Zach Scruggs’ latest blog post attempts to support the proposal to include wind coverage in the National Flood Insurance Program. That attempt includes this gem:
This bill will benefit the entire United States. Over 50% of all Americans live within 50 miles of water, the area most susceptible to hurricane force winds. This includes our largest cities: New York, Philadelphia, Miami, Houston, Tampa-St. Petersburg, Los Angeles, and Washington D.C. Any of these cities are vulnerable to a catastrophic hurricane like Katrina at any time. Indeed, one of the largest hurricanes in our history hit Long Island New York in 1938. If that same hurricane came today, New York City would be devastated worse than New Orleans was after Katrina.
The arguments made by the insurance industry and its allies in Congress that this bill would just be a federal “subsidy” and would encourage people to live in “risky” coastal areas are completely bogus. Over 50 percent of all Americans live in “high risk” coastal areas right now, and none of them can get real hurricane wind insurance. Are they all supposed to move 60 miles inland?
A couple of points:
- Ummmm…. I thought that the cat risk Los Angeles faced was something a little different than that of a hurricane. You’ve probably heard of references to “the big one”, right? and, hasn’t the state of California worked to ensure that there is a market to address risk from that catastrophe?.
- I hate to point out that I happen to live in a “high risk” coastal insurance area, at least by his definition. While I do pay more for my homeowners insurance because of living in harm’s way, coverage is available to me.
It seems to me, instead, that there are problems in certain parts of the country as some large insurers come to terms with just how much aggregation of risk they actually do face, and many regulators are reacting in such a way as to create an inhospitable business climate, creating a disincentive from any new insurers who might wish to take advantage of a (albeit risky) business opportunity.
- While no one wants to see families forced from their homes due to lack of available insurance coverage, isn’t there something to be said for not creating artificial incentives to increase development in risk-prone areas, or to not subsidizing developers’ apparent desire to cover every square inch of beachfront with condos?
I can certainly agree that something should be done on the Gulf and Atlantic coasts to address concurrent causation issues, as well as gaps between NFIP coverage and industry-standard wind cover. I can also agree that the current property insurance marketplace along the Atlantic and Gulf coasts is a mess, and perhaps a possible solution could involve a multi-state or federal element.
But dude, lay off with the sensationalism!