The current situation favors non-admitted insurers that can price different risks appropriately. A truly free market gives consumers more choices and ultimately reduces prices. A good agent will shop around for their clients.
I would agree with you and take it a step further and convert all property polices to non admitted and take then all out of the guaranteed fund and let the free market truly play out. I would say this may more accurately bring about true rating for the risk and even open some new options and innovations.
Interesting, since Farmers has adjusted rates on homeowners policies almost every year, using the 6.9% allowable increase to their advantage, as an agent I have not seen the loses to support this in our area yet we get the increases. And remember, that 6.9% is an average, some areas have gone down, while others have seen a 10%+ increase! I am not for this plan but having seen what our industry has done (direct writers) I can see why it is moving thru the committee!
Wouldn’t really trust what Farmers does as a reflection of any kind of market reality. They aren’t exactly known for making smart decisions over there.
Many insurers were significantly under priced before the fires of 2017 and 2018 and are now seeing substantial increases in their reinsurance costs. The reinsurance companies know that just because an area did not experience a large fire in the last couple of years does not mean that it is immune from a large fire event today. The question the California legislature must tackle is if they would invest their own money to insure these challenging risks at low prices.
Agree the reinsurers are catching up on pricing, but in my 30+ years working with them directly their knowledge of wildfire exposures/underwriting is always 10 years behind. They were always paying too little attention and now they are paying attention to the wrong areas and factors, and screwing up their pricing and capacity accordingly. Much of that money comes from around the world to us and they all rely on US brokers reinsurance brokers and wildfire vendors who don’t know how to underwrite. All they do is look at event models, the equivalent of loaded guns pointing at their feet. It’ll be another 10 years before they understand what is happening right now. And their current models are 10 years behind the curve. We are doomed ;D
The current situation favors non-admitted insurers that can price different risks appropriately. A truly free market gives consumers more choices and ultimately reduces prices. A good agent will shop around for their clients.
I would agree with you and take it a step further and convert all property polices to non admitted and take then all out of the guaranteed fund and let the free market truly play out. I would say this may more accurately bring about true rating for the risk and even open some new options and innovations.
Interesting, since Farmers has adjusted rates on homeowners policies almost every year, using the 6.9% allowable increase to their advantage, as an agent I have not seen the loses to support this in our area yet we get the increases. And remember, that 6.9% is an average, some areas have gone down, while others have seen a 10%+ increase! I am not for this plan but having seen what our industry has done (direct writers) I can see why it is moving thru the committee!
Wouldn’t really trust what Farmers does as a reflection of any kind of market reality. They aren’t exactly known for making smart decisions over there.
Not sure the article mentions how many people can not find ANY home insurance options right now. Seems like it is worth noting.
Many insurers were significantly under priced before the fires of 2017 and 2018 and are now seeing substantial increases in their reinsurance costs. The reinsurance companies know that just because an area did not experience a large fire in the last couple of years does not mean that it is immune from a large fire event today. The question the California legislature must tackle is if they would invest their own money to insure these challenging risks at low prices.
Agree the reinsurers are catching up on pricing, but in my 30+ years working with them directly their knowledge of wildfire exposures/underwriting is always 10 years behind. They were always paying too little attention and now they are paying attention to the wrong areas and factors, and screwing up their pricing and capacity accordingly. Much of that money comes from around the world to us and they all rely on US brokers reinsurance brokers and wildfire vendors who don’t know how to underwrite. All they do is look at event models, the equivalent of loaded guns pointing at their feet. It’ll be another 10 years before they understand what is happening right now. And their current models are 10 years behind the curve. We are doomed ;D