"Correctly" is doing a lot of work here. Some readers might miss that this is double edged. Insurance is a mandated product. You don't have a choice if you want a mortgage, or want to run a business. So while it is true that the sustainable price for insurance in many areas is higher than what current regulations allow, let's not forget what happens in an unregulated insurance market; price gouging.
If the regulators have defined 'price gouging' as a price substantially below the break even mark, literally any profitable insurance product is implicitly believed by them to be price gouging. The US does a weird thing where "insurance" no longer means pooling risk but some sort of transfer payment welfare system. If they're going to define "price gouging" as profitable activity it is hard to see how the economy is going to function.
Allowing insurers to make a profit and run a business without interference is going to be cheaper - and in most instances better - than whatever the politicians are trying to build here. If you get rid of all the mandatory-this and price-gouging-thats then to stay in business insurers have sell products that people want to buy at a competitive yet sustainable price. It works for food, it'd work here too.
The math of insurance suggests that, if it needs to be widely carried (either due to things like mortgage requirements, or the simple realization most people don't have enough resources to absorb a major catastrophe themselves), the most economical way to go is to have a single risk pool that's as broad and diverse as possible, so it can swallow a large clustered crisis more easily. Yes, this is a bit of robbing Peter to pay Paul.
I always found it funny when insurance marketing talks about "personalized rates", when the goal is to DE-PERSONALIZE the risk. If you have 10,000 customers in Los Angeles, and 5 million elsewhere, you can either isolate the LA customers and charge them the "real" price of the risk, which will be unviable as a business and probably politically touchy too, or you can include them in the broad pool, and the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
The concept probably works better if you have some concept of social cohesion to lean on-- you might not get the best possible outcome personally, but the system itself is more robust for everyone.
What if Paul built his house somewhere less flammable? I see options here where Peter doesn't need to be robbed, he could pay a fair rate and Paul could make less risky decisions.
If one pool of people are taking a bad deal vs the market rate when buying insurance then it isn't really insurance any more. It is a transfer payment a.k.a. welfare. Which is cool and all in the sense that welfare is a social tool that exists. But calling it 'insurance' is needlessly polluting the language. If people expect to hoover money off others then they should be charged more until the expected return of everyone in the insured pool is equal. If the payouts are going to be held equal in the event of a disaster then that means the price of insurance has to vary depending on the risk profile of the customers.
> It is a transfer payment a.k.a. welfare
Its called solidarity and yes, it means some people NOT have to pay more but others recieve more. Paul AND Peter get the security of disaster coverage in exchange. This is what you pay for. A big risk pool and not your individual disaster recovery.
If you want "solidarity" you need a government service. Private insurance has every incentive to price things accurately and not subsidize higher-risk people. If you tell insurance companies what they have to charge, they have every reason to say "nope, I don't want to offer that service at that price, that doesn't make economic sense".
Insurance that is able to quantify risks precisely and set prices individually based on that is useless. If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone. Whereas solidarity can bring a better society - which even those who have to occasionally pay more benefit from in the end.
> Insurance that is able to quantify risks precisely and set prices individually based on that is useless.
This is simply untrue.
This may be true for health insurance, because there is a strong moral case to be made that is unfair and illiberal to make people pay more for genetics or simple bad luck that result in them being likely to need more health care.
It is not true for home insurance, where people can choose where to live and choose what kind of housing to live in.
The purpose of home insurance is to reduce time-based variance for disaster, not for people in low-risk properties to subsidize people in high-risk properties.
It is not "solidarity" for someone in a steel-and-concrete house with a metal roof who clears brush and trees from around their house to subsidize someone who lives in wooden mansion who doesn't take any fire precautions. It is a perverse incentive.
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
Again, it is not the purpose of insurance for it to be positive expected value for people in high risk homes! It is expected for insurance to be negative expected value. The point is to reduce variance.
Surely you don’t want your taxes to go into rebuilding other people’s beachfront houses as many times as needed. Show a little empathy!
https://reason.com/2024/01/10/the-feds-shouldnt-subsidize-fa...
> Again, it is not the purpose of insurance for it to be positive expected value for people in high risk homes!
Insurance should not be positive expected value for anyone; if it is, either the actuaries are doing a poor job, or the product is a loss leader, or there's some regulatory reason the company can't pull out of the market. (Or, you are in a very rare circumstance where you actually know better than the actuary.)
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
It is insurance. You pay money, the company takes away the risk. That doesn't make it a bad deal, that makes it a service. That is like complaining about a hypothetical garbage company that charges for taking away trash even though the trash might have some notional value.
Insurance isn't an investment scheme. If you want to pay money for a positive-expected-value deal, go buy stocks and bonds.
whole point of insurance is that you pay for avoiding risk
in other words, you pay more than you would on average loss from bad events - but you avoid catastrophic losses that would break your life
that is why insuring your phone is likely a bad idea (as you can pay for a new one) but liability insurance or insuring your home/flat may make sense
> If it has to make any profits - or at least pay salaries - it's guaranteed to be a bad deal for everyone.
paying 3k per year, to avoid 1% risk of 250k losses may be a good idea, especially if 3k loss is survivable without trouble and 250k loss would be more than 90 times worse.
> paying 3k per year, to avoid 1% risk of 250k losses may be a good idea
You are basically guaranteed to pay 3k to avoid financial risk with a mean value of 2,5k. That sounds like a fallacy to me (isn't it the same as saying that paying 3k for 1% chance of winning 250k is a good idea?), may make sense psychologically though.
That logic is reasonable if you can trivially afford 250k; in that case, you might choose to self-insure. However, that logic does not hold if the 1% event is not something you can afford.
Every dollar does not have the same incremental value. Going from $1B to $1B-$250k is not the same as going from $300k to $50k, and definitely not the same as going from $50k to -$200k.
Incentivizing people to build homes that are likely enough to burn down as to be economically uninsurable is an absolutely wild abuse of the term "solidarity". Solidarity is the idea that an injury to one is an injury to all, not the idea that choices should have no consequences and the environment shouldn't constrain humans; the only way you can possibly sustain a world in which people actually treat an injury to one as an injury to all, is together with some effort to avoid people from gratuitously exposing themselves to injury.
The tricky thing about global climate change is the "global" part. Funny how that works.
The LA fires aren't a climate fire though.
For other disasters, while climate change is "global", the effects are pretty much localized and to various degrees. Some places have had adapted construction to those kinds of blue moon disasters since centuries, so why should they part with more money?
> If you have 10,000 customers in Los Angeles, and 5 million elsewhere, you can either isolate the LA customers and charge them the "real" price
That's the only way.
> which will be unviable as a business and probably politically touchy too
Why would it be? If you live in Los Angeles - doesn't mean you don't need insurance (even if it several times the cost of insurance in the safer areas).
> or you can include them in the broad pool
No, you can't. Your competitor who doesn't do this will offer cheaper insurance - because they doesn't distribute high risk of small group to everybody else.
> the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work.
Why would they do that? 20 bucks is 20 bucks.
> The concept probably works better if you have some concept of social cohesion to lean on
You mean if you with totalitarian governance deprive people of the ability to choose? Yeah, that could work. I mean, that's how the gulags were justified.
I'm trying to understand how what you're suggesting is different from mandating everyone just get a personal savings account, where they must pay some specified minimum calculated to cover them in the event of a loss of their personal property?
Are you saying that we should only pool risk between people in the same risk bucket?
How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
> Are you saying that we should only pool risk between people in the same risk bucket?
People should be free to make that choice even though it increases net costs for higher-risk or less-affluent individuals.
> How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
By allowing private actuaries to make these pricing decisions: skilled organizations will succeed, others will fail.
I'm trying to work out how what you're describing works, first I have to understand you before I can form an opinion on it :)...
Ok, I get how you want to value risk, independent actuaries. I suppose, there's some bias there as insurers might lean on them to adjust the risk to be more favourable to them and as they'll be repeat business, they're likely to comply, but let's assume we find some really honest ones.
So given say a pool of people with similar risk profiles, say young professionals in high earning careers, and you calculate that they're effective risk is the same so you pool them together.
Now, what do you believe an insurer would insure them against? And of the things, what would not take them out of the pool they've been placed in and put them into a different, perhaps smaller pool?
I'm not quite sure you understand what insurance are. You have risk, you don't want to have it, so you pay other people to took that risk away (to some extent). How those people are expected to assess risk? Somehow. That's their problem.
It's like how a hair salon owner evaluates the difficulty of a haircut. And generally, when you want to have simple haircut, but they are gonna charge you extra because Jason Statham is their client, and he has very sensitive and delicate hair ends, each of which requires a careful individual approach... You naturally start wondering what Jason Statham's hair situation has to do with your haircut.
> I'm trying to understand how what you're suggesting is different from mandating everyone just get a personal savings account
Because insurance will cover you even if your house burns down in the first year of coverage, whereas a personal savings account will have only a very small amount of money in it in the first year of home ownership.
That's the whole point of insurance.
I don't know where the idea came from that the purpose of home insurance is for people in low-risk homes to subsidize people in high-risk homes, but it's a very strange idea.
Right, that is the purpose of insurance, to take risk and spread it across a population.
Now the simplest way of doing that is you decide whether someone is "insurable" or "uninsurable" and then for everyone insurable, you define payout criteria and a fair pay in rate (premiums) which is based on your ability to calculate their risk and taking some extra on top for providing the service.
Your skill at:
1. assessing risk correctly as to whether you take them on as clients
2. calculating their risk correctly and mapping it to a price to charge them (premiums)
3. defining payouts in a way that allows you to pay out when things happen to your clients so others trust you to pay out, but not so often that you have no working capital
broadly determine how well you'll do.
You can do all kinds of other complicated things on top of that, but from what I can tell, the fundamental idea seems to be that given those considerations, the insurer pays out, so the fact that someone has a high risk home should be priced into their premiums or they should not have been taken on in the first place.
Now you appear to dislike that people who have different risk profiles are grouped together, what I'm trying to understand is how that works.
For example, in the case of the house burning down:
1. The insurer pays the homeowner out and increases their premiums
2. The insurer pays the homeowner out and places them into a different risk category of people who own similar homes, but have had their house burn down, works out their new premiums, which are now likely much higher as they're in a riskier category and it's likely that population is smaller.
I assume you're arguing for something like 2 to happen?
Or is it something else?
> Now you appear to dislike that people who have different risk profiles are grouped together
There is no problem with pooling properties with different risk profiles so long as each property pays premiums that adequately represent that property's risk profile.
Don't people who live in higher risk homes already pay higher premiums?
Do you believe that's not the case? Or that insurers are giving them discounts? Or are the risks miscalculated?
I'm in the industry: regarding California,the answer is that they aren't paying high enough premiums. Regulators have refused to allow catastrophe modeling to set rates, so fire prone areas are effectively getting a discount.
> I'm trying to understand how what you're suggesting
Nothing. It's definition of insurance - selling your risk.
> Are you saying that we should only pool risk between people in the same risk bucket?
I mean, why would people want to be in a bucket with people with higher risk?
> How do you aim to determine the resolution of that risk? Not to mention calculating it accurately?
These are the problems of insurance companies. At the end of the day, the consumer simply chooses the best price for his risk.
Except if insurance company A does that, insurance company B will call the full-cinderblock home and say "hey, we can save you $20".
If it's a product you actually want everyone to carry (like health insurance) it should probably be the government offering it.
Which implicitly means: "everyone must always pay into the government pool."
If low-risk individuals are allowed to make their own choices, they will choose an insurer that caters to their group, thus depriving the government "option" of "premiums."
Just like with school property tax vouchers: if people are allowed to directly appropriate the benefits of their funds, less "desirable" schools would receive less funding.
Mandated government "insurance" is a form of welfare.
>>>Mandated government "insurance" is a form of welfare.
Yes? Of course? That doesn't make it a bad idea.
you can either isolate the LA customers and charge them the "real" price of the risk, which will be unviable as a business
NOT lining up the premium with the actual risk is what's non-viable.
> or you can include them in the broad pool, and the people with a full-cinderblock home in a non-flammable state pay $20 more a year so the entire endeavour can work
And you immediately start loosing customers to insurers that either did the former or left LA alltogether. This changes $20 surcharge into $25 surcharge, causing more customers to leave, causing surcharge to increase and so on.
> I always found it funny when insurance marketing talks about "personalized rates", when the goal is to DE-PERSONALIZE the risk.
Actuarial science is not often associated with “fun” but they have been partying for centuries.
“In 1662, a London draper named John Graunt showed that there were predictable patterns of longevity and death in a defined group, or cohort, of people, despite the uncertainty about the future longevity or mortality of any one individual. This study became the basis for the original life table. Combining this idea with that of compound interest and annuity valuation, it became possible to set up an insurance scheme to provide life insurance or pensions for a group of people, and to calculate with some degree of accuracy each member's necessary contributions to a common fund, assuming a fixed rate of interest.”
> you can either isolate the LA customers and charge them the "real" price of the risk […] or you can include them in the broad pool
Maybe you don’t understand that the insurance business is based on including everyone in one pool (so it can swallow a large clustered crisis more easily) AND charge them (more than) the real price of the risk.
I understand. The goal is to make the biggest possible pool, which means a single, preferrably government-run carrier (to limit profit-maximization on a service that's more or less essential)
This completely ignores incentives. If insurance isn't allowed to charge people more who live in fireprone or floodprone areas, more people will live in such areas, and overall society will have to spend more money rebuilding when disasters inevitably hit those areas. Personalised insurance pricing would allow insurers to charge much more to people living in such areas, which incentivises people not to live there. It's also a moral issue: if everyone pays the same rate, then people who did the right thing and chose to live in an area that wasn't fire or flood prone are subsidising people who did the risky thing.
> This completely ignores incentives.
For socialists this is a goal, not an obstacle.
What about the people who drive cars, vote for more suburban sprawl, and actively work against reducing CO2 emissions? When are we going to charge them THEIR fair share?
By eliminating personalization you’re doing the same thing - removing price as a signal.
It’s good when insurers personalize! Install screens to prevents embers from entering roof vents? Great. You should get a discount!
It’s a win-win. Consumers are incentivized to take measures to reduce risk.
A lot of the "big boy" insurance on ships etc actually have inspectors - they'll come and inspect your ship (or industrial plant etc) periodically to confirm it meets the agreed safety standards. And if it doesn't, no insurance! That really aligns incentives.
This is a good point.
You also have insurance companies that will incentivize risk reduction by subsidizing alterations - if you clear any trees within X ft of home, they will give you $1000 towards it.
But yes on the inspections. I’ve had home insurance inspections around electrical and plumbing. They wanted to make sure it was at code as it was an older home.
This sounds like a very US-centric view and id strongly disagree that only the profit motive keeps economies and people going.
You almost said it yourself, "The US does a weird thing where insurance no longer means pooling risk". Why? Is it the profit motive or gov. regulation?
My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose, insurance companies are justified with.
Free markets have down sides and failure conditions too and only principled gov. regulation can fix it.
> This sounds like a very US-centric view
> My answer: The selective approach of insurance companies mirrors the profit seeking lack of solidarity, which is ultimately incompatible with the risk pooling purpose
What’s the non-US-centric view? Lloyd's of London is older than the US.
profit motive does keep the economy going. if you do not believe that youre like a flat earther.
> unregulated insurance market; price gouging.
with sufficient competition, it is impossible to price gouge.
So if there is supposed price gouging, then there must be insufficient competition. Therefore, the source of the lack of competition would need to be removed (ostensibly, by gov't - such as increasing business loans so that new insurance companies can be started).
Or, you need to be pragmatic, realize that you're not gods and won't create a perfect system that can't be exploited, and instead tackle the issue from multiple angles while revising your approach as the exploiters attack.
Don't let the perfect be the enemy of good enough.
What are you trying to say here?
I'm saying that running a government is a lot like running a ship:
You can't just let the currents and tidal forces ("the invisible hand") run the show unconditionally because even though they can propel you great distances at very low cost, they'll eventually throw you upon the reefs.
And you can't just let the rowers and tillers (legislators & executive) run the show unconditionally because they'll end up exhausting themselves with little to show for it as they fight against the winds and currents when they should cooperate.
It's a balancing act that requires some science, some experience, some luck, and a steady hand - and a capable and honorable captain and crew who believe in the mission.
I still don't follow.
If I'm reading it right, and the prior context, we shouldn't allow private insurers to charge the prices they want for insurance?
What do you want us to do? Ultimately someone has to pay for the bad outcomes happening here - either that's homeowners in risky areas, insurance shareholders or the general taxpayer, depending on where you fall.
If you don't make the ultimate originators of the risk pay for it (people in risky areas) they won't stop doing the stupid thing and others will bear the cost. Arguably that is the greatest strength of the "free market" - directing the efforts of everyone in the same, positive, direction.
Because although in the recent LA case we're dealing with rich folks who could shoulder the increased burden, often it's the poor areas that are riskier, and where the people there have little choice over where they can live.
There's no universal solution. A "free market" approach will work in some areas, and fail spectacularly in others. Same goes for a full-on centralized control approach.
And in all cases, you also have the confounding factor of bad actors gaming the system - and your current tools may be insufficient to meet the challenge.
So you need a human guiding hand to make sure things don't go too far out of whack.
This isn't an either-or decision. Stability doesn't care about whose motives or approaches are more "pure".
Agree to disagree.
The "human hand" guiding outcomes still needs to get it's resources from somewhere, presumably from government tax income. I disagree this will necessarily result in better global outcomes than the free market.
In cases where almost everyone agrees people should always have access to a service (healthcare) I think it does make sense to obligate everyone to pay. I don't think it makes sense in this specific case of wildfire insurance.
The free market here seems to be failing by your definition because it can't make money. To me that's it succeeding. It's demonstrating that it's underpriced, and people being unwilling to pay the necessary prices shows that they need to find somewhere else to live.
Amusingly enough, the lack of housing itself is another problem caused mostly by human-guided hands in government, not the free market. Enlightened despotism always sounds great when they agree with your perspectives, the reality is rarely so smooth.
Where do we find an honorable captain in this day and age? And how do we get them into the captain's seat?
"good enough" assumes a lot about the rules of the game here. Imagine, the game is: "heads I win, tails you lose" and then read your comment.
Or, the market lets the gods do their work, rather than the government acting like one.
—esoteric capitalism
I mean, there's sometimes simply not enough capital available to support the creation of further competition in a sector. And government subsidies in the form of cheap business loans are sort of robbing Peter to pay Paul. You're simply allocating capital from one sector (the one being taxed) to another
For what it’s worth, you can get a house with no insurance or mortgage. They tend to be cheap. I had an uninsured thatched cottage for a while, it was 68k
You can have a mortgage with no insurance (after purchase day) here in New Zealand. The bank won’t like it, but also won’t know.
You are right that you can get away with it in NZ.
For total loss then bankruptcy might save you money (assuming you have no other assets or kiwisaver; since you still owe the debt).
But part of the contract with the bank is allowing the bank and insurance company to verify/update.
If you cancel your insurance, the insurance company is incentivised to tell the bank since you will probably sign up for insurance again when told to by the bank. I don't believe the banks or insurance have push updates. I would guess banks batch check if insurance is still live annually?
I live in Christchurch and I believe insurance is valuable risk management - plenty of people gambled and lost with Earthquakes. That said: I own an as-is house because I bought a 3 bedroom on 800m2 for $190000 (cheap because you can't get a mortgage for it because it is uninsurable due to subsidence - I only paid land price).
(For those unfamiliar - $190000 New Zealand is roughly $106,000 US, and 800m2 is about 1/5 acre. I know neither Christchurch real estate nor its geology - but obviously that 1/5 acre carries a big "will it keep subsiding?" caveat.)
I can highly recommend buying property after a big earthquake - there's amazing bargains (lifetime wealth changing). I'm guessing more risky to buy after other disasters like fires or hurricanes or floods.
My land is not too bad actually (relatively) - heaps of other insured properties have similar slumping along the river or on the hills.
I've got friends with slumping issues - hidden nightmares for future buyers... In their houses you could feel the uneven floors before the earthquake and the earthquake just accelerated the problem. Pay attention when buying any house in an earthquake zone!!!
My house is actually fine -- only the ring foundation is broken and needs replacing. There are plenty of companies with the skills to do it reasonably, because it is a common issue in Christchurch e.g. a raft foundation.
The property was extremely cheap (less than half price) partly due to another issue - the driveway and front lawn gets flooded by the river occasionally (the house is high and dry).
Disclaimer: I like risk and can afford it.
Banks in Australia were the same, but some are now starting to demand proof of insurance yearly to counter that loophole.
What's the thinking here? The bank is loaning you money and they want to ensure you buy a particular product.
They're the ones with the money. They can easily guarantee that you buy the product they want. All they need to do is give you less money, buy the product themselves, and give it to you.
I think what you mean is what I wasn't sure about (but found with a quick search), some banks do offer home loan and insurance bundles here in AU. I found one that offered a discount on the insurance if you get the loan with them, for the life of the loan.
But legally, you are allowed to change insurers at any time. They would probably not be allowed to include that as a contract-breaker clause in the loan itself due to free-market-reasons, or force you to take only their insurance to have the loan (we tend to have a few laws about keeping conflicts of interest like this at arms length but I'm not sure about this case). But if insurance is legally required, I suppose they can ask for proof periodically after you leave to terminate the loan.
The insurance is with anyone. They own the house, not you, and so they want to ensure it's not going to burn down (or more likely get washed away in a flood, where I live) and be irrecoverable, so they require you have the home insured. They care naught for contents insurance, just the house/building.
Is it different in the US to the UK? Surely you own the house and have a liability on the mortgage?
When we bought our house in the UK (a long time ago), it was a condition of the mortgage that we had buildings insurance. The theory is that if the house burns down or similar, the bank will want the rest of their money back and the house buyer is unlikely to be able to afford that considering that they needed a mortgage in the first place.
It's basically the bank just outsourcing a lot of risk to the insurance company (via the house buyer).
Why would they go via the house buyer? They can insure the house themselves.
It's common for the house buyer to want extra insurance (e.g. contents) whereas the bank is only interested in the house as a sellable structure, so it makes sense for the buyer to take on the insurance requirement (it's also less paperwork for the bank).
Insuring the contents of a home is routinely done as an entirely separate matter from insuring the structure. All renters have to do it that way. You can do it that way in a rent-to-own scheme too.
We've got combined buildings and contents insurance, but yes they're often separate. My point is that owners want more from the building insurance than a bank cares about.
But if they're the ones that want the building insured, it seems like it would be better for everyone if they're the ones that source the insurance.
I don't know what you mean. Banks loan out money for you to buy a house, but you don't technically own it (that is, you have no title) until it is paid off. The bank wants the house itself as collateral for the loan. It cannot be collateral if something destroys it in the 30 years or whatever during which you are repaying the loan. Therefore, they demand insurance to make sure that they will be repaid. The insurance requirement protects you but also the bank, because what do you think the odds are that someone who just lost their house in a fire or something is going to keep making mortgage payments for a pile of ashes?
You can do that in the US too. As well the banks won't like it, so what they'll do is protect their assets with force-placed insurance that you pay a hefty premium for.
A quick google suggests a similar situation in that there's no legal mandate but most lenders in NZ require insurance.
What did you do for liability insurance?
For the first year I had a policy similar to what farmers use for ag land, then it got cancelled and I was uninsured, which wasn’t ideal.
I sold the house after a while, it was an interesting experiment in cheap living but ultimately it wasn’t great.
Annoyingly I couldn’t insure it because it was thatched, and I couldn’t change the roof because of heritage. The Irish government has screwed over thatch owners brutally.
Price gouging isn't actually what we're seeing in the most disaster prone areas. Insurance companies aren't charging open ended prices, they're simply exiting the market. Florida for example.
I believe Florida market exits had more to do with litigation-friendliness than premium caps or disaster risks. E.g.,
> In 2020, 79 percent of homeowners insurance lawsuits nationwide were in Florida—even as the state accounted for only 9 percent of the U.S. homeowners insurance claims, according to the Florida Office of Insurance Regulation.
There were some recent reforms in response (HB 837, 2023; SB 2-A, 2022).
They're exiting the market because the states have limits on how premiums can increase y/y. The risk modeling (which is turning out to be right) says premiums are fractional of what they should be. So unable to raise premiums, the companies just leave.
Rock, meet hard place.
The big risk that we need regulation for is not that insurance charges too much, but too little. There will always be the temptation to charge less than the other guy, get lots of customers and hope nothing really bad happens.
This is a great callout, although I suspect the two main things insurers need but can't get today, due to regulations:
1. Ability to raise price based on risk. Regulation example: State won't let insurance company modify their fire risk maps. I believe this has come up in central Oregon for example.
2. Ability to drop people out right. i.e. if they think risk of home insurance is 50/50 next 10 years, they won't insure at all.
P&C insurance is a pretty competitive industry, and there are plenty of mutual insurance companies in the P&C business that don't have a price gouging incentive. Most of the regulations that are about reducing counterparty risk for the insured are probably necessary, but price controls are not, and generally, they only distort the market.
Insurance (at least the kind we are talking about) is only mandatory if you have loans, and even then it is not 100% mandated. We do need insurance regulations, but price caps limit what things actually make sense to cover. To put it another way, you are free to buy land in a risky area if you want, but nobody has to insure it or loan you money for it. If you find someone who will loan you the money if you can get insurance, then you can't get insurance, that sucks for you but nobody owes it to you to hand over money on a losing investment. These requirements can be abused, but there really isn't much evidence of insurers, lenders, and investors colluding to rip people off.