Comment by doctorpangloss

Comment by doctorpangloss 9 days ago

Trees and empty land cost nothing. But:

            CA Insurance Claims USFS Wildfire
    Year    and Settlements     Management Budget
    2018    $13.6 billion       $2.5 billion
    2019    $2.8 billion        $2.4 billion
    2020    $3.5 billion        $2.35 billion
    2021    $4.75 billion       $2.4 billion
    2022    (unknown)           $2.65 billion
    2023    (unknown)           $2.97 billion

The expensive part of forest fires is paying back homeowners who lost their homes in places guaranteed to be lit on fire, at prices for homes as though the fires didn't exist. The way we chose to do this is by saying it was PG&E's fault, and in exchange, PG&E gets to recoup those payments via permanently higher rates.

It is a little complicated, but it isn't that complicated. The simple question is, should the government pay a safe home's price for a burnt down home?

deepsun 9 days ago

No. Let owners exercise owner's responsibility (e.g. insurance, and if insurance is too expensive -- well, the risk is too high).

PS: I heard the thing California does, however, is putting a cap on insurance premiums, so insurers just avoid some regions, and owners cannot find insurance to buy. It's kinda the same thing -- owner's responsibility.

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doctorpangloss 8 days ago

At least you’re answering the question.
California FAIR is the insurance of last resort so what you’re saying isn’t totally accurate.
There has to be an insurance option because you can’t get a mortgage without insurance. And owner occupied real estate prices do not go up without mortgages.
California bends over backwards to make owner occupied real estate risk free.
More provocative questions: what is the difference between someone who lost a home in a place guaranteed for the home to eventually burn down, and someone who doesn’t own a home at all? In that moment: nothing, right? Why is sunk cost a fallacy all the time, except that time?
Is someone who pays less in taxes deserving of less, more or equal government assistance? No, right? Now replace taxes with “compulsory payments” like home insurance: does your answer change?
This should illuminate for you why CA wildfire bailout policy is so inequitable. These communities are not an escape valve from overpriced real estate in California cities, they ARE the overpriced real estate all the same.

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xenadu02 8 days ago

AFAIK in CA insurance rates must be set based on historical trends not anticipated future losses or reinsurance prices. It is easy to imagine why - insurance companies love to play financial games when they can. Historical data is lagging by nature and the reinsurance market predicts large fires will continue thus the insurers get hit from both sides.
Note that a lot of the property insurance regulation stems from a 1988 voter proposition. I suppose it has worked fine from then until now but the CA drought and greatly increased fire risk was an unexpected shock.
FWIW I would guess that we won't see extreme fire events for some time going forward - probably not until a "big drought" comes back to CA 30-40 years from now. The reinsurance market will settle down and mutual insurance companies will end up issuing refunds eventually.

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aidenn0 8 days ago

The camp fire was caused by a failed hook on lines where similar hooks showed extreme wear-and-tear, despite PG&E claiming to have inspected them recently. It's not like we just decided to say it was PG&E's fault; their inspections were clearly missing important deferred maintenance.

If the fire had been caused by someone without the funds to pay for damages (e.g. a homeless encampment (Day Fire) or college students improperly extinguishing an illegal bonfire (Tea fire)), then there might be criminal charges, but insurance companies will be on the hook.

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tekknik 8 days ago

So some random person lost their job because they didn’t actually do the inspection and now everybody in northern CA pays higher rates. Do you see what you did there? Who do you think won here?
People will not start doing proper inspections until you punish the individual harshly, instead of the company.

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- aidenn0 8 days ago
  
  My point was that twofold:
  1. torts often fail to make people whole, and even when they do, they aren't always a good deterrent.
  2. The comment I was replying to implied that SCE was a scapegoat for the Camp Fire; all evidence strongly suggests that this is not the case.
  
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