Friday, September 07, 2007

Socialized Insurance

I know in the past John Stossel has taken aim at the Federal Flood Insurance Program as a boondoggle. One that encourages people in building their houses in hazardous places while saying the aim of the program is to help people.

Well never fear for Congress wants to help those in coastal areas that may be affected by another hurricane. Rep. Gene Taylor[D-MS] has proposed to expand this program to cover wind damage since after Katrina many insurance companies were ruling wind caused water damage as flood damage to avoid paying out.

Well I think Rep. Taylor and Sen. Trent Lott are wrong to push this. After reading this opinion piece on why Taylor's expansion is a good idea, I see the opposite. If there had not been a Federal Flood Insurance Program, then the insurance companies would not have been tempted to shift cost. The downside would have been people paying before Katrina heftier insurance fees for living in flood prone areas. Which would mean there might have been fewer people in the Coastal areas to have been hit by Katrina.

Right now, roughly, 1/3rd of the US population lives in coastal areas or over 100 million people. Now think if this insurance program put forth by the federal government and paid by all tax-payers did not exist, how many of those millions of people would be living in condos on the beach or quaint cottages? Like any socialized program, the National Flood Insurance Program has artificially warped the market for insurance and what do people in Congress propose? To increase the amount of Federal intervention in the insurance market.

As John Stossel says, give me a break!

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