Stupid Bail-Out du Jour
From the WSJ:
Taxpayers May Face Hurricane Tab
Congressional Democrats want to nationalize a chunk of the insurance business that covers major storm-damage claims, which would essentially backstop the giant insurers in case of disaster. Critics say states with little or no hurricane risk could end up footing the bill for damage in flood-prone areas...
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.
So here we go. Shift the costs of risky construction in hurricane alley to those people who choose not to engage in risky behavior -- so risky that even the insurance companies want little or nothing to do without.
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