Comment by scythe 9 days ago
It could possibly be managed by the state by placing a tax on fire insurance which would basically be a workaround to Proposition 13. That would probably be about as popular as a Chinese "weather" balloon but it does have a certain poetry of having the people who use the forest — by living in it — pay to manage it.
There is only one reason why insurance straight up isn't available somewhere, and the reason is regulation.
I can assure you that no matter how high the risk of fire, insurers will be willing to provide insurance on that so long as they are legally allowed to charge the appropriate premiums.
> There is only one reason why...
Not true. Assume for the moment that you're the CEO of Golden Insurance Co., and you're still writing fire insurance policies in Burn County, CA. After Yet Another massive fire - and loads of "100% loss" payouts - from your balance sheet - the experts in your Risk Estimating Dept. say the premium to insure a $600K house in Burn Co. needs to be $200K/year - because they expect to pay out to replace that house ($600K) every 4 year ($150K/year), and they need the other $50K for overhead and temp. relocation benefits and rebuilding-cost inflation and a bit of hedge - just in case they're wrong, and things burn down even more often.
Now - if the fire insurance for a $600K house costs $200K/year, how many of the homeowners can and will actually pay that much for fire insurance? Perhaps a number that's falling like a rock? Meanwhile, Wall St. is howling about the horrible risk that your balance sheet is facing, if there's another big fire season. And the 99% of homeowners who can't afford those premiums are bitterly angry, and in a mood to string up the bearer of bad news (meaning you) from the highest tree still standing.
SO - why wouldn't you, as CEO, make the unfortunate decision to just stop writing fire insurance policies for properties in Burn Co., CA?
The answer amid a lack of regulation is NumptyCo sells a policy for $10k, pays most of that to its owner, and declares insolvency at the first sight of a claim.
Most California landowners are hardly poor. We're talking about a state with more than double the GDP per capita of Japan. And the property taxes are in some cases among the cheapest in the world. We're talking about just over a million homes in fire zones, while the total budget for the Forest Service is about $10 billion per annum. That's $10k per year per house to fund the financial equivalent of the entire Forest Service — for roughly a third the rent I pay on a studio apartment in Bergen County. I'll try to find a small enough violin for these landowners. Yes, there are some people who are asset-rich and liquidity poor, but we are not talking about West Virginia.
Effective fire prevention will also make fire insurance cheaper and reducing development in fire-prone areas will reduce the cost of forest management.
I'm a little consfused what point you are trying to make with those numbers. I don't get how comparing the nation budget of the USFS against homes in California on fire zones is an argument for anything.
California spends a roughly an order of magnitude more per acre they are responsible for, when compared with the USFS so I don't think underspending by California is the issue here. The problem seems to be the lack of authority for CalFire to manage fire risk on federal land.
California has already taxed everything that can be taxed, and raised taxes to the point that further tax increases are likely to result in a decline in tax revenue.
People living in the forest (who’s doing this exactly? you didn’t specify) are not the problem. Wildfires are a natural event meant to bring balance to an overgrown forest. All of CA suffers from this so why force only some to pay?
Since CA tends to be a rich state, I vote that those living in SF and LA pay 75% of the required fees, and the remainder of the state pay the rest.
The fire insurance that is unaffordable or just straight not available anymore to those same people?