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But this cuts both ways. The insurers chose to provide their services in the area for the amount of money agreed upon. If anyone was more aware of the risks and probabilities, it's them.

Why do they get to pull out now when it's time to hold their end of the contract?

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fishstock25 17 hours ago | parent | next [-]

That depends on what you mean with "pull out". Typically you pay a premium and that means you are insured for a certain period. A year or so.

Everybody who is insured at the moment of course needs to be paid by the insurance under the terms they had agreed to. The insurances should not be allowed to "pull out" of this responsibility.

But what about the next year? If no insurance wants to offer you another term, especially not for those same conditions, then it's their choice to "pull out" in that sense.

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andrewaylett 16 hours ago | parent [-]

On the other hand, suddenly not offering cover at all is a problem for people who have established interests in a property.

I can see an argument for not writing new policies in an area. But I can also make an argument for allowing existing policyholders to renew -- maybe not at the previous rate, but at an appropriate rate for the risk.

As a matter of public policy, we ought to match the risk put on a homeowner with a mortgage by the bank with the risk assumed by the insurer when the homeowner pays their policies. Not let the insurance company lay the risk on the homeowner if they notice the risk has gone up before the loss is realised.

Alternatively, we need to start treating buildings insurance more like (UK) life cover: I took out decreasing life insurance when I took out my mortgage, it'll pay off the mortgage if I die. The amount of cover goes down every year to roughly match me paying off my mortgage. No matter what happens to my health in the meantime, if I keep paying the premiums then I keep the cover -- even if I wouldn't qualify for new cover.

Or maybe we need to say that if an insurance company declines to renew because they think the risk has risen too much, the customer should be allowed to claim on the expiring policy even if the house is still standing, because it's obviously worthless, and it's obviously due to a risk that was covered by the policy.

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Panzer04 14 hours ago | parent [-]

If you want a longer reinsurance term, it needed to be agreed to upfront. I'd guess insurance companies are well aware of the risks of writing long-term policies and so don't usually offer them. That being said, your comparison to term life insurance is quite apt - I wonder if such insurance policies actually exist. I would guess they'd cost more than a yearly renewing policy, but who knows.

Your other proposals as extensions to yearly terms certainly go too far. Annual renewal policies are commonplace, and it should be well understood that there's no obligation on any party to continue it.

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andrewaylett 11 hours ago | parent [-]

Oh, definitely. At least not without a lot of discussion around how much the extra insurance would have cost. I'm not in a position to implement it either :).

If we're going to have state intervention though (and it seems at least under suggestion, I've no idea how seriously, in CA) then rather than an insurer of last resort, we (or rather they) should consider what they actually want from their insurance.

	▲	MichaelZuo 10 hours ago \| parent [-]
		There are specialty insurance companies that will underwrite almost anything, for any duration, for a high enough fee. But if the state regulator sets a maximum cap they wouldn’t be allowed to…

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SirMaster 11 hours ago | parent | prev [-]

California law limits how high the insurance companies can charge for premiums. Did that law or those limits exist when they started offering coverage in the area?

Maybe they didn't, and then the law or limits were imposed at a time when the insurance companies needed to increase the premiums to match the new risk. But if the law prevents them, then they have no other choice but to pull out. Why would they as a business stay if the risk is to great for the premiums they are allowed to charge? They certainly are not obligated to stay.