Eli5: Why are insurance companies leaving entire states like California and Florida?
In: Economics
Setting aside the many ways in which insurance companies are problematic:
Insurance fundamentally works by collecting payments from a large group of people at least equal to the amount they predict they’ll need to pay out in that same amount of time, based on actuarial and other data.
Florida and California have made it so that the companies can no longer do this, by either limiting their payments or by having unexpectedly high payment predictions.
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