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Comment by shostack | Hacker News Reader

At what point do state-run insurance plans like California's for earthquakes make sense to expand to just ask housing insurance as big insurers like State Farm pull out of the state?

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I am not familiar with state-run insurance plans but I would be worried if it was ran as a potential form of taxation/revenue for the state government, because then homeowners would be subject to the whims of the current dominating political party without the mechanism of free market competition to lower the cost of insurance. I would want it to be run "at cost" as much as possible.

Edit: To be clear, what I am saying is that the stockpile formed from insurance premiums should not be accessible to other causes (even during emergencies unrelated to homes). I'm fine with tax revenue topping off insurance, but never insurance money being redirected to another budget.

You also have the risk of it being underfunded, or borrowed against, as we've seen with so many state-run pension plans.

Open to correction if I'm wrong, but from the examples I'm aware of (e.g. federal flood insurance) when insurance is run by the government it's always underpriced, then topped up behind the scenes from general taxes.

People tend to gripe less about an extra few dollars in taxes (which aren't line itemed), but more if the price of their insurance premium ever goes up (which they do see a separate line item for).

In British Columbia automobile insurance is legally only available from the government ICBC, and ICBC had 800 million in the bank so the government took it and at the same time changed a recently constructed toll bridge to be free, essentially buying the votes of everyone who uses the bridge at the expense of everyone who pays automobile insurance.

Provincially run insurance and utilities traditionally keeps prices in check.

Notably, when provincially run insurance and utilities have sold to private interests, the results have always been the same, even recent examples across Canada:

Service gets worse (extremely worse/completely inaccessible if you’re rural), AND costs to consumers double after 3 years, then continue to rise astronomically for several years following.

This, 100% of the time, is followed up by rural people that voted for this scenario to occur complaining that big city politicians fucked them again.

Insurance isn’t run “at cost” it’s run for profit. Insurers are leaving because there isn’t enough profit, and State insurance cuts out the profit part. It’s also more trustworthy, there are many low cost insurers in Florida that just completely screwed their customers. A disaster hit and they just refuse to pay:

https://www.wfla.com/8-on-your-side/florida-insurers-close-n...

You might be correct, but that article doesn't support your claim. The article says 86% of claims were closed, of that 86%, 70% received payment, 30% were closed without payment. Maybe that 30% were screwed, maybe they weren't actually covered, maybe they were below their deductible. The article doesn't have an answer.

Experience shows that of those closed-without-payment, some kind of get-out-clause will have been invoked by the insurer - but it’s all above-board and legal, but is it right?

When the market wants nothing to do with offering the product, there can be no free market competition. Not that most insurance is operating in anything remotely close to a free market to begin with.

I wonder what the risk profile looks like for CA earthquake insurance. Earthquake damage is semi-isolated to areas close to the epicenter or built on landfill, major earthquakes are rare, but I could see 5-10% of policies making claims when there is a major earthquake.

It’s possible to build such that earthquakes aren’t that big of a deal, see Japan.

I don’t think it’s possible to build something resilient that’s consistently flooded with salt water. Unless it’s a boat. And those cost a lot to maintain.

> I don’t think it’s possible to build something resilient that’s consistently flooded with salt water.

The Dutch beg to differ.

But I agree with your point that buildings can be built quite resilient.

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