Friedberg: How California Created an Insurance Crisis by Artificially Inflating Home Prices

after the California Department of Insurance wouldn't allow the rates to rise like they should from a free market perspective they had to set up their own insurance program called the fair plan for homeowners they have about 6 billion of exposure in Pacific Palisades alone they don't have enough Capital to actually fill the Gap because the reason the rates want to go up is cuz the thing costs more than the state is willing to admit 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 at some point taxpayers are going to look at the fact that they're paying some percentage of their income to support someone else's home value and they're going to say enough is enough and enough of these sorts of events start to happen and then the legislative change I think will happen that says this it doesn't make sense we have to make a change and I think we're getting pretty close after the series of events