The article is from Wired which I find humorous in that it’s about flooding. Something that generally doesn’t mix well with things that are wired. But anyway, the link to the article is here. And the short summary is this, flood insurance is a total joke and it has been for a really long time. Of course, it’s run by a federal agency who just now has decided to try to make it effective. Their current solution involves throwing yet more taxpayer money at a problem that nobody can predict.
There’s a reason private insurance companies won’t touch flood insurance. It’s a pretty simple reason too. Flood insurance isn’t profitable except in areas where nobody would ever buy it.
So here we are again, our government doesn’t really trust capitalism so instead of actually giving it a chance, they decided to stick their noses into the game by creating a tax based insurance policy that is now wildly overdrawn and losing money hand over fist every day. Perfect. Now we have a huge gap to fill, and the solution – as always – will be to ask everyone to put more money into the pot even though there’s absolutely no evidence that the next major storm won’t be even more expensive and thus waste even more money.
Wait…did I say waste? Am I suggesting that saving someone’s house in the bayou is a waste? Well, yeah, sort of. Life is full of risks. Building a home or starting a business in a location that is below sea level is one such risk. Does it mean you shouldn’t do it? No, feel free, but also, make sure to be ready to build a second home once every generation or so because your place is going to flood. Not if, but when. That’s the way water works. And it shouldn’t be the government’s job to rebuild your home. Because “the government” is NOT paying for it. The guy who pays taxes and lives above sea level is paying for a service he won’t ever use. Of course, if he did need to use it, he couldn’t because FEMA spent all the money already.
Too harsh? Maybe. An opinion I can have because I’ve never had a loved one affected by a flood? Probably. Of course, it could also be that I just really believe that insurance companies could make this work if the federal government would get out of the way. Would the insurance be cost prohibitive? Maybe. Perhaps not. Isn’t it possible that with slick advertising, State Farm can convince the guy in New Mexico to spend just a little on flood insurance by showing him video of floods in Arizona? And if they can sell enough in the markets that are the least likely to have payouts, might there be enough to cover those other markets? Again, maybe.
But frankly, at this point, I’d much prefer a maybe over a definite when the definite is that more good money is going to be thrown away to a federal agency that simply doesn’t work.