California @lemmy.world zabadoh @ani.social 7d ago

Los Angeles fire survivor is told State Farm’s $900K check on hold due to insufficient funds

calmatters.org Los Angeles fire survivor is told State Farm’s $900K check on hold due to insufficient funds

A check from State Farm to a Los Angeles fire survivor has taken more than a week to clear so far. A bank is concerned about insufficient funds.

9 comments

That's pretty alarming when a major insurance company is out of cash...

Insurance distorts housing markets, allows builders to take unreasonable risks, etc.
- I strongly suspect that this is some kind of internal fuckup, not State Farm being insolvent.
  
  I thought that the company that had the fire insurance in Cali wasn't State Farm proper. It is a spin off specifically for home insurance there. I could also be wildly wrong.
♫ like a bad neighbor... our check has bounced. ♫
Not a good neighbor
This was done earlier this year, The Institute & Faculty of Actuaries published a paper on the true risk climate has on the world economy. Insurance companies are most likely only starting to get this information and large payouts from the wildfire's, the hurricanes and the flooding is most likely already pushing the companies to insolvency. You can of course move risk around with re-insurance and spun out independent insurance companies but the risk to overwhelming the entire system is becoming higher and higher each year. I wouldn't be surprised if the specific account used for the CA wildfire payouts was empty and overdrawn and State Farm was caught off guard by that and had to do some serious amount of moving money around to fill it back up. Enough where it took a couple of days to come up with the cash, that in itself is really scary.
- The problem is not risk. It is cost. Climate change means that the cost maintaining human infrastructure where we built it has become higher than we want to pay. And regulators and politicians have prevented insurance companies to raise rates to match the increased cost.
  
  Ultimately, there are 3 ways out of this:
  
  Move. Either have a government buy out program for at risk areas; or stop insuring new construction or substantial repairs. Your home was totalled by a hurricane for the second time this decade? Here's your insurance payout; but don't rebuild there because we will not insure you
  
  Build infrastructure to reduce costs. This could be more regionally appropriate building codes. Forest management. Waterworks. If we are willing to spend the resources, we have a surprising ability to bend local environments to our will
  
  Pay the increased cost.
State Farm doesn't want me to be in business in California.

Ask me how I know.

9 comments