Posted On: October 26, 2007, 1:21 pm CDT

Posted By: Papa John

If some cluck from Ohio knows with certainty (per his/her post earlier this week) that the fires we experience are inevitable, how much moreso would the insurance companies who put their surplus on the line year after year? Early in my career a mentor advised that it is not the risk that is the worry, but rather can the risk can be rated. Unrateable risk is basically uninsureable; rateable risk, is. If there is an extensive amount of uninformed capital that has underwritten an extensive amount of under-rated risk in the fire areas, that capacity may be gone by next fire season. But the fault for the under-rated plans would have to be borne not only by the underwriter, but also in large part by the CA DOI who failed one of their prime directives: "...rates shall be adequate, not excessive, and not unfairly discriminative...."