If you believe that insurance is still profitable at the rates where other insurers leave the market, the rational response is to start your own insurance company. Run the numbers and prepare a presentation to investors; if your numbers are rational and convincing, you can capture the market for yourself and reap the profits.
For the consumer insurer its more like looking at a commission and guessing whether it will go up again as other market participants decide what to do.
the home insurance industry in California changed dramatically with the 2017 summer fire season. The numbers are about "billion" in claims. (edit) substantial destruction of buildings of a major city Santa Rosa. At the same time, price escalation of homes was in full swing. Some houses experience a paper-value growth of more than ten percent a year, on top of high prices. The combination is fatal to the stable insurance industry.
No party is innocent on this.. all players are aggressively padding their positions adversarially, including local government. Less than half the burned homes were rebuilt, four years later IIR.
ps- a recent study claims that about fifteen percent of residential homes are under extreme fire risk in California now, out of maybe 1.5 million structures... roughly, depending on definitions.
Some of your other statements are exaggerated. You say a third of Santa Rosa burned in 2017 but it was more like 3% of the dwellings in that city. The Census states that Santa Rosa has gained net dwellings in the last 5 and 10 years, so Santa Rosa is not another Paradise.
ps- I recommend this site.. https://ccst.us/reports/the-costs-of-wildfire-in-california/
See page 63 of: https://www.energy.ca.gov/sites/default/files/2019-12/Forest...
"In terms of financial performance, admitted insurers in the Homeowners Multiple Peril line broke even in terms of combined underwriting profit between 2001 and 2017. Results for the Fire line were better, with the combined ratio well below 100 percent over the same period. The industry was profitable when investment returns were considered; however, insurers’ experience between 2001 and 2017 illustrates how a particularly bad wildfire season can wipe out many years of underwriting profits."