In California, if you can't get fire insurance through the private market, you generally have access to the FAIR Plan (https://www.cfpnet.com/about-fair-plan/). As the about page points out, it's not taxpayer funded - instead, companies writing home insurance in the state are required to contribute towards a share of risk in the plan.
> when other companies called, you could tell them you have USAA and they're acknowledge they can't match the rates
This is funny, I actually do say this. I co-founded Goodcover, we provide renters insurance and USAA is an inspiration. But we still have a really hard time beating them! I'm also a USAA Member (car insurance) and also can't say enough good things about them.
I have a lot of sympathy for this feeling - I am a USAA member, but through family, nothing I did. I feel fortunate that I qualify. My cofounder and I are trying to build a company a lot like you describe to bring "USAA style" to more people. We just did our launch HN last week (Goodcover). It's renters only right now so won't do exactly what you describe, but just wanted to say I totally get where you're coming from.
Sounds great, let us know if you have any questions! You can send your current policy to compare @ goodcover and we'd be happy to send back and apples-to-apples comparison.
Thanks! Yeah it was always annoying to us that you needed to give away all your personal details before you even found out whether something would be worth it, so we wanted to be different. Glad to hear you like it!
Thanks for your questions! So, the actual cost of the regulatory filing part isn't that high in dollars, it isn't necessarily cost prohibitive. The real issue is building a unique insurance product, the underwriting for it, the pricing model, and all that good stuff - and then finding the reinsurance and primary insurance partners that will go to this new place with you. Knowing people helps, track records are important, the strength of your underlying models (industry vets at those companies will put them through the wringer). And then you need to do that 49 more times...
Thanks for your question. Apart from the structural difference (MGA vs. balance-sheet carrier) the main one is our business model. It allows us to offer better coverage for less money, and a Member Dividend.
Good question - yes. "Home computers" would cover it. Just be sure to check the limit you're buying and that it's adequate for the amount of equipment you have.
I think (correct me if I'm wrong) you're asking about comparison sites - in those cases the law requires them to establish an agency relationship. We're open to it and think we'll compete well, but much like Southwest it would be hard to give better prices anywhere else than our own site.
Thanks for the feedback, that's not my intention. We're definitely not claiming we're the only innovation in 100 years.
However the environment those companies started in is gone. Insurers went in and out of business all the time in the 1920s and 30s, it's the survivors who are left (I think it really is amazing how many of the top insurers started in the 20s and 30s!). It's good there's more regulation and safety for insureds.
It does mean though we have to work in the current framework to get things done - the companies of the 1920s can't be started the same way in the 2020s.
Great question - volume of stuff is proxy for your estimated increased cost of living. More stuff, more likely to have a bigger household, higher everyday living expenses (hence, "additional living expenses" would be even more!) It's not perfect, which is why it's adjustable, but have to start somewhere.
Thanks! And yes, great idea. So far we've been seeing a lot of landlord-provided policies, and we beat them by wide margins. By pitching ease of use and great coverage for the minimum possible tax on their tenants I hope will be a win!
No problem, it's important I think. It is a heavily regulated industry so we always have to be mindful of what is legal, what is going to get regulatory approval, and what we actually want that will serve Members the best.
On voting rights - we haven't worked out how to legally do so, but we're experimenting with ideas over how to give the community more control. Would love to brainstorm ideas! Feel free to reach out, chris @ goodcover com
So, given the underlying risk, I think the premium for wildfire in CA will be going up in general with or without this. The moratorium on non-renewal only lasts one year, and really just reiterates existing law. Most insurers have been trying to adjust their rates long before this came out.
How much is hard to say. An old mentor of mine always said, "There's a price for every risk, but sometimes it's as much as the limit of insurance." That's a bit geeky but basically, as wildfire becomes more common, the models will adjust to accommodate. Community efforts to make their communities more resilient will go a long way though, like mentioned above.
Thanks for your question, it's an important one, and deserves more than a handwave answer. When we started Goodcover, our goal was to make it so we were not in conflict with our Members - and the core of this is a cooperative model.
The original business model we were looking for is known as a "Reciprocal Exchange" (RE) - a type of co-op or mutual (like you mention) where the members own the claims capital, but the business is managed by a company called an "Attorney in Fact", which is usually a for profit (Farmers is an example). That would be us - we’d make money providing an amazing service to as many people as possible.
Unfortunately, we found out from the CA regulators very early on that starting a Reciprocal Exchange today was basically a non-starter. The capital requirements I mention in "Quirk 2" mean we can't just raise money from somewhere and kick-start the RE. We would need to get future-subscribers to put up the cash, and the amount we were talking there was just not possible. Farmers started in 1928 with a loan for their backend capital, something that is illegal today. So we were stuck - how do we start a new co-op insurer given this requirement?
The above story is the process of us figuring that out. Goodcover is an MGA that manages insurance on behalf of its Members, like an Attorney in Fact does for an RE. However since we can't have an actual RE until we have sufficient number of Members, we rent the capital backstop from conventional carriers. They pay us a fee and return the "underwriting profit" to us (that part is even more complicated and can talk later if you want), which we then return to Members, like Farmers should, but doesn’t anymore.
So, long answer - but yes, we are a for profit company. We operate the insurance like a cooperative, but like many other coops we do that for a for-profit fee. But, given the regulatory environment today we don't really look like your 1920s co-op!
Firstly, I'm sorry to hear about your community, that is rough and hope people are ok. And thank you (and your fire buddies - my cousin is a wildfire-fighter) for all your work to keep your community safe!
To your question on self insurance - it's a matter of risk and statistics. No insurance is less money up front than coverage, but you retain the risk which may or may not cost a lot. We give a quote everywhere, and we think it accurately represents the risk Goodcover is covering for you, but I concede it is more expensive than it used to be.