Seen in Insurance Journal:
Despite promising changes, Congress has shown little enthusiasm for taking the unpopular steps that experts say are necessary to fix the nation’s main flood insurance program.
Recent flooding in the Midwest has brought the issue back to the forefront. Hurricanes Katrina and Rita, back-to-back storms in 2005, dispelled any notion that the insurance program was self-sustaining. They threw it roughly $20 billion into debt and called attention to major structural flaws.
Nearly everyone acknowledges it cannot pay off the debt, much less pay for losses in future storms. But so far, Congress has done little more than raise the program’s borrowing limit, essentially handing taxpayers a series of shaky IOUs.[...]
“The early rhetoric was, ‘We’re going to fix this. We’re not going to tolerate this continued exposure of taxpayers to unlimited subsidies,’” said Robert Hunter, a former director of the flood program who now oversees insurance issues for the Consumer Federation of America. “They’ve done nothing to fix it. It’s just unbelievable.”
Imagine that—the notion that a federal insurance program shouldn’t be a vehicle to subsidize those who have the misfortune and/or choose to live in harm’s way.
I wonder if that concept can be carried over to proposals to federalize hurricane risk.