Comment by ethbr1
But in the case of home insurance, unlike health, people actually have a choice: build there or do it somewhere else.
Artificially forcing blended home insurance rates lessens the pricing signal that this particular area might be too risky to build in.
At the end of the day, it's developers and the city/county making money while offloading the risk to insurance companies and government mortgage buyers.
There have been endless lawsuits by homeowners alleging discrimination in their insurance rates. All this impairs granular risk assessment and insurance rates. A recent WSJ article was about lawsuits from homeowners who were quoted higher insurance rates because their roof was rotten and/or there were trees that could fall on their house.
The same has happened with auto insurance rates (men and women have different accident rates, so used to have different rates), and, glaringly, medical insurance rates.