Michigan Should Bail Out Hurricane Victims?
That’s what Congress, Billary, and Obama would like to see happen. From the Wall Street Journal:
As hurricane season begins, Democrats in Congress want to nationalize a chunk of the insurance business that covers major storm-damage claims.
The proposal — backed by giant insurers Allstate Corp. and State Farm Mutual Automobile Insurance Co., as well as Florida lawmakers — focuses on “reinsurance,” the policies bought by insurers themselves to protect against catastrophic losses. The proposal envisions a taxpayer-financed reinsurance program covering all 50 states, which would essentially backstop the giant insurers in case of disaster.
The program could save homeowners roughly $500 apiece in annual premiums in Florida, according to an advocacy group backed by Allstate and State Farm, the largest writers of property insurance in the U.S.
But environmentalists and other critics — including the American Insurance Association, a major trade group — say lower premiums would more likely spur irresponsible coastal development, already a big factor in insurance costs. The program could also shift costs to taxpayers in states with fewer natural-disaster risks.
“This bill makes it a little bit too easy for the state to go to the federal government for a bailout,” said Eric Goldberg, associate general counsel at the American Insurance Association, an insurers’ trade group.
The legislation passed the House with bipartisan support, 258-155, late last year, despite a presidential veto threat. Although a Senate vote is unlikely this year, proponents are trying to make it a litmus-test issue in the presidential race. The two Democratic contenders, Sen. Hillary Clinton of New York and Sen. Barack Obama of Illinois, in their recent visits to Florida — a key swing state — have both voiced support for the plan.
Hey, you know what? If you want to live on the Florida coast then you should pay for protection against hurricanes. If you live in a flood zone, you bear the responsibility. If you live in California and want to build a house where brush fires and mud slides are common, you should pay for your own insurance.
If I want to smoke, I should have to pay higher health insurance premiums and if you refuse to lose weight or work to lower your cholesterol . . . Well, you get the idea.
7 Responses to “Michigan Should Bail Out Hurricane Victims?”
on 02 Jun 2008 at 9:12 am # Quentin
Sounds like “Rotarian Socialism”….
“We believe in Free Enterprise, and keep those subsidies coming!”
Courtesy of “The Probability Broach” by L. Neil Smith.
on 02 Jun 2008 at 10:25 pm # emdfl
I live near the coast in FL - actually the Tampa Bay area about 12 miles from the Gulf. My house has been on the ground since 1923. My insurance went from about $800/year last year to $1800/year this year and that’s for a 2bed1bath wood- framed 900 square-foot house.
I resent like hell paying for these SOB’s that build their F*&^^*% places on a concrete slab on the beach at the low tide mark and then cry when they get blown and washed away.
I’m pretty sure that my outstanding mortage balance is low enough that I can tell the insurance company and the bank to kiss-off. I’m going to look into this when I get back to the states.
on 02 Jun 2008 at 11:04 pm # Mike G
If the Feds are going to be responsible for picking up the costs of some natural disasters, then they should be fair and pick up the costs of all natural disasters. That includes that natural disaster that sweeps across the northern tier of the country every year called Winter. This disaster strikes with much more regularity and often more damage than your typical hurricane and instead of coming and leaving in a day it comes and grinds away for several months. Snow packed on my roof causes ice damming and a leaky roof, call the Feds. Mother nature dump 24 inches of white stuff on my towns roads, ask the Feds for reimbursement for the cost of the cleanup. When winter finally leaves my roads are cracked, buckled and potholed, why should my local taxes pay for repairs when the Feds and pony up the cash. Politicians in northern states are missing out on this gravy train big time.
on 03 Jun 2008 at 1:21 pm # MAJ Mike
I’m not so sure that inland Texas (I live in San Antonio) should even assist with damages to coastal Texas.
When I shopped for a new home, I made sure that the new house was not located in a flood plain. If I can do that, why can’t others?
You want to live on the gulf coast and risk destruction by hurricane, why should i support your bad decisions?
on 03 Jun 2008 at 3:46 pm # McThag
I live in Florida and agree that Michigan should not be responsible for my hurricane insurance any more than I should be held accountable for their snow removal.
Since they already pay for their own snow, I think I should extend the courtesy in return.
on 04 Jun 2008 at 5:57 pm # Peet
I mentioned this to the Mrs. First words out of her mouth were to the effect (not an exact quote) “So what? It’s just like flood insurance.”
Sadly I had no comeback. Are they really the same? I know jack-stuff (to put it politely) about flood insurance…
Anyone? Parallel? Same? Completely different?
Peet
on 09 Jun 2008 at 1:06 am # J'hn1
One of the big problems is that the insurance companies used to keep catastrophic payout funds set aside. So much each year added to the pot if no catastrophe occurred.
Then the IRS changed the rules.
Now, if an insurance company sets aside money against later needs, the IRS screams “MINE” and taxes the “evil profits”.
Every year. kind of crippling the normal benefit of compounding interest.
What is needed is some form of tax exempt category that once committed cannot be withdrawn against except for major catastrophe. Let each state set its own thresholds (% of insured valuation set aside and triggering damage value) and subdivide by county.
When the threshold is reached, that companies special category (county)funds are used first, to depletion, then statewide catastrophe funds (if needed) then any umbrella policies that the insurance company themselves might have. If a company leaves the state, the catastrophe funds are divided up among the insurance companies picking up that insurer’s former clients (keeping county accounts straight).
The government started the mess by changing the tax laws, but reforming them is as far as government “help” should go.