Natural disasters are becoming more severe and costly—who should bear the financial burden? We explore the tension between socialized risk and market-based insurance.Topics covered include:<ul><li>The surprisingly large percentage of natural disaster losses that are uninsured</li><li>Why natural disaster severity is increasing</li><li>A deep dive into the complexity of the home insurance market, including state-based home insurance plans</li><li>How California has tried to update its home insurance regulations, leading to potentially greater coverage but higher premiums</li><li>How socialized insurance relieves the cost burden to consumers but can also lead to riskier behavior and adverse risk selection</li><li></li></ul>Episode Sponsors<a href="https://assetcamp.com/" rel="noopener noreferrer" target="_blank">Asset Camp</a><a href="https://netsuite.com/david" rel="noopener noreferrer" target="_blank">NetSuite&nbsp;</a>Insiders Guide Email NewsletterGet our&nbsp;<a href="https://moneyfortherestofus.com/insiders-guide/" rel="noopener noreferrer" target="_blank">free Investors' Checklist when you sign up for the free Money for the Rest of Us email newsletter</a>Our Premium Products<a href="https://assetcamp.com/" rel="noopener noreferrer" target="_blank">Asset Camp</a><a href="https://moneyfortherestofus.com/hub/" rel="noopener noreferrer" target="_blank">Money for the Rest of Us Plus</a>Show Notes<a href="https://www.nbcnews.com/news/us-news/california-wildfires-what-we-know-palisades-eaton-los-angeles-rcna188239" rel="noopener noreferrer" target="_blank">California wildfires: What we know about L.A.-area fires, what caused them, who is affected and more by Tim Stelloh,&nbsp;Marlene Lenthang,&nbsp;Rebecca Cohen&nbsp;and&nbsp;Phil Helsel—NBC News</a><a href="https://www.munichre.com/en/company/media-relations/media-information-and-corporate-news/media-information/2025/natural-disaster-figures-2024.html" rel="noopener noreferrer" target="_blank">Climate change is showing its claws: The world is getting hotter, resulting in severe hurricanes, thunderstorms and floods—Munich RE</a><a href="https://www.rms.com/blog/2024/05/31/shaping-the-future-of-wildfire-insurance-in-california-new-insights-from-the-most-comprehensive-wildfire-risk-model-in-the-market" rel="noopener noreferrer" target="_blank">Shaping the Future of Wildfire Insurance in California: New Insights from the Most Comprehensive Wildfire Risk Model in the Market by Firas Saleh—Moody's</a><a href="https://www.wsj.com/finance/insurers-rule-change-puts-california-homeowners-on-the-hook-for-l-a-fire-88336040" rel="noopener noreferrer" target="_blank">Insurers’ Rule Change Puts California Homeowners on the Hook for L.A. Fire by Jean Eaglesham and&nbsp;Sara Randazzo—The Wall Street Journal</a><a href="https://www.insurance.ca.gov/0400-news/0100-press-releases/2024/release065-2024.cfm" rel="noopener noreferrer" target="_blank">Commissioner Lara issues landmark regulation to expand insurance access for Californians amid growing climate risks—California Department of Insurance</a><a href="https://www.wsj.com/finance/california-home-insurance-los-angeles-palisades-fire-3cce96a9" rel="noopener noreferrer" target="_blank">California Was Already in Home-Insurance Crisis Before Los Angeles Infernos by Jean Eaglesham and&nbsp;Joe Flint—The Wall Street Journal</a><a href="https://www.wsj.com/economy/consumers/the-world-is-getting-riskier-americans-dont-want-to-pay-for-it-51901067" rel="noopener noreferrer" target="_blank">The World Is Getting Riskier. Americans Don’t Want to Pay for It. by Greg Ip—The Wall Street Journal</a><a href="https://www.ft.com/content/51e2f893-6822-4962-9469-112c6b72a3fe" rel="noopener noreferrer" target="_blank">Reinsurers little exposed to LA fires after retreat from disaster risks by Lee Harris—The Financial Times</a><a href="https://edge.sitecorecloud.io/millimaninc5660-milliman6442-prod27d5-0001/media/Milliman/PDFs/2023-Articles/12-5-23-Milliman-Residual-Market-survey-for-PIFC.pdf" rel="noopener noreferrer" target="_blank">A Survey of Residual Market Plan Assessment and Recoupment Mechanisms by Nancy Watkins, Robert Lee, and Rehan Siddique—Milliman</a>Related Episodes<a href="https://moneyfortherestofus.com/481-home-insurance-crisis/" rel="noopener noreferrer" target="_blank">481: How to Navigate the Crippling Home Insurance Crisis</a><a href="https://moneyfortherestofus.com/444-natural-disasters/" rel="noopener noreferrer" target="_blank">444: Natural Disasters: Are They Truly Increasing?&nbsp;</a>Investments MentionedStone Ridge High Yield Reinsurance Risk Premium fund (SHRMX)See Privacy Policy at <a href="https://art19.com/privacy" rel="noopener noreferrer" target="_blank">https://art19.com/privacy</a> and California Privacy Notice at <a href="https://art19.com/privacy#do-not-sell-my-info" rel="noopener noreferrer" target="_blank">https://art19.com/privacy#do-not-sell-my-info</a>.

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Who Should Bear the Cost? Socialized versus Market-Based Risk Management

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