[landedgentry]

I'm less concerned about the spying and more concerned about insurance companies arbitrarily non-renewing policies with no recourse for the consumer. Insurance is heavily regulated for good reason, and insurance should be a source of stability instead of anxiety.

[brogrammernot]

Alright, I spent years working and building 0-1 insurance products. Let me peel back some stuff that’s been happening behind the scenes.

Some officials are elected and some are appointed which all depends on the state. Appointed officials are usually more reasonable and elected are not because higher rates = mad voters = re-election chances lower.

For a long time, insurers have struggled to get sufficient rate changes approved. A literal quote for you during Covid was, “Son, I’m looking out my window at downtown {city} and I don’t see many cars on the road. We won’t approve the rate increases.”

This was with actual data of losses increasing due to supply chain disruption of auto parts, labor increases and many more things.

We basically had to write policies and hope for the best despite knowing the data / trend lines forecasting major losses.

Fast-forward and what do you have - major losses by all of these companies - and so these companies have two choices: - Try to get rate approvals - Exit the market or line of insurance

For California, the latter is the better option because at least for auto you cannot use credit, telematics or other very predictive attributes to price the risk. This results in essentially pooled risk which in aggregate drives up rates for all. Simply put, California officials did this to themselves.

For other states, the first option works but the rate increases are now significantly higher because it was near impossible to get any adequate rate increases last few years.

So, the bill has come due and it sucks for everyone as it’s either a) higher prices or b) can’t get insurance (Florida folks for certain types) or c) limited suppliers not being able to get reinsurance to share the risk results in higher rates that customers can’t afford so they go without.

[lm411]

Here in British Columbia, our provincially owned insurer (ICBC) saved significant money because of fewer claims during Covid. They even issued a rebate to most drivers. Though they also noted losing some revenue due to fewer or lower premiums being paid. The amount saved was far greater.

https://assets.ctfassets.net/nnc41duedoho/BNR4qtOTGPJuyQADtK...

I wonder if the difference was largely because of Canada's more strict lock downs. The roads were nearly dead here for quite awhile.

[trogdor]

Why are insurance rates regulated by the government?

I understand that the state has a strong interest in ensuring that insurance companies are adequately capitalized, but I don’t understand the state interest in directly regulating premium prices. (Or is that not what you are referring to?)

[PrairieFire]

One key part of the formula omitted is most major insurers while posting underwriting losses in certain markets, etc in 2023 posted annual net profit over $1.0bn. Am I right in thinking these sweeping rate increases and market exits are justified by protection of $250mm+ per quarter net income? If so, then are we right to blame anybody other than the insurers shareholders and owners for this current state? Wouldn’t $25mm per quarter net income be sufficient? Why does runaway profits maxxing have to apply to every market including public good markets like insurance?

[jjtheblunt]

I’m not seeing you motivate or justify the rate increases.

[wolverine876]

> This results in essentially pooled risk which in aggregate drives up rates for all.

For all? I'd think it reduces rates for some and increases it for others.

[Vic-Bhatia]

Hi, This is a very informative post. I am trying to learn more about how the insurance industry works. Would you be open to sharing any resources (websites, books etc) that teach the 0 to 1 of insurance? Or can I DM you with a couple of questions? Thanks!

[kchoudhu]

> supply chain disruption, labor increases

All of these things have either reduced or stabilized over the last two years, but prices seem to keep going up. Strange!

[myself248]

I thought risk pooling was the point?

[stalfosknight]

And yet there's seems to always been enough money for stock buybacks and disgustingly excessive executive compensation.

[Analemma_]

I'm not usually a "actually this is the fault of regulation" sort of person, but in this case it really is the fault of regulation. A bunch of states have laws saying premiums can't rise more than X% in a year, or can't rise at all without the approval of the state insurance commissioner. If circumstances have changed (e.g. wildfire or hurricane risk is now worse than we thought, and also labor market tightness and inflation means repairing/rebuilding is much more expensive) such that the insurance company can't insure you profitably without a rate hike they're forbidden to do, then of course they're going to drop your policy.

[danielmarkbruce]

No one, including companies, should not be forced into contracts they don't want to enter into.

In practice, you are going to find they are never arbitrarily doing it. They are doing it because the price no longer covers the cost of providing the insurance. Just like when I decide the price of X isn't worth it anymore, I stop doing the transaction. The reasonable response would be to increase the price, but in some situations it's not possible due to regulation.

[j45]

Except when those companies have lobbied to create laws to make the use of their industry mandatory.

[upofadown]

This sort of opportunity to find a rationale for cancelling an individual insurance policy will inevitably by used for evil. See: Insurance Redlining.

[reactordev]

Or you thought cancelling cable was hard now…

[nradov]

In some states it's the heavy regulation which is causing policy non-renewals. When governments fix prices below the market rate that inevitably leads to shortages.

It's a stressful situation for many property owners. They may not realize the impact that recent high inflation has had on repair costs, especially when prices tend to spike up higher after major disasters.

[colechristensen]

I don’t think insurance companies should be forced to protect you from your own outsized risk taking at a government capped price.

[epolanski]

Nobody can be forced to insure you if they don't want to. I learned that on CNBC the other day, here's the segment talking about the state of home insurance in US.

https://www.youtube.com/watch?v=xw8fpEpwMzA

[VHRanger]

Thats exactly the problem with insurance.

If I have any sort of risk mitigation (file backup, fire alarms, spare tire, a generator, whatever) I can test that it works periodically. So I know I'm actually safe for the event.

For insurance, you can't know what bullshit they'll come up with to deny a claim when the time comes for it.

You're left with having paid for the insurance all that time for nothing! Much better to have put that money in a piggy bank instead.

[treflop]

I’ve known plenty of people who had legitimate accidents not of their own fault where insurance made them more than whole, and they would have not been able to afford the replacement if they had simply been saving for the same amount of time.

If you actually feel like you could recoup of the cost of paying for insurance by instead keeping the money in a piggy bank, you are buying too much insurance. There’s a sweet spot for insurance and overpaying for too little insurance is a you-problem.

[ametrau]

Well technically you were paying for their obligation to pay for you. Which is a real thing of value.

[bvan]

You assume it’s bullshit. Difference.

[dmoy]

Do you live in CA? In recent years that's the majority of arbitrary cancellations I've heard about - companies pulling entirely out of CA.

[hn_throwaway_99]

I 100% agree with landedgentry. I don't really have any problem with insurers using drone photos - anyone can take drone photos of anyone else's property - and I'm not really a fan of the article calling it "spying" to imply some special kind of nefarious behavior.

But I do think the total bullshit is that companies are just using it to come up with essentially fake reasons to drop customers:

> Cindy Picos was dropped by her home insurer last month. The reason: aerial photos of her roof, which her insurer refused to let her see. ... Her insurer said its images showed her roof had “lived its life expectancy.” Picos paid for an independent inspection that found the roof had another 10 years of life. Her insurer declined to reconsider its decision.

I also don't have a problem if an insurer decides to leave a state entirely - that decision is essentially saying the state has made it impossible for them to adequately price risk, and that's something the state should fix if so desired.

But these BS cancellation reasons seem like a case of insurers wanting to have their cake and eat it too. I'm not very familiar with state-by-state insurance law, but I'm assuming they have to come up with some reason to drop a homeowner that already has a policy, so this looks like they're trying to find BS reasons to just drop potentially less profitable parts of their portfolio.

[bluejekyll]

Similar reports are coming out of Florida. Generally, it seems the industry is pulling away from higher risk to climate change issues from larger storms or fire risk.

[otteromkram]

But, profits.

How else are execs going to pay for that third vacation home?

[dylan604]

Does that third vacation home get spied on from the sky as well?

[Waterluvian]

Can’t really force people to do business like that…

What you can do, which the U.S. already does, is government-run insurance, socializing the losses among a population. Flood insurance, for example.