Fire is bad. So is strangling the fire insurance market where people need it most.

As a wise and misunderstood fictional scientific abomination once said, “Fire, bad!” Frankenstein’s monster was right. Fire is bad, and not just when one is being pursued by villagers carrying torches and pitchforks.

The wind-blown wildfires currently ravaging parts of Los Angeles are horrifying and tragic. We’ve all seen the pictures. It’s just heartbreaking.

Left-leaning folk are pinning the blame on climate change. That seems like a cop-out to me. Experts have been warning for decades that California’s forests and wildlands are being obviously mismanaged.

And besides, dry conditions have always been with us. So has wind. A careless spark in such conditions causes a dangerous fire. No need to blame “society” for that.

Right-leaning folk are blaming California’s terrible leftist government(s) with their very unwise forest/wildland management policies and their woke DEI hiring practices in various fire-related departments.

Such criticism is deserved, but today I’m going to rail on California’s government for their destructive semi-socialist insurance regulations. Many of the homes that were just burned to the ground were uninsured or underinsured, and it’s all the government’s fault.

In 1988, California passed Prop 103 (the Insurance Rate Reduction and Reform Act). The ballot measure barely squeaked by, receiving just 51% of the vote. But every Californian since has had to live with the results. Ain’t democracy grand?

Among other dumb effects, Prop 103 requires approval from California’s Department of Insurance before insurers can raise their premiums. It even created a process allowing consumer advocates to intervene to contest the insurer’s claims.

That is stupid, of course. Given a choice, consumers always want more coverage for less premium. Their interests are the opposite of the insurers, who want to provide the least coverage for the highest premium.

Your basic economics textbook teaches that the interplay of many customers and many insurers yields an array of market prices that must be discovered. It can’t be “decided” by some regulatory body, regardless of who comprises it.

Fire insurance in California muddled along under these dumb regulations for a while, but last year things came to a head. Unable to assess premiums that accurately accounted for the risk of fire and the costs to rebuild, many of the biggest insurance companies pulled an Ayn Rand and just… shrugged.

They pulled out of the market in California or dramatically reduced the number and type of properties they would cover, or limited the amount of coverage they would offer.

But don’t worry, California has a fire-insurance safety net. It’s called the FAIR (Fair Access to Insurance Requirement) plan, and it’s awful. It offers limited protection for a high premium. And here’s the kicker. It’s funded by all the insurers who continue to do business in California.

Have you been wondering why insurers have been leaving the state entirely rather than just being more selective about who to issue policies to? That’s why.

Since 2022, at least eight insurers (including big ones like State Farm and Allstate) have announced plans to stop offering home insurance to new customers or withdraw from California entirely.

So, the government monopolizes the stewardship of forests and wildlands as well as emergency fire response. Then it creates regulations that cripple the market for fire insurance.

That’s criminal. I really hope California can straighten itself out. It’s a great place filled with great people. They deserve better — or at the very least 49% of them do.

Naturally,

Adam