Wildfires in the west do not stand alone as an increasing problem that are going to break the insurance market. The change in predictability will make actuaries unable to correctly price the risk, and the true prices will be so high that nobody will want to believe or pay them. Attempts to legislate continued coverage will only end in government-run insurance that underprices risk (despite being expensive) and goes bankrupt, like both the NFIP and California’s FAIR plan have done (with different bailouts so far).
When the government insurance of last resort fails too many times, eventually the 30-year mortgage market will break down as well.
Wildfires in the west do not stand alone as an increasing problem that are going to break the insurance market. The change in predictability will make actuaries unable to correctly price the risk, and the true prices will be so high that nobody will want to believe or pay them. Attempts to legislate continued coverage will only end in government-run insurance that underprices risk (despite being expensive) and goes bankrupt, like both the NFIP and California’s FAIR plan have done (with different bailouts so far).
When the government insurance of last resort fails too many times, eventually the 30-year mortgage market will break down as well.