Home owners in low-risk regions like upstate NY actually have to subsidize the solvency of insurers offering coverage in extreme-risk regions like Florida and the south.

Everyone's home insurance premiums should be lower than they actually are. Except they're not, because we have to pay to offset the cost of all the people rebuilding their houses on the Florida coast every few years.

I mean that's kind of a strong claim. Premiums are priced by risk. If insurees of one company in Florida are getting more than they pay in aggregate, then other insurance companies which correctly price the risk in NY will take all their customers.

This only holds for government insurance programs. And in that case all taxpayers are subsidizing them.

And then there is a devastating hurricane, billions to be paid by insurers. Who you think give them money to pay?

The answer is: everyone who uses home insurance all over the world. They will keep insurance companies afloat while paing billions for the damage.

> Who you think give [insurers] money to pay?

Now? The NFIP and FAIR. Which is to say all citizens.

I cant say I understand this, to me it seems like if you know the averages of claims across time will be $X, then you just sell the premium for >$X . Like it could be seemingly absurd, like if you expect to replace a house every 10 years, then you do annual premium >= ($REPLACEMENT/10) . (all averaged across the pool)

The pools can be different based on the US state and the type of insurance based on the location where the insurer is doing business. For a region where a major dangerous weather event is a certainty on a yearly basis, I (a layman in insurance) would expect the premium would approach just the full cost of replacing the property rather than being something you barely think about once a year. Hence the pricing out.

Well there’s overhead like cost of administering the claims etc etc so actually if it were literally replacing the house every 20 years the annual premium would be like house$ / 10 not 20.

But if it gets even remotely close to that point the yearly insurance is a significant portions of the house worth and it’s obviously not affordable/insurable - whatever term one wants to use.

At that point if one can’t self insure then they can’t afford the house

Part of the problem is that insurers are in the business of predicting the future, which has gotten very hard recently (global warming, cost shocks).

The other constraint is that, jurisdiction dependent, rate hikes are subject to regulatory approval.

Most importantly, the insurance industry does not make much if any money on underwriting. They make their money on investing the float, which only exists if they sell policies. That’s why insurers for the most part are ok posting slightly negative margins on their underwriting.