Washington Warming to National Disaster Plan Idea
National News • March 16, 2007
A proposal for a national disaster plan to backup private hurricane and flood insurance markets appears to be gaining momentum in Washington.
This week, Rep. Barney Frank, D-Mass., chairman of the ...
Insurance Journal is not responsible for the content of the message below.
Subject: RE: RE: We're lucky to have Barney Frank in Congress
Posted On: March 16, 2007, 1:16 pm CDT
Posted By: Mark
Comment:
Jeff,
I agree with your opening comment; there are risks that the private insurance industry can not cover without charging premiums higher than anyone would be willing to pay. The higher the risk; the higher the premium. Many would say that for an insurance company to charge an actuarially sound rate for the risk they insure is tantamount to "greed".
As far as government intervention, let's be reminded of why the NFIP was created in the first place. We all agree that the private insurance industry can not insure the risk of flood due to the catastrophic nature of the peril, and the extremely high rates that would have to be charged.
Prior to the NFIP, when catastrophic flooding occurred, the federal government would be called upon to provide financial assistance to those who suffered losses. The cost of this federal assistance is, of course, paid by all American taxpayers.
The NFIP was created so that those who continued to live in flood prone areas, even after repeated flood losses, would bear more of the cost for future losses through premiums for federal flood insurance. These premiums are artificially low so that the coverage would be affordable. Taxpayers make up the difference when it comes time to pay claims. You help out your fellow citzens every time a flood claim is paid.
As for all the "move away" folks, I don't believe they/we are talking about people moving away from the coast, as long as they can afford to responsibly insure the property they own.
Those who should "move away" are the socialist minded, "government will cure all" people. And I would hope they would move far, far away.
Subject: RE: RE: We're lucky to have Barney Frank in Congress
I agree with your opening comment; there are risks that the private insurance industry can not cover without charging premiums higher than anyone would be willing to pay. The higher the risk; the higher the premium. Many would say that for an insurance company to charge an actuarially sound rate for the risk they insure is tantamount to "greed".
As far as government intervention, let's be reminded of why the NFIP was created in the first place. We all agree that the private insurance industry can not insure the risk of flood due to the catastrophic nature of the peril, and the extremely high rates that would have to be charged.
Prior to the NFIP, when catastrophic flooding occurred, the federal government would be called upon to provide financial assistance to those who suffered losses. The cost of this federal assistance is, of course, paid by all American taxpayers.
The NFIP was created so that those who continued to live in flood prone areas, even after repeated flood losses, would bear more of the cost for future losses through premiums for federal flood insurance. These premiums are artificially low so that the coverage would be affordable. Taxpayers make up the difference when it comes time to pay claims. You help out your fellow citzens every time a flood claim is paid.
As for all the "move away" folks, I don't believe they/we are talking about people moving away from the coast, as long as they can afford to responsibly insure the property they own.
Those who should "move away" are the socialist minded, "government will cure all" people. And I would hope they would move far, far away.