The cherry picking is usually a compromise to keep the companies operating in the state at all. If the state says a company must offer coverage for all perils for the entire state or leave entirely, it doesn’t take an underwriter to know Florida is a bad bet. There are similar carve outs for windstorm coverage in other gulf coast states, and I think for wildfire coverage on the west coast.
The cherry picking is usually a compromise to keep the companies operating in the state at all. If the state says a company must offer coverage for all perils for the entire state or leave entirely, it doesn’t take an underwriter to know Florida is a bad bet. There are similar carve outs for windstorm coverage in other gulf coast states, and I think for wildfire coverage on the west coast.
Edit: I couldn’t find anything about a single peril state plan for California, but this article describes some of the recent insurance issues in the state: https://apnews.com/article/california-home-insurance-wildfire-risk-premiums-047bdfa514ce93dac83c82735a15554a