You're talking like this is some kind of conspiracy theory, when there's not really any other way it could work. Banks will not give you a mortgage without home insurance, because then it would be an unsecured loan against an asset which would be worthless, with them eating the loss, if the house was destroyed. That's not sinister: nobody wants to loan against an ephemeral asset. And car insurance is mandatory because if you hit somebody, causing a million dollars of lifetime medical bills, and you don't have insurance, you've just fucked their life over with no possible recourse.
Lenders are mostly in the business of underwriting loans so that they conform to certain standards, such as those set by the government (fannie mae/ginnie mae/freddie mac/etc), and then selling them to the government after which their cash flows then get sold to investors looking for fixed income investments.
So it might be too much work to for little return to step outside of this optimized system and custom design a mortgage product, especially when the alternative is government subsidized mortgages whose interest rates you will not be able to beat.
>Mortgage interest is tax deductible but home insurance isn't.
Since 2017, 90% of US tax filers do not itemize, and so they cannot deduct home mortgage interest.
Wow, as someone who's been itemizing his whole life, that's astonishing if true. Learned something new today!
Markets have taken many different forms, have been entrusted with different sets of responsibilities to different degrees, over the course of economic history.
Perhaps it makes more sense now to develop a fiscal institution to run insurance than to continue to rely on a market-based solution.
Systems do sometimes collapse, but I would prefer to look at it as "we are smart enough to study these systems and act in the social best interest when failure is imminent or has already happened, and responsible enough to work to improve the society that makes our lives possible."
Parts of the world are becoming inhospitable for human life. We can try as we might to terraform and engineer against it but Mother Nature will win.
At some point as an insurance company or even whole industry needs to look at the data and assess whether the juice is worth the squeeze. These companies - despite marketing materials - don’t care about fixing your home. They are only interested in risk versus reward. When the operating environment becomes too risky you either raise prices astronomically (this is happening) or you pull out entirely because your customer base simply can’t afford it (this is also happening).
Regarding the stance that we are smart enough to outsmart these problems - I agree but also disagree. What do you do when all signs are pointing to no and the cost of potential solutions far outweighs any benefits? You cut your losses and move.
We are smart enough to be proactive about these sorts of things, and considering we already have such an apparatus called "the state" to use to our benefit, we can provide assistance to people to reinforce their homes or move when necessary (in a rote economic sense, to keep them net-positive productive, in the utilitarian sense; in a humanistically compassionate sense, to keep them dignified) instead of trying to guide systemic patterns of behavior by punishing individuals for making impossibly complex choices regarding where they chose to and already do live.
That's literally the apparatus of the state (in both senses of the word) used to the benefit of the residents. That may just have the effect of moving the problem from "my insurance premiums are too high" to "my taxes are too high", because at the end of the day, someone has to be paid to fade the risks inherent in insuring the property against perils.
The issue with Citizens is that it does create a lot of financial risk for the state, especially since it doesn't buy as much reinsurance as a private company would.
as opposed to the whims of a few unelected bureaucrats? influenced by the whims of the politicians trying to buy votes?
> We are smart enough to be proactive about these sorts of things,
no, "we" are not. Let's suppose you are, for the sake of argument. What reason is there to think that the sort of people who get appointed to regulatory bodies are equally smart? As opposed to just "well-connected."