Interesting, highly relevant. What happens when states force home insurers to do things that aren't in their interest (like premium caps, prohibitions of underwriting conditions) etc. Hartley et al: effects of Fair Access to Insurance Requirements in the 1960s. 1/

The problem: it was hard to get home insurance in some neighborhoods, esp poor, black. The usual "we have a hammer" solution: FAIR plans banned insurers from using property information and risks to set premia. What could go wrong? And we know better now, right? 2/

Incredible case of unintended consequences if true: guaranteed insurance meant you could insure properties for way more than their worth, and then let them burn down. 3/

FAIR plans were implemented in 26 states: - prohibited use of environmental and neighborhood factors in underwriting (!!) - Mandary insurer partiicpation - Payout requirements which were well above market values in declining neighborhoods 4/

Paper is a triple-difference design, comparing: - pre/post FAIR implementation - Neighborhoods with/without likely FAIR access - Participating / non-participating states Seems reasonable. 5/

Results are 🔥🔥 FAIR-insured census tracts lost hundreds of housing units between 1960–80, or *about 29.8% the 1950 stock*. This should be the textbook case for moral hazard, the aggregate losses here are incredible, not to mention effects on neighborhoods. 6/

These were declining neighborhoods already (which is why their insured value was >> market value). Mandating generous insurance for these properties accelerated their decline by making the insurance payout way more valuable thatn staying and making it work. 7/