Sadly, that time seems to have passed.
Insurance, like every other business, is pretty simple. A person wants to make money, so they look around for a need not being met. Oh, there's a bunch of people with houses that could burn down, and they are expensive to replace, and most people don't have that much money sitting around and can't afford such a big loss. But only a few burn down.
IDEA!!! We offer to "insure" people against such an event. To make money, I have a simple job. For each house I insure, I calculate the replacement cost for every possible damage, and the likelyhood of that damage. That gives me a yearly "cost" associated with that house. That's what I charge for that house, plus a fee so I make money.
I do that for every house -- so every house pays a different amount, based on my own decision as to what the risk is for that house.
BTW, I'm not the only bright person in the world, there are thousands of others who could do the same thing. So a smart homeowner is talking to all of them, finding the person who is willing to take the greatest risk for their business by offering the cheapest insurance.
There is no "spreading of risk" in the sense you describe. The "spread of risk" is over TIME. But that's a small fault, because obviously if I insure thousands of homes because I've been a really good salesperson, the risk spread over time translates into losses every year, spread over the houses -- assuming I didn't do something really stupid, like sell policies to a thousand people who all lived right next door to one another. If I did, it's like investing all your money in one stock -- great if the stock goes up, disastrous if the company goes bankrupt.
But I didn't NEED to sell a thousand policies for this to work -- I merely needed to have, in my pocket, enough money to pay out on whatever I was insuring, whenever the insured risks happened to be realised.
If you want to get picky, you would note that I've really described how you budget replacement costs for capital with known failure but unknown occurance of failure -- in fact a house could go forever without EVER having an insured loss.
But the rule stands -- I valued each house based on that risk, and I made money based on that house matching it's risk profile. The fact is that I needed to insure only one house if I get lucky, but if I don't I'll be OK if I insured a lot of houses.
In any case, the amount I charge for a house is NEVER, I repeat NEVER, based on how many other houses I insure, or how much I charged for those houses. No matter how many houses I have insured, the NEXT HOUSE I insure is charged exactly what my formula dictates for THAT HOUSE.
The only reason this doesn't happen is because of regulation. Some lawmaker decided it wasn't "fair" for people to get charged different amounts, or maybe some unscrupulous businessmen used their business to settle personal scores (which in a perfect world would just mean others would take their business from them).
So now the state starts regulating how you can charge people for stuff, and next thing you know some people are paying more than they should so others can pay less than they should, and the more you make that happen the more pressure there is on the insurance companies to falsify or make up stuff so they can insure more of the people forced to pay more, and fewer of the people allowed to pay less.
Maybe the government will do a stupid thing like set up an "insurer of last resort", for which every insurance company pays a fixed fee based on the NUMBER of people insured. Now it's like the OK Corrall.
Every insurer tries to dump their worst houses into the common pool, while cherry-picking the best houses, thus driving up their profits. What a STUPID WAY TO RUN A STATE.
And then people blame the insurance companies, who are in fact doing exactly what the law seems to encourage them to do.
Funny, you can almost interchange 'people' or 'person' for 'house' or 'home' and describe the stupidities of government regulated health/medical insurance similarly.
It's amazing to me that even here at Free Republic, it is hard to discuss issues of free markets without a significant percentage clamoring for 'government protection' (read: It's inconvenient for me to pay for it, so let's pass the cost onto others).
It's as if anyone that makes a profit is 'bad' and everyone 'deserves' something they want for what they want to pay for it, regardless of it's TRUE cost. It's just plain sad.
I don't think you understand the situation at all.
In fact, I'm sure you don't.
A significant number of Florida residents have had their homeowners/property insurance nonrenewed and the new premiums are 2, 3, 4 times last year's premium...when they can get insurance.
Property that isn't homesteaded or primary residence may have premiums that cannot reasonably be met.
Those that own rental property may not find insurance at all.
Now you have thousands and thousands of residents who cannot insure their property and cannot sell it.
This isn't one or two people.
Mine is between double and triple but I can handle it, but I'll probably sell and move when I can.
And I'm far from the only one.
Now tell me that the state doesn't face a problem.