That's pretty alarming when a major insurance company is out of cash...
Insurance distorts housing markets, allows builders to take unreasonable risks, etc.
this post was submitted on 10 Jul 2025
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I strongly suspect that this is some kind of internal fuckup, not State Farm being insolvent.
probably just waiting so they can get some interest before releasing the funds first.
As someone that works in corporate America that would take too much common sense to execute on, its likely incompetence.
I thought that the company that had the fire insurance in Cali wasn't State Farm proper. It is a spin off specifically for home insurance there. I could also be wildly wrong.
I'm sure the national state farm corporation spun off shell companies to reduce liability in these high risk areas.
Conservatives love talking about pensions funds needing to be solvent for decades...
But there's never a push that insurance companies need to have cash on hand.
They keep their money in investment accounts to make a profit on it, so how much they have varies at any given moment.
When large scale disasters strike and the market is down they're fucked. If they liquidate at the low price not only does it cost them money. At a large enough volume it excarbates the market being down.
Enough insurance claims at once and it could crash the whole economy.
People don't realize how many different ways we're fucked...
Yes, but they use reinsurance companies to spread the risk around the globe. The whole world economy might be down, but there is unlikely to be major insurance events in all countries at once. Covid claims could have broken that but most insurance decided not to cover it.
They aren't out of cash they simply gave their execs too many bonuses. I guarantee their deficit could be offset by reducing leadership pay to something more realistic.
it’s almost certainly a subsidiary of a subsidiary, created solely to hold a minimally funded bank account
♫ like a bad neighbor... our check has bounced. ♫
Not a good neighbor
This disturbing because I just started working at a State Farm agency. I was told State Farm only makes money off the interest that funds in the bucket that customers pay into. So there should be plenty of money to pay claims. Boss told me thinks it something like 200 billion dollars.
Don't insurance companies carry something like "super insurance" where it's like a meta policy in the event of something catastrophic?
Yes, it's called reinsurance.
Yes, but thats the insurance company hiring other insurance company to cover sone of the risk.
It's just a larger risk pool made up of other insurance companies. When you have a home insurance policy, you're entering into a risk pool with everyone else in your policy that's essentially a hedge against some catastrophic loss, everyone in the pool pays for each loss and it spreads the burden out, rather than a single member losing their home or going bankrupt.
For the home insurance example, when you have insurance companies that cover risk pools in one geographical area, especially smaller agencies that are regional, they have to hedge against the risk of a catastrophic loss so large the risk pool can't cover it (like California wildfires) So they enter into an even large risk pool with other insurance companies.
This chain can actually go on for a while with several layers of reinsurance.
So while you do hire a company to manage the risk pool, really the risk is divided amongst the members/policy holders in the pool.
This is what happens when housing is grossly overpriced. The entire system collapses
It's more than that. This was once a fine enough place to live but improper stewardship of the earth has made it a place unreasonable to build a major city, meanwhile we're in a period where people build cities in places utterly unreasonable like phoenix. New York will occasionally get fucked by natural disasters, but what happened in LA where huge portions of the city need complete rebuilds, doesn't happen there. Wildfires have become the norm in California and it's one of the regions rapidly becoming uninsurable, alongside Florida.
The price of the houses is bad, but it's the cost to replace what was lost that insurance cares about alongside the scale of the disaster and the expected mean and variance of time to recurrence. The housing is oversized and otherwise too high value in non-market ways, lacks fire resistance, and is likely to be hit by another wildfire before insurance can recoup what they paid out.
Except it really never was a "fine enough place". Wildfires didn't "become the norm". They are literally a part of the very ecosystem of California. Various trees have even evolved to need them.
Sure we fucked the planet, but don't blame "improper stewardship of the planet" on this one. This was hubris, like building on floodplains is also just plain hubris.
check
Bone apple tea, Noah Webster !
Of all of America's stupid shit simplified English is one that just makes sense. Cheque is an unnecessarily French spelling for a word that you wouldn't think of as French if not spelled that way.