Disaster Insurance


Growing concerns about the vulnerability of Florida and other parts of the U.S. southeastern coast to hurricanes and other storms have created the perception of an "insurance crisis" and generated new calls for a major federal government intervention in disaster insurance markets. A variety of factors are contributing to growing coastal hazards, including the commencement of a new cycle of intense hurricane activity, massive development in coastal areas, and (possibly) global warming. Proponents of federal intervention contend that the risks involved are too great and too unpredictable for the private insurance industry and state insurance funds to handle without federal government support. On the other hand, federal intervention might lead to artificially low insurance rates, possibly encouraging new development in hazardous areas.

The Georgetown Environmental Law & Policy Institute has published a report on coastal disaster insurance, entitled Coastal Disaster Insurance in the Era of Global Warming: The Case for Relying on the Private Market. The report examines the various proposals before Congress for the federal government to take on an expanded role in providing insurance to property owners threatened by hurricanes and other coastal storms. It concludes that most of the pending proposals are misguided and, to the extent possible, the United States should stay out of the insurance business and allow private companies to provide disaster coverage that reflects its true market cost.

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