Transcription
Los Angeles Insurance Giants makes a prediction after a devastating fire in LA. Watch this, folks.
Okay, we've been talking about this. Mark Mike Zuckerman, CEO of CSAA Insurance Group, highlighted the grave risk to California if homeowner insurance becomes unavailable due to wildfires. He stated that not being able to insure homes in California against these kinds of risks will completely upend the state.
CSAA is the third largest insurer in California and continues to write new policies but declined to renew 5,500 policies in 2024. This is just 1.2% of its total policies due to wildfire. Zuckerman emphasized the necessity of adjusting insurance prices. I'm going to read this one more time, folks. He emphasized the necessity of adjusting insurance prices to match the increased wildfire risks.
He explained that this is not a sign that wildfires aren't insurable; it is a sign that insurance companies need to be allowed to charge prices that match the increased risk in order to insure. While CSAA raises home insurance rates by 6.9% this year, other insurers such as Allstate and State Farm have implemented double-digit increases or left the California market entirely.
Tom, well, I got a couple of things on this. What he's talking about is the overall market. As the CEO of an insurance company, you would expect him to talk about the overall market. But I've got some stats down underneath this. He's right that if they have increased risk, they increase the price.
Anybody that has a teenage driver and they got two tickets in their first 18 months of having a driver's license knows that their car insurance goes up. Then you tell your kid, "Hey, you're on my insurance policy, but you can't get any more tickets." You went to traffic school for that one, but you can't do that because, take a look, your mom and I are paying higher car insurance.
People in America, American families know about this. You've heard about this, right? So guess what? It's the same thing. If they think that your house is at risk, maybe because brush clearance hasn't happened properly or you're in a wildfire area and they're concerned about it, the insurance companies are acting—oh, here comes the word—rationally.
In a normal market, do they want your business? Of course they do. Do they want to raise the price so that you don't do business with them? No, no they don't. But if you're selling me bananas and fruit and it costs more to get here, the shipping, then you have to charge me more for a basket of bananas, right?
Because you say, "Well, the fuel was up, the shipping was up." I don't know, I went down to the dock and I bought it through my fruit wholesaler. Tom, I had to raise the price. Everyone seems to lose their sense of understanding that that's what's happening here.
All these headlines are crazy, but I'll tell you something else that's crazy. When the rates were going up, people changed coverages of the policy. You know you can save on your car insurance policy? You know how you do it? I call the insurance company and say, "You know what? I don't need this." I lower the cost of, like, if somebody else gets injured in my accident, deductible, everything.
Maybe you say, "Well, you know what? I got a little bit more money now. I don't need a $500 deductible; I can do $2,000." So the first $2,000 of a car crash is mine. Yeah, and guess what? They say, "Oh, that's great, Mr. You just saved 8% on your premium." That's the way it works.
Well, check this out. Yesterday, I dug into it. Insurance Analysis Group says 74% of homeowners are underinsured for what's called the complete loss. And Al, you know what AL is? Alternative living expenses.
Alternative living expenses are usually only 20% of the coverage you choose to have on your house. So if your house is $700,000, your alternative living coverage is 20% of that, $140,000. If it takes three years to rebuild the house, you are going to blow through that. Or if rents go up—and we're going to see that story a little bit—you’re going to blow right through the lid on that.
And guess what? You're going to have to decide to sell the property or figure out a way to self-finance. So let me tell you guys what happened here. A perfect example of a story: Francis Bashet in California. He owns a house in Palisades. He's been there for decades.
He's been living in Palisades for 50 years on and off, but he's owned his house for a couple of decades, give or take. His insurance premium last year went from $4,500 to $118,000 a year—$1,500 a month from $4,500. Rob, if you want to pull up the story of Francis Bashet, Brandon, if you guys can send it to Rob so he has it to pull it up.
This is a Wall Street Journal story. It went from $4,500 to $188,000 a year. A year ago, he gets this letter. When he gets this letter, he sits there and says, "There's no way in the freaking way I can afford to do this." So he doesn't do anything with it.
He goes to the FAIR Plan, which is $3,200 a year, and they protect your house, I think, up to $3 million. But when he goes to the FAIR Plan to apply for it, they tell him to cut 10 trees on the side of his house.
Okay, he looks at the cost of cutting the 10 trees and says, "I can't afford to do this." So he decides not to cut the trees. He doesn't even get the FAIR Plan. Then he goes and does something in California. They say, "Going bare." That means you don't have any insurance. It's what it's called—going bare.
"I'm going to go bare," and I have nothing—not FAIR Plan, not homeowners insurance. He has nothing. And you can do it if you have no mortgage. You can do it if you have no mortgage. You know what ends up happening? His house burned down.
Oh man, 100% of his house burned down. So guess what he doesn't have to do right now? He has no insurance to pay for it. No FAIR Plan, nothing to do anything with it. By the way, the FAIR Plan—I'm talking to a fellow yesterday who is a very successful real estate businessman.
We're having this conversation. He's here. We've known each other for a long time. You know who he is, and I just want to keep it private because of the conversation we had. He's here, and we're sitting in a hangar having a great conversation together. His house burns down in Malibu.
Wow. The guys next door, a lot of the people there whose houses have burned down in Malibu, a lot of them had only the FAIR Plan. The FAIR Plan apparently only protects up to $3 million, and they have $50 million houses.
So if you got a $20 million house with only a FAIR Plan, that $20 million house is now only getting a $3 million insurance policy to rebuild. That $17 million has to come out of whose pocket? Right there.
Look at this. California's FAIR Plan insures payments for natural disasters up to what? $3 million for residential policyholders. So imagine you're sitting there saying, "Where the hell am I going to come up with this other $17 million?" You're not.
But a guy's going to come to you and say, "Look, I know you're kind of screwed here, and I'll give you $5 million." And that's exactly what you were talking about. By the way, watch what happened yesterday. Gavin Newsom yesterday tweets out a video from the podcast.
If you can go to—if you can go right there. This is Gavin Newsom, and he says, "This is absolutely false." It's from his account. "I signed an executive order to protect residents from predatory land speculators and developers."
Here's Vinnie talking about this in this clip. And look what he did. They had those fact-checkers go and say, "I saw that." Community notes. So go little, go little. We got to give credit to who posted this as well.
So Wall Street Apes posted, and in the description, it says California Governor Newsom officially setting the stage for developers to come and buy up the devastated land in LA, Pacific Palisades. Play the clip if you can, Rob, from the podcast. If you can go and play this clip, go for it.
Watch this where Newsom is talking about calling Josh Green the Maui fires. Okay, they exposed the same stuff that's happening right now: government failure, delayed response, ignored warnings, and all these fires.
He says something about reimagining California where he calls the Maui guy. And this is what bothers me, Tom. Those people that you're talking about now that have nothing, okay? That house worth, let's say, $10 million with regard to insurance—now if somebody comes and wants to buy up the land, Tom, they can offer them way less and say, "Listen, everything's gone. You didn't have the right insurance. We're going to give you this much money cash."
Tom, go about your business. Am I right? People that had their house paid off, yes. For some of them that don't have the resources and were underinsured, that is their only choice: sell land.
So Tom and Vinnie are talking about this now. Watch this. Go back to my account, Rob. Go back, if you could, to the Twitter. Just go back. Yeah, there you go. Zoom in on that same thing. Zoom in, if you could.
His executive order, after the team looked at it, okay? The executive order he said to not allow people, predatory land speculators and developers, for people to come and pick it up is only for three months.
Weird. And it mandates property offers that meet market value. How long do you think—when we're talking about how long do you think it's going to take to clean out the debris alone for homeowners?
And then for people to say, "I want to sell the house." How often do you say, "I want to sell my house," and 90 days later you sell the house? How often have you done that? It doesn't happen like that unless you're in a peak market where everything's going like this.
But in a situation like this, this is going to take six to 12 months. So yeah, we put an executive order to protect on all the lip service stuff. This is just a public political PR stunt. People are being impacted right now directly, and this insurance could be the number one reason why it leads to the California exodus.
And by the way, here's a part. You can sit there and try to spin it all you want. You know how long it's going to take to clean this? I'm having a conversation yesterday. We're having a meeting with the mayor of LA. We're sitting having a conversation together, and the amount of people right now that are looking at moving—like cities in Texas, cities in Nevada, places in here—like we're already getting people asking that they want to come down here.
We're already getting people interested that are leaving because how long, Tom? And this could go to any one of you guys here. This goes to everybody. And folks, you're listening to this comment.
Rob, can you put a poll? How long do you think it's going to take those areas to recover from this where it goes back to normal? 1 to 3 years, 3 to 5 years, 5 to 10 years, or 10 years plus? Run those numbers.
Tom, how long do you think it's going to take? I did some research on this. At the end of three years, less than 20% of the homes will be finished. Less than 20%. Three years from now, they estimate 17 to 20% of the homes will be finished.
Three years from now, and those will be some of the smaller ones. These bigger ones in Malibu, these are five-year projects that are going to go through a thing called the Coastal Commission advanced permitting.
So there it is: 17 to 20% in three years. So I would say five to 10 years. And let me ask you a question. So let's say you had that—how much was that guy's house? $15 million, the one in the Palisades that burned down.
And now they're only going to give him—no, I'm saying the Malibu houses on the water that all burned down. Most of them burned down. If it's a $20 million house, you only get $3 million from the—okay, so now here's my question to you.
Now you have that $3 million you have to rebuild. Let's say you're not going to have the $20 million. So now that property, you're going to build a—let's say you're not going to build a $20 million house. You're going to, what, build a $3 million house?
Now you can't possibly. But that's what I'm saying. So now that's going to my point. So now you're going to take that money, that land. What can you do with that land? You're just going to sell it? Is that what you're going to do?
You just sell the land? Listen, here's what it comes down to. How many of those buyers bought it that have an additional $50 million, $100 million sitting there? How many people—like, for example, when a person buys a million-dollar house, just to simplify, bring it to a million-dollar house.
If a person buys a million-dollar house, how many people have a million dollars in cash? Very few. Of course, very few. How many—what percentage do you think? How many, if you buy a million-dollar house, how many people that buy a million-dollar house have a million in cash?
Less than 5%, would you agree with that? I think it's maybe even smaller than that. Watch this. I'll give it to you. I'll give you the stats. So home purchases were down 70%.
Okay, you know here in South Florida, and of the remaining—so that means you're only selling 30% as much as two years prior. Make sense? 70% down, 30% of the 30%—they said that 50% were cash buyers.
So that's 15% of the original total. So using stats from South Florida, it estimates that of higher-end homes, about 15% of them are full cash buyers.
Okay, so then if you look at that, so let's say 15% of people have the cash to buy it. But that sounds about right. Okay, let's just say 5% to 15%. So now that's at a million. Go to the $20 million homes in Malibu.
What percentage of the people that buy the $20 million have $20 million? It goes up, but it's probably only 30%. It's going to go up to afford those houses. Now, of the 30% that have the money to be able to pay for those houses, how many of them are going to say, "Yeah, yeah, honey, let's make this mistake again?"
No, in California, is going to protect us? Hell to the no. It's going to be a new person that wants to take the risk. So they're going to sell at a discount. How much is that discount? Depends on how much insurance they had.
There's a lot of things that's going to come into play here. But the reality of it is this is not done. 2,500 votes. Most people said it's going to take 5 to 10 years. Look, 72% of people say it's going to take more than 5 years for this thing to come back up.
72% say it's going to take that long for them to recover. Adam, final thoughts? Well, you know what's funny? Because I get all these emails from insurance companies, and you know we're in this industry.
I got an email from the insurance department of California. Now, typically, I just delete this. What do I care about the insurance? I'm in Florida. But what I found is interesting is this.
This is from—scroll all the way to the bottom just so you see. This is from the State of California. If you go to the very bottom, this is signed from Ricardo Lara, the insurance commissioner of California.
I actually want to get your perspective on this. Have you ever seen anything like this? It says, "Whereas the dwellings of the thousands of California residents that have been destroyed or damaged, hundreds of business structures have been destroyed or damaged, and tens of thousands of California residents have been evacuated from their homes by the Palisades and several other fires."
Boom, boom, boom. "Whereas the magnitude of these fires and associated insurance claims are likely to create a shortage of qualified insurance adjusters."
So now I, Ricardo Lara, the insurance commissioner of the State of California, in accordance with the authority vested in me by section yada yada, hereby declare an emergency situation to exist with respect to the adjustment of insurance claims arising from the wildfires.
And he gives three main points. Therefore, I authorize the following: number one, the work performed by non-licensed adjusters is under the active direction, control, charge, and/or management of a qualified insurance adjuster or qualified manager. That makes pretty much sense—qualified.
Here's where it gets weird. Number two, the non-licensed adjuster must register with the insurance commissioner within 15 days of the date to which the non-licensed adjuster commences the claims adjusting activity in connection with the wildfires.
So there, scroll down, Rob. All claims adjust—basically, how I'm interpreting this—you tell me. You don't even need licensed adjusters. You don't even need to be, quote unquote, a person who has been vetted.
This is not something that there's such a shortage of insurance adjusters that they're basically making exceptions here. And here's the final part: any qualified adjuster or qualified manager authorized to do business in California, activity directs, controls, or charges and/or manages non-licensed adjusters may be held liable.
Have you ever seen anything like this? Tell me if I'm wrong, but let me tell you what this means. If you don't have an insurance license, let's say, "Hey, hey guys, we need more life insurance in California. We're underinsured."
"Hey, you don't even need a license to go sell." I got you, bro. I'm trying to understand this. Go ahead. But this is Ricardo Lara. You think he's a liberal or a conservative?
Most people that work in the Department of Insurance—Rob, can you look up who this Ricardo Lara, insurance commissioner, is and see who appointed him?
Okay, Ricardo Lara, insurance commissioner. Who appointed him in California? So you have to zoom in a little bit. Speculate that he's on the—okay, he ran for Senate as a Democrat in 2012 and 2019.
Okay, he served as California Senate. Okay, so guess what? Here's a Democrat that is forced to deregulate. This is a form of deregulation because think about it.
In 1929, people who sold stocks didn't have series sevens. You're just like, "I want to sell stock." No, there was no licensing. There's no such licensing. Only came after all the people got caught manipulating the stock market, the big crash.
Then FDR goes to Joseph Kennedy, brings him in to start the SEC. The SEC gets started, then they start saying, "We need fingerprints because you're handling people's money."
Then does series seven, take this test, take that test, then invest. You know, all these 1934, all this 1933—that's when all this stuff gets started, right?
So this is a form of deregulation to accelerate. It's almost a contradiction for them. They don't know they're doing this. They're deregulating. They're lowering regulations.
They're lowering the barrier of entry of doing something like this because their overregulation has limited the number of people they need as adjusters to come and help them out.
Sure, you understand what I'm saying? In your mind, what you're saying is they're lowering standards to get anybody to come in. Both could be true, but to them, it's a form of deregulation.
Tom, would you agree? I completely agree. And what they're trying to do is—let's say Pat does that make sense?
Let's say Pat, yeah. Well, I guess my only question would be there's overregulation and there's underregulation. I mean, I've seen you. I mean, how many insurance agents has PHP? Nearly 60,000 licensed.
So there you have standards. There you have a fast start like we do. We do, but I tell just nobody can just start selling insurance. But I tell you, okay, okay, what do I need to do right now to sell? What license do I need to do Facebook ads for your company of $10 million a year?
There's no license. So why not? But that's the point. Is it a good thing or a bad thing? It's a good thing. I see what you're saying.
So do you necessarily need a license to sell insurance in some places? Maybe, maybe not. Driving cars, is it good that we're giving people—I agree.
So you see how this works? I mean, I wouldn't know anything about that, but the point is in some areas it does, in some areas it doesn't. When you're dealing with people's finances, it's probably a good idea for you to go out there and learn some of the rules and regulations and stuff and learn.
You know, the continuing education is actually a very good thing that they're doing. It's needed. Trust me, we had a lot of headaches with that with some people.
But going back to you, Tom, form of deregulation? Yeah. So Adam, let's say you're Allstate and I'm State Farm. The number of people we have to send an adjuster out to take pictures of your car cuts in a crash.
A guy comes out with the camera, takes pictures, surveys your car unless it's on a tow truck and a junkyard, right? Okay, that's the adjuster. So what they're saying is that you and me, we're like, "How are we going to get—how do we set appointments?"
It's going to be a month to set all these appointments for an adjuster to go out, take pictures, site survey. They'll put a drone up. You know, I read about this.
And that's what they need to do. The chimney was standing. The thing's completely done. They see the rest of the street, and then that now goes to Pat and Vinnie who are now in the claims office looking at it.
Okay, yeah, I just got from the adjusters here. I see what your property was. So they need—they're going to have the adjusters go out and do it. Previously, the state put all these restrictions, so you and me didn't have enough adjusters.
Now we've got emergency adjusters so we can get the information into the claims people and start helping them. And I bet you that this was the insurance people that, like you and me, the carriers calling Sacramento and saying, "Listen, you've put a lot of restrictions on us in the past, but we need an emergency certification program so that we can get adjusters out taking pictures of property, meeting with our customers so that we can get their stuff into the claims office and start the process."
And so this is a liberal doing something that doesn't look liberal, but he's doing it because I think that he has no other choice. The carriers are screaming.
Yeah, so you think so, Pat? We're on the same page, but you're asking a very, very good question. At a time like this, I think they're actually making the right choice. They have to do this right now at a time like this.
They're making the right choice. Has insurance—the concept of insurance, whether it's home insurance, whether it's auto insurance, whether it's health insurance, whether it's life insurance—has it ever been this much on the forefront?
A month ago, the number one story in the world was Luigi M about the concept and the situation going on. You're making a very good point. Now homeowners insurance—yeah, I'll say this.
I see so many people that have car insurance, but they don't have life insurance. I see people that have renters insurance, but they don't have disability insurance. The number one asset in your life is not your car. It's not your house. It's not your business. It's you.
So this is why I think people are so wound up about what's going on. The good thing with insurance—here's a good thing with insurance, specifically life insurance—not a lot of other stuff.
I've been in insurance for 25 years. I can tell you how many times the death benefit wasn't paid out. And each time the death benefit wasn't paid out, there was something to do with the beneficiary that they had.
Somebody else paid for them. Somebody else did the blood for them. There was some kind of first two years in contestability clause where something happened. I guarantee you it's very few, but it's very few. They pay out. They pay out.
Now when it comes on to auto insurance and other stuff, those guys will do anything and everything they can to not pay out. So many people have bad experiences of only getting $3,000 on a car being totaled.
Like, what are you talking about? It's $22,000. What am I going to do with $3,000? It's very different with life than auto, than health, than homeowners. We have to isolate all these very, very—in my opinion, humble opinion.
I know plenty of life insurance professionals. I don't know too many, like, you know, renters insurance professionals that are professionals. If you're on V, Tim, we like to make predictions, okay?
And we have a lot of fun with predictions. If you watch the podcast, we make predictions. We play the game of predictions. So do you think you're pretty good at making predictions? Do you yourself? You're like, "I'm very good at making predictions."
Well, guess what? We're playing a game, and it's the first 100 days of Donald Trump as president. We're playing this game on VT News with a leaders bulletin, with a contest, with recognition at the end, with prizes at the end.
And here's how it works. Every day, VT News is going to post a prediction for you to make on the website, and you go out there and make the predictions yourself. And by the way, to participate, all you have to do is put your email there. It's free. You don't have to do anything else.
For some of you that want to take advantage of all the features that VT News gives, upgrade. We use VT News for our podcast all the time. And here's how it works. It's starting today.
And the way the scoring system works is the sooner you make the predictions—like Tom is doing it right now—to get the highest scores. Look, he's doing it right now. He's not even waiting for us. Tom's been doing this so fast because he wants to be ahead of everybody.
But we're going to show you how this works. So here's 14 predictions that are officially available on the website. Some of them are going to be funny, some of them are not, and some of them are going to tell you exactly how many points you can get on those if you get them right.
There are more points if you answer faster. So if you want to put a reminder on your phone in the morning, each prediction will be posted on the website at 9:00 a.m. Eastern Standard Time.
So Rob, let's read some of these predictions on VT News from the top to bottom. And Vinnie, Tom, Adam, if you guys want to score your predictions now, you can. Let's go through them.
So number one: How many former presidents do you think will attend Trump's inauguration? Okay, none, one, two, three, or four?
Okay, and if Michelle doesn't show up, it still counts as Obama showing up. So four is everybody shows up, three is one of them doesn't show up, etc., etc.
Okay, V, number two: Trump has stated he has 100 executive orders planned for day one. How many executive orders will Trump execute by the end of January 21st? That's a day after inauguration.
You have the breakdown on how many he's going to do. Go to the next one, Rob. Okay, which Trump cabinet appointed confirmation hearing process will take the longest if they are all confirmed at all?
You can pick and choose which on those are. They're right there. Go to the next one, Rob. What will the state of U.S. border security look like at the end of Trump's first week in office?
It gives you options on what to do. Five: What will happen to Truth Social one month after Trump takes office? Six: Will Trump pardon Snow in the first 100 days?
Seven: Will Trump restart the Keystone Pipeline in the first 100 days? Eight: How many of Trump's cabinet members will change within the first 100 days?
Will Trump once again remove the U.S. from the Paris Climate Accords in his first 100 days? Ten: How will inflation compare on day 100 versus his first day?
Eleven: Will Trump evoke an executive order in his first 100 days to resume construction on the southern border, the wall that he wanted to build?
Twelve: Who will receive executive pardons during Trump's first 100 days? Rob, can you open that one up? Because that's 800 points, and that one you got a few of them right there.
Who do you think is going to get that? Will it be Biden, January 6 rioters, himself, Fauci, Mayorkas, or none of the above? Go to 13. I got two more to go.
Will an incident that creates a security concern happen during Trump's inauguration? And last but not least, will Trump take executive action against TikTok in his first 100 days?
If you are good at—by the way, behind closed doors, I just want to prepare you guys because Tom is an NBA, and the rest of us don't.
Tom's been talking that he's going to kill us in this game because Tom is very good at these types of games. So if you want to join us, we're going to go all the way to the 100th day, which means the 100th day will be 100 days from January 20th.
So it's not going to be done until February, March, April, end of April, okay? Maybe May 1st, and then the winners will have some special surprise and prizes for you guys.
So go to VT News and start posting your predictions now. You do get points the earlier you post. So the second person gets fewer, third fewer, fourth fewer.
And the leaders bulletin will be posted with your name there. Make sure your name is there so we can track you. You will see the leaders bulletin of people with the highest scores on their predictions.
All right, so let's get right into it again. Go to VT News. VT News to become the news tradus. If you enjoy this video and want to watch more videos like this, click here.
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