San Friedman has a nice summary of simmering political circus surrounding proposals to add wind protection to the NFIP—a circus which bizarrely sees Bob Hunter allied with the insurance industry for a change.
I’ll suggest interested readers check out Friedman’s article if they desire to be brought up to speed.
However, there is one interesting bit of thought that has triggered a line of rambling in my mind.
But I doubt the NFIP is the solution rather than a big part of the problem. An editorial in today’s “Roanoke Times” summed it up best:
“Everything bad about the National Flood Insurance Program—it encourages development in flood-prone areas, pays homeowners to repeatedly rebuild where they should not, and forces inland taxpayers to assume risk taken by often wealthy homeowners who choose to live near or on the coast—would be magnified by a proposal to have the program cover wind damage.”
The editorial adds pointedly: “This is a rare time when corporate interests and public interests coincide…[W]hy should the federal government go where private insurers fear to tread?”
Maybe I’m’ misremembering, but I thought that part of the justification for the NFIP was that it could be a vehicle to head off future flood disasters. In return for the feds making flood cover available, local communities would be obliged to take measures to head off future flood losses, by zoning, flood control programs…essentially measures that would eventually lead to fewer properties being in harm’s way, and therefore would require less federal financial support to aid in post-disaster recovery.
If the “prevention of future loss” element of the NFIP were actually effective, I wonder if the program’s expansion into other perils would necessarily be a bad thing. Yes, I prefer free-market solutions, but having state intervention to discourage future irresponsible development in storm-prone areas isn’t necessarily objectionable to me. If government-provided cat insurance is the carrot necessary to make the stick effective…I wouldn’t necessarily hate that.
Of course, the catch to such thinking is that the NFIP hasn’t been as effective in getting folks out of harm’s way as perhaps is needed. Unless that lack of efficacy is addressed, expansion would seem to be a bad, if not idiotic, idea.
