Yet if the federal government is willing to pick up the tab for predictable (if irregular) disasters, that only encourages people to move to dangerous areas. And in fact, six of the 11 at-risk states are growing more swiftly than the rest of the nation. More people results in more property at risk, and predictably the cost of natural disasters has steadily increased.
The federal government shouldn’t create a fund that socializes disasters by making those who are at little risk kick in for those who are at great risk. Washington should avoid catastrophic coverage unless a disaster is nationally catastrophic.
Instead, the country should move back toward a local disaster response frame¬work, meaning states and the people who choose to live in those states should cover the cost of disasters.
Before they’re eligible for federal aid, states should be required to have met some common-sense criteria. For example, each state should be forced to eliminate caps on what insurance companies may charge customers. That would allow insurance companies to build up funds so they won’t lose money when (not if) a hurricane strikes.
Customers would have to pay more for insurance, but would actually end up with more choices. State Farm, for example, has decided to stop offering coverage in Florida because the state caps its rates too low.
Also, states should prohibit rebuilding in disaster-prone areas. It makes no sense to rebuild a beach house that’s been destroyed by a hurricane. After all, it’s only a matter of time before another hurricane will blow in and knock it down again. Better to move inland and rebuild on safer ground.
Violent words should be reserved for violent acts, not political tiffs. Likewise, if almost every event is called a “disaster,” then we’ve lost the meaning of that word, too. It’s time for the federal government to get out of the insurance business as much as possible. The private insurance market, not federal taxpayers, should provide protection against acts of nature.