Why does car insurance pricing vary so much by state?

For a specific state or region, the determinants of the average cost of car insurance include population density, car theft rate, age distribution and natural catastrophes, among others. In a region with more senior drivers (e.g., South Florida), the average premium would be higher, ceteris paribus. 

Similarly, more crowded roads (high population density) and a higher car theft rate would also lead to a higher premium, as would more natural catastrophes and a preference for cars of higher value. Insurance is a pooling and cross-subsidizing system. Low-risk insureds subsidize high-risk insureds. Due to this cross-subsidization, safe drivers (with no accidents or claims) still pay a higher base premium in high-risk than low-risk regions.