📈 California's suppressed insurance rates break the market and land on the taxpayer

“They're driving real estate value up because they're not allowing the cost of insurance of that real estate to naturally float. And so by driving real estate values up, the economy looks good, they make property taxes, income comes in, but at the end of the day, the bill is going to come due. And in the case of Florida and in the case of California, either the state government or the federal government is going to step in and pay the difference.”

“So the individual homeowner is not going to be in a position to rebuild. I think that the liabilities of the insurance claims are going to be so massive that the state is going to look to the federal government to build them out.”

“And so the free market solution is the only solution. If you look at I have an investment in a company called Kin Insurance, and they specialize in direct to consumer insurance for areas that are plagued with natural disasters... So you're not allowed to use a weather model to price in, you know, your decision making for insurance in this state. And that just doesn't make a lot of sense.”

“But to the question of who is responsible, it is economically going to make no sense to rebuild unless you can get that insurance. It is a coveted place to live. But because of the construction costs have gone absolutely parabolic in California, because of regulations, you're talking about $14 million in income to build a $7 million house.”

“Well, California has got, at this point, price controls or a mechanism for controlling the change in price on insurance, on housing services. And now they've got this non-solicitation rule. All three, I think, are very challenging to, I think, an appropriate market recovery. ... But I think it's going to be one of the biggest burdens going forward and it could actually lead to a pretty significant effect in long-term housing prices in California. Because of the way that the insurance market is structured and regulated in California.”