This is the Catery Daily podcast for Friday, January 17, 2025.

I'm Caleb Brown.

Wildfires continue in California and policy decisions over allowable rates of insurance for homeowners made before the fires started.

May have made the situation much worse.

Now California's governor has taken some executive action to make it easier to rebuild

and some action that will probably make it harder to rebuild.

Cato's Ryan Bourne and Steve Slavinsky comment.

Ryan, I want to start with you in terms of the wildfire impact and so many people who lived

in the palisades of California and elsewhere that's been ravaged by these wildfires,

what can we look to as not necessarily just causes,

but things that are going to make this recovery so much worse that could have, in fact,

probably were foreseen.

So there's a couple of different aspects to this, but, you know, fundamentally, even though

the rising risks of wildfire, are always going to make, say, home insurance more difficult

in California, state policy actually made this situation worse and households more vulnerable

because of effective state price controls in the home

insurance market. So if insurers in California wanted to raise their rates, California law under

Proposition 106 requires them to submit detailed justifications for doing so to the California

Department of Insurance. And the insurance commissioner has a lot of discretion as to what premiums and

rate she approves. But until very recently, the state's rules effectively said that insurers

had to base their premiums on historic losses from things like wildfires, rather than

forward-looking assessments from what's known as kind of catastrophic risk models. Those regulations

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