JUNE 20, 2017 1:05PM
Towards a Private Flood Insurance Market
By IKE BRANNON
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The federal-government-managed National Flood Insurance Program (NFIP) is $25 billion in debt, stokes moral hazard, and entails a regressive wealth transfer that favors coastal areas. The NFIP is set to expire at the end of September, offering policymakers an important chance to rethink the program.
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The systemic underpricing of insurance causes moral hazard, by masking the cost of flood risk and encouraging overdevelopment in flood-prone areas. Because the average home in the NFIP is much more valuable than an average American home, the program is regressive on the whole. And since a disproportionate number of properties in the NFIP are on the southeastern coast, wealth is transferred from the rest of the country to homeowners near the coast in those states.
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Like “social security”, NFIP is another wealth transfer scheme. From across the nation to SouthEastern US! From the poor working slobs to the costal rich.
I’ve always had “a bone in my throat” about this program.
(1) The Pepuls Republik of Nu Jerzee has some perennial areas that flood (i.e., Bound Brook; Little River; Mill Basin). Note the names for a clue! Yet, time after time, “flood insurance” pays these poor folks to rebuild in the exact same place? — — “Insanity: doing the same thing over and over again and expecting different results.” — attributed to Einstein — — After the first one, it should be “uninsurable”.
(2) The “flood insurance” and Federal flood “relief” is a giant boondoggle of fraud and abuse.
(3) Since “rich people” are more likely to own “ocean front real estate”, why should the Taxpayer insure them? They can afford their OWN insurance. Again, how many times do we have to pay to rebuild someone’s mansion?
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