california-wildfires/article/insurance-state-farm-18125433.php[/quote]

Insurance risk hasn’t really changed much in the past year in Florida or California. Insurance companies always say they are reducing their insurance exposure because of lawsuits or construction costs or some other nonsense they blame on the states but I worked on this issue as a Congressional staffer and they dropped more policies after the 2008 financial crisis than they did after Katrina. 
The profits of an insurance company come more from its investments than from its insurance underwriting. Insurance is a mechanism to create a huge float of reserves that they seek to invest in high-return investment schemes, which often are boom and bust markets like commercial real estate, mortgage backed securities, etc. 
When their investments are earning high returns they are willing to expand their insurance business in riskier areas to collect much more premiums to invest. When their investments are losing money they cut their insurance exposure to reduce the amount of capital they are required to hold for paying claims. 
[/quote]

State Farm is claiming that regulatory required underwriting standards prevent it from accurately pricing risk in California—particularly California’s requirement that underwriting be based on historical risks when wildfire risk has exploded during recent years.

Insurance companies typically invest their reserves in diversified assets of which only a relatively small sliver are made up of risky, illiquid assets.  Most states have decent reserve requirements.

When insurance companies exit a market (FL or CA) that’s generally a really bad sign that something is up.  You offer a product with mandated demand that scales to an entire market and … you stop?  [/quote]

State Farm has a history of fraudulent practices and a corporate culture of bad faith lies. They were despicable after Katrina, forcing their contracted adjusters and engineers to change reports to deny wind damage. I’ll never believe anything they say. [/quote]

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