Off-Topic: Southern California Fires

[MeowingCows]

Rando zillow grab in San Jose, has monthly HOI at $450.00 per month.

1171 Ironstone Ct, San Jose, CA 95132 | Zillow

1171 Ironstone Ct, San Jose CA, is a Single Family home that contains 1712 sq ft and was built in 1974.It contains 3 bedrooms and 2 bathrooms.This home last sold for $1,985,000 in February 2025. The Zestimate for this Single Family is $1,962,400, which has decreased by $32,984 in the last 30...

www.zillow.com

That's a lot more believable than ~$100/mo.

 

[keepngoal]

Looking far down the path, but we/they have 3.5 years before the Olympics arrive. Infrastructure, venues, lodging ..... That is a hell of a time line for that gigantic event.

 

[cowgirl836]

Crazy swings, they just got walloped with rain last year to help the drought conditions.

and now if the rain shows up, they will be dealing with mudslide and flooding type stuff.

 

[dmclone]

Rando zillow grab in San Jose, has monthly HOI at $450.00 per month.

1171 Ironstone Ct, San Jose, CA 95132 | Zillow

1171 Ironstone Ct, San Jose CA, is a Single Family home that contains 1712 sq ft and was built in 1974.It contains 3 bedrooms and 2 bathrooms.This home last sold for $1,985,000 in February 2025. The Zestimate for this Single Family is $1,962,400, which has decreased by $32,984 in the last 30...

www.zillow.com

That seems very reasonable. I pay about $280/per $100k of coverage in Iowa and they are paying $300 per $100k. Although probably not a fair comparison since the land itself is worth so much.

 

[12191987]

Reinsurance also helps with Insurance Company's capital requirements.

I'm currently assisting with a reinsurance analysis for a life insurance company.

Maybe I’m paranoid, but that is disconcerting.

Hopefully the system has protections against complex arrangements that hide circular dependencies.

 

[dmclone]

25 years ago, I worked at Wells Fargo Home Mortgage on the team that handled hazard insurance. We couldn't allow a home to be uninsured, so if they couldn't find insurance, we would put Forced Place Insurance on them. Let me tell you that you do not want to have force placed insurance on your property. At the time, it was roughly 4x the price of normal insurance on the property. I can't imagine how expensive it is now.

 

[ClubCy]

Got put in forum jail -- can't see the "Start conversation" button when viewing his profile.

Ooooh. Wonder what he did. I do hope he and his family are ok.

 

[NoCreativity]

Fires in Studio City and Hollywood seem to be contained. Is the risk over, those responders really came through last night if true. Incredible response to save that area. Arsonists spotted setting fires in Santa Monica last night.

This is a completey unverified claim. Stop spreading misinformation until the officials actually confirm it.

 

[spk123]

Disclaimer: I don’t work in the insurance industry.

Apparently insurance companies use “reinsurance” to insure themselves against losses in major events.

I only know this because California previously didn’t allow insurers to bake this into the cost of their premiums, but the recent change to allow it was meant to entice companies to come back to the state.

Anyway, presumably reinsurance is a major factor in how impactful this will be to their profits.

Cat Reinsurance is pretty essential to the functioning of any property insurance market. Think about it this way: Any given insurer may be subject to some extremely large losses that are concentrated in a small area. If a major catastrophe hit that area, that insurer may go bust, and customers may not be fully indemnified. This is especially true for smaller mutual insurers who don't have a nationwide footprint. By ceding away some premium to reinsurers (who are often, but not always, big global companies who can diversify that catastrophe risk across the entire world: for example, CA wildfires, FL hurricanes, typhoons in Japan, flooding in Europe, etc.), it allows primary insurers to smooth out some of the volatility in their results and be able to write in the areas that they do at lower rates (partially because of lower capital requirements) than they otherwise would be able to. The system's not perfect, but without Cat reinsurance, the primary property insurance market would be even more distorted: higher rates and less availability.

 

[isufbcurt]

Maybe I’m paranoid, but that is disconcerting.

Hopefully the system has protections against complex arrangements that hide circular dependencies.

It's not to hide circular dependencies.

It's more of transferring risk to other entity.

I'll try to explain in more detail later, I need to get on a call

 

[Cyclonepride]

Maybe I’m paranoid, but that is disconcerting.

Hopefully the system has protections against complex arrangements that hide circular dependencies.

Laughs in 2008

 

[iowastatefan1929]

 

[ClubCy]

Winds expected to pick up again this afternoon and evening…..

 

[Mr Janny]

It's not to hide circular dependencies.

It's more of transferring risk to other entity.

I'll try to explain in more detail later, I need to get on a call

This. I work for an insurance company that has a sizable reinsurance business. We sell a percentage of every policy we write to other insurance companies, so that if there is a large claim, we might only be on the hook for 50 percent of it. And in turn, we buy up parts of policies written by other insurers.
And you diversify the kinds of policies that you buy up. So, if you're a fire insurer, you might buy up worker's comp policies for reinsurance, to protect yourself a bit in case of a catastrophe. You might have a massive fire claim, but it's unlikely that there will be a coincidental catastrophic worker's comp claim at the same time, so there's some protection there.

That's a very simplified explanation, but on the whole reinsurance isn't really a bad thing

 

[12191987]

It's not to hide circular dependencies.

It's more of transferring risk to other entity.

I'll try to explain in more detail later, I need to get on a call

Heh. I was just commenting from a naive perspective on the idea that if you could circumvent capital requirements by buying reinsurance it might be possible to end up with reinsurance-all-the-way-down.

As someone else pointed out, 2008 scarred me.

 

[isufbcurt]

Maybe I’m paranoid, but that is disconcerting.

Hopefully the system has protections against complex arrangements that hide circular dependencies.

By spreading risk, an individual insurance company can take on clients whose coverage would be too great of a burden for the single insurance company to handle alone. When reinsurance occurs, the premium paid by the insured is typically shared by all of the insurance companies involved (the one I am working with is 80% reinsurer and 20% the cedent).

If one company assumes the risk on its own, the cost could bankrupt or financially ruin the insurance company and possibly not cover the loss for the original company that paid the insurance premium.

For example, consider a massive hurricane that makes landfall in Florida and causes billions of dollars in damage. If one company sold all the homeowners insurance, the chance of it being able to cover the losses would be unlikely. Instead, the retail insurance company spreads parts of the coverage to other insurance companies (reinsurance), thereby spreading the cost of risk among many insurance companies.

Reinsurance and insurance regulations vary state by state. California is very regulated.

 

[12191987]

By spreading risk, an individual insurance company can take on clients whose coverage would be too great of a burden for the single insurance company to handle alone. When reinsurance occurs, the premium paid by the insured is typically shared by all of the insurance companies involved (the one I am working with is 80% reinsurer and 20% the cedent).

If one company assumes the risk on its own, the cost could bankrupt or financially ruin the insurance company and possibly not cover the loss for the original company that paid the insurance premium.

For example, consider a massive hurricane that makes landfall in Florida and causes billions of dollars in damage. If one company sold all the homeowners insurance, the chance of it being able to cover the losses would be unlikely. Instead, the retail insurance company spreads parts of the coverage to other insurance companies (reinsurance), thereby spreading the cost of risk among many insurance companies.

Reinsurance and insurance regulations vary state by state. California is very regulated.

The claim is that this is part of the problem.

Until recently insurers weren’t allowed to use their reinsurance costs when calculating premiums.

 

[Clonehomer]

It would be nice to know the actual total of all premiums in the state paid for 2024 to determine if a $10-20 billion hit would be catastrophic to the insurers or not, though in this case, the hit would be pretty immense for a relatively small geographic area and whoever had written a bunch of coverage there.

Isn’t that what @simply1 posted in post #149? Granted, it was for 2022, but it looked like a total of $90B if I’m reading it correctly.

 

[simply1]

Isn’t that what @simply1 posted in post #149? Granted, it was for 2022, but it looked like a total of $90B if I’m reading it correctly.

Also a significant amount of the palisades are insured by FAIR because of the high risk. Fair will charge every company if it needs to in order to remain solvent, so it will spread it out.

 

[Die4Cy]

Looking far down the path, but we/they have 3.5 years before the Olympics arrive. Infrastructure, venues, lodging ..... That is a hell of a time line for that gigantic event.

Southern California might be the slowest, most expensive place to build in the United States that isn't Manhattan Island as well.