Ep. 417 Kristian Fors on How to Fix Homeowners Insurance in California
Kristian Fors is a research fellow with the Independent Institute. He joins Bob to discuss his new policy report, which explains why so many insurers are pulling out of the California homeowners market, and how to fix it.
Mentioned in the Episode and Other Links of Interest:
- The YouTube version of this interview.
- Kristian Fors’ policy report on the CA homeowners insurance crisis. Independent Institute’s Golden Fleece awards.
- The link for Monetary-Metals.com.
- Help support the Bob Murphy Show.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
Would have loved some exploration on why this is coming to a head now when prop 103 was passed in 1988
Good question, Neal!
Socialism eats up capital. Sometimes it takes a couple of decades for the capital to be exhausted.
Prior to Prop-103 california had something closer to market prices. Prop-103’s intervention built-in a feedback bias that depresses rate increase in a recursive manner, since next year’s artificially depressed, permitted prices will be based on this year’s depressed permitted prices.
The cumulative effect has been eroding profitibality in the market, squeezing out the marginal providers and insurance classes first.
This system slowly approaches a threshold of absolute forseeable unprofitability, and once that’s crossed, that’s when you see a ‘sudden effect’.
Even though I’ve never seen his father, he looks as though he would his spitting image.
oh boohoo, the insurance companies finally have to pony up and spend some of the money they’ve been fleecing from US citizens for decades. don’t feel bad for them, they willongly assume this risk in order to recognize incredible gains! much like we risk paying for insurance and never needing it, it’s a 2 way street. instead of letting them abandon and render homeless the families that keep the 5th largest economy in the world going, and who also supply the United States with most of it’s produce, why not force them to look at modernizing their industry, the industry that hasn’t changed in years. instead of enabling these corporations to consistently 30% or 48% price increases – that’s right 48%! – imagine your homeowners insurance increasing by that amount (wouod be devastating to many families, oh and btw this astromocal rate hike request was submitted in April 2025 – even with prop 103 in place and they got approval for 17%! The hubris is disgusting – I wish my rate increases matched those numbers) instead of allowing them to lean into raising prices to increase profits at and every growing rate how about forcing them to innovate, they could build partnerships and programs to address the issue with flammable housing materials for example. or help out with the forestation challenge As a charitable contribution they can write off, or coop your customers maybe? cut executive salaries and bonuses for 2 years or until solutions are found. how about take a calculated loss every now and then in a few regional markets, like retailers are known to do, so that you ensure a stable, healthy and responsible business model. for crying out loud, go back to school and learn how to adapt, innovate, adjust, pivot. ask chatGPT how to do it if your too lazy and stop crying in your ivory tower. You insurance behemoths suck.
other ideas: socialize this industry asap , merge with health insurance scoundrels so their record profits can subsidize this necessary cost in bad years, ramp up real estate developer businesses or concrete supply companies to create a self sustaining revenue model based this hardening tlak, build desalination plants to help combat the wildfires that are scorching not just California, but many regions of the earth. you have to change to survive , change can be uncomfortable and scary in the short term, I understand the corporate executives don’t want to take a hit to their bank accounts and will display token guilt when they make the concius decision to layoff employees instead of honoring their hard work and loyalty by carrying them for a year or two the way the workers have carried the company every single day for the entire existence of the entitity . but I guarantee you, the success you create, and the feeling of actually being the catalyst that improves the human race, will feel very good in the long term. look, even if these ideas are crap it still goes to show that opportunities to innovative and adapt are many and that’s where your focus should be. do better, be better, use your power to change the world.