Hurricane Milton, Helene: Is the home insurance industry doomed?

Jerry Theodorou, who leads insurance research at the R Street Institute, a free market think tank, noted that insurers in California face regulations that limit their ability to increase rates and for a long time blocked them from using forward-looking catastrophe models to set their prices.

“California was a special case largely for regulatory reasons,” Theodorou said. “The main driver of the high premiums in Florida was plaintiff attorney firms run amok…”

States have begun to take steps to lure insurance companies back. The Golden State is beginning to allow insurers to incorporate catastrophe models that anticipate the future while the Sunshine State just implemented a new law to limit insurance lawsuits. States are also updating building codes and offering insurance discounts for people who do things like upgrade their windows, use fire-resistant materials, and strengthen the frame of their homes.

“The tools are there,” Theodorou said. “They need to be deployed more.” He added that a government-run reinsurance company as some legislators have proposed would only entrench the current flaws of the insurance market.