It seems the logical approach to handling house in a wildfire prone area orvavflood plain would be to simply charge stupid high rates or not offer the insurance at all.
Which is exactly what insurance companies do. It is usually very difficult to get flood insurance in a flood plain. Rather than taking that as a clue that people shouldn't live there, all too often, the government steps in to subsidise the risk. I don't want to over simplify, things are complicated and sometimes it is appropriate to subsidise such risk, but sometimes it is not.
Which is exactly what insurance companies do. It is usually very difficult to get flood insurance in a flood plain. Rather than taking that as a clue that people shouldn't live there, all too often, the government steps in to subsidise the risk. I don't want to over simplify, things are complicated and sometimes it is appropriate to subsidise such risk, but sometimes it is not.