>After saying it would run out of funds by March, California’s last-resort fire insurance provider will impose a special charge of $1 billion on insurance companies — which will in turn pass the costs along to homeowners — the first such move in more than three decades.
1. Created dangerous conditions through inadequate fire management.
2. Prevented the private market from adequately communicating the risk through price increases. As a result, 7/12 of insurers stopped or restricted selling new policies.
3. Created a moral hazard by selling it's own policies to homeowners who were dropped by the private market.
4. Failed to respond to the fires.
5. Failed to cover claims through its insurance program.
6. Is trying to bail itself out by extracting $1 billion tax from the rest of the state.
Yet we're supposed to be thankful for this?
You could say the people whose homes burned are grateful they are being bailed out at everyone else's expense. But I bet they would be much happier if their homes had never burned down in the first place - a debacle that was entirely avoidable.
The question wasn't "should you be thankful?", the question was "has fire insurance been heavily subsidized by the state?". The answer to that question, which is implicit in multiple of the bullet points in your comment, is: Yes, fire insurance has been heavily subsidized by the state.
Separately, as convenient as it is to blame the state for the fire happening in the first place, the truth is just that wildfires are more common now, and are going to continue being more common, because of climate change. That's a bummer, but it isn't the fault of the state of California alone.
>Yes, fire insurance has been heavily subsidized by the state.
No, it wasn't subsidized by the state. The state has actually made fire insurance more expensive for everyone - including the people who lost their homes.
>Separately, as convenient as it is to blame the state for the fire happening in the first place, the truth is just that wildfires are more common now, and are going to continue being more common, because of climate change.
What's actually convenient is blaming a series of predictable policy failures on "climate change" - something that cannot be held accountable - rather than the politicians who can be.
> 3. Created a moral hazard by selling it's own policies to homeowners who were dropped by the private market.
My friend, that's the subsidy. Those are public policies with subsidized premiums.
It also isn't clear what "predictable policy failures" you think caused the fire and allowed it to spread.
The problem is that fire risk is way up in a lot of places, including LA. Insurers know this, so all else equal, their premiums would also be way up. However, the premiums are now too high for most people to afford. So policy makers can either just let people be priced out of areas with high fire risk, or they can subsidize insuring those areas. Neither option is a good one.
Maybe if we put you in charge of all the governments in these areas, we would find that you do actually have the magical solution to square this circle, but I'm very skeptical. I think you're just doing the normal thing - which is your right as a citizen of a democratic system of government! - of complaining about whichever policy was chosen of the universally bad options available.
That's not a subsidy unless your definition of a subsidy is anytime the government gives anyone anything. It would be a subsidy if the state provided the private market with financial incentives to reduce premiums. That is not what they are doing. Instead, they are offering a product that the market doesn't want to provide, and bailing themselves out by increasing premiums when their genius move goes up in smoke.
>So policy makers can either just let people be priced out of areas with high fire risk, or they can subsidize insuring those areas. Neither option is a good one.
No actually option #1 is exactly what the state should have done. You want to live in a dangerous place? That's your choice, but you should be prepared to pay the price for it.
When the state offers these policies, they are encouraging people to live in harm's way. If those who died had been priced out of these areas, they might still be alive today - just living somewhere else.
I'm sorry man, but subsidized insurance is a subsidy! What are we even doing here?
To your second point. Sure, it's easy to say that as an ideological rando on the internet. In the real world, policymakers are going to try to figure out better solutions than "nobody can live in the western United States because the fire risk is too high everywhere".
It seems like we're just arguing semantics at this point. And no, we don't have to evacuate the entire west because of fire risk, we just have to change incentives so fewer people move to the very hazardous parts.
It's not semantics! This is the refuge of everyone who says something is what it's not (or isn't what it is). "Well sure, yeah, I guess if you use words to mean the things that those words mean, then you have a point!"
You can just say that the public subsidy for insurance distorted the market in problematic ways. I totally agree with that. I don't understand why you got attached to saying that it isn't a subsidy.
But no, it's not as simple as "change the incentives so fewer people move to the very hazardous parts". This already is, and is only going to become more so, an existential problem for insurers, throughout very large swaths of the west.
The recent LA fires weren't in any particularly hazardous place. The hazard levels are higher than people can bear in more places than policymakers can bear to let private insurance markets sort it out. It's a real and giant problem. Just trying to hand wave it away with "foolish policymakers just didn't do the obvious thing" is convenient, but unhelpful.
California's FAIR plan is not a subsidy because it is not trying to lower the price of a good or service. It is rather a safety net program for those who cannot access private insurance (another policy failure caused by price controls). It's really as simple as that and I don't see why you're having so much trouble understanding it.
>This already is, and is only going to become more so, an existential problem for insurers, throughout very large swaths of the west.
Other western states are doing fine, probably because they do more controlled burns, so seasonal fires don't become conflagrations. That, as well as an insurance market where the state doesn't suppress price signals makes fires a non-issue for 99% of people. Also, since more and more people are living in urban areas I would expect fewer fatalities in the future, not more.
I'm not "having so much trouble understanding it", it's just that publicly subsidized insurance is ... subsidized. It's not a complicated or "semantic" question. You've created this other definition of what "subsidy" is, which just isn't what it is. If the government subsidizes something, it's a subsidy.
I don't get why you're so attached to doing contortions to deny that. It kind of seems like you think subsidies are good things, but that this subsidized insurance is bad, so thus it can't be a subsidy. But it's easy to square this circle: sometimes subsidies are good but often they aren't.
To your last paragraph, I think you just aren't aware how much other states are also struggling with this problem. You seem to live in California, so it's understandable to be most aware of what's going on in your own state.
