You thought California’s wildfires were a distant problem. Maybe you sent prayers, maybe a few dollars to a charity. The rest? That was for taxpayers and the Department of Government Expenses to figure out—maybe cut some waste and tighten the purse strings.But you know the insurance underwriters saw all this coming since many, if not most/all, packed up and left years ago, knowing what should have been obvious – Homes built in fire-prone woods, fueled by dry brush and Santa Ana winds, were ticking time bombs.
When rates shot up, people went uninsured. And for those who remained insured (if they did not leave already), the losses piled up. Policies vanished. The hills and beaches were filled with uninsured homes and a disaster in the Billions just waiting to happen.
And the winds and the fires came, just like every season. However, California still refused to manage its forests and clear the tinder. They even shut down reservoirs for a fish whose population never increased.
And now, here’s the kicker—it’s not just their problem anymore.
I should have seen the writing on the wall when our homeowners association in Kentucky lost its insurer. There are no wildfires here. No hurricanes. It’s just a quiet, safe neighborhood. And yet, we scrambled for new coverage at a higher cost.
Then I read The Wall Street Journal article shared in News Items by John Ellis. It turns out that rising insurance costs aren’t just hitting disaster zones. They’re creeping across the country like a slow-moving cancer. Why? Because insurers spread the risk outside the areas at risk. That multimillion-dollar beachfront home? That mansion tucked in a wildfire corridor? When disaster hits, their losses get passed on—to you.
A Harvard Business School study confirmed it: Insurance rates in stable areas are climbing to offset reckless development elsewhere. The responsible are subsidizing the risk-takers. And Californians, ever the first in line for a handout, still expect the rest of the nation to foot the bill.
And now the government is making it worse.
John Ellis, in his latest news roundup, pulled together three stories that show just how deep this rabbit hole goes:
FEMA’s Fumbling – FEMA is already stretched thin from past disasters and is now tapping into borrowed money to keep up with payouts. [Source: The Washington Post]
Insurance Exodus Continues – More insurers are pulling out of California and Florida, citing impossible regulations and massive losses. [Source: Financial Times]
The New Insurance Tax? – With state-level insurance pools failing, some lawmakers are floating the idea of a federal insurance fund—translation: a nationwide tax to bail out bad policies. [Source: Bloomberg]
It’s happening. The people who chose to live in paradise, in fire zones and floodplains, are about to get their safety net—funded by the rest of us.
Time will tell, but one thing is clear—California needs to grow up.