“It’s a financial storm without a shelter in sight,” reporter Mark Strassmann blustered on the July 6 “Evening News.” “Up and down its coast, Florida has an insurance crisis,” Strassmann alarmed viewers.
The CBS correspondent criticized premium increases by private insurers and high deductibles by Florida’s state-run Citizens Property Insurance Corporation. But he left out any conservative critics who would argue that federal flood insurance subsidies have brought on the “crisis” – as homeowners accustomed to artificially cheap flood insurance are now facing market-driven prices for privately offered homeowner’s insurance.
“We don’t see any end; it’s just going to get worse and worse,” Florida homeowner Noel Steinberg complained to Strassmann. The bottom line, the CBS correspondent concluded: “no one, not the feds, not the state, has a real solution.”
To the contrary, conservative think tanks like the Washington, D.C.-based Heritage Foundation have offered a solution: change the way the federal government provides flood insurance so that people don’t have an incentive to live in hurricane-prone areas.
“As millions of Americans continue to relocate to flood-prone areas and property values in those areas continue to rise, NFIP will face much higher annual claims then it has in the past,” research fellow David John argued in a Dec. 13, 2005, article on reforming the National Flood Insurance Program (NFIP).
John called for four steps to prevent future taxpayer bailouts of the NFIP and to discourage development in hurricane-prone areas. Among his suggestions, John called for heavier insurance premiums for rental houses in flood zones and for ending federal subsidies for older homes.
“Especially in coastal areas, artificially low flood insurance premiums are subsidies that encourage people to live where natural disasters are more likely to occur. While people should be allowed to live where they please, they should also bear the risk that their choice may subject them to,” John argued.