- Joined
- Feb 27, 2010
- Messages
- 1,257
A little bit about the financial and insurance side of this calamity. The responsibility of this disaster lies in the lap of Gavin Newsom and Ricardo Lara who happens to be the commissioner of Insurance for the state of California. For the past 8 years the top 20 companies doing business in the state have filed for rate adjustments to make sure they had adequate resources to pay current claims and to establish reserves for the pending wildfire claims. It is not a matter of if but when regarding the fire exposure. Many areas have a greater exposure than others and the companies needed rate adequacy for the exposure. Fast forward to 2024 and many of the top 20 companies had either stopped writing new business or pulled out of the state altogether. This action shifted the risk to the companies that remained. State Farm asked for a 24% rate increase to continue writing fire insurance in the state. Commissioner Lara denied the increase. State Farm then started the non renewal process for homes in the high risk area and also stopped writing new business. Two more companies pulled out of the state and Lara still refused. Simply put, the premiums didn't match the exposure. The commissioner pulled a power play and it screwed the citizens of California. The average value of the homes in Pacific Palisades was around 10 million, then add 75% (7.5m) for contents and 50% for additional living expenses. Multiply that by 5000 which is the number destroyed just in Palisades. Yep, the state is run by idiots. Don't get me started on the mayor and Fire Chief!