Comment by xenadu02

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.