Image via Wikipedia With Hurricane Gustav thankfully having passed through and done it's worst, it's looking like the last few months of the hurricane season are going to be quite active. As of this writing there are 4 more storms forming in the Atlantic, Hanna, Ike, Josephine and Karina. The current estimate of insurable losses from the damage caused by Gustav are currently between $2 and $4.5 billion. I mention the insured loss estimate because currently there is a move afoot by the federal government to expand government control of disaster relief and also increased federal disaster insurance coverage. With more federal involvement and more federal dollars spent for disaster coverage, take a look again at the numbers I previously mentioned regarding estimated insurable losses from Hurricane Gustav, came ashore as a Cat 2 and quickly became a Cat 1, and extrapolate the numbers of a busy hurricane season. The private insurance market has done the job it is supposed to do in the past, notwithstanding some insurance coverage issues that arose after Katrina, which were blown way out of proportion in the media. As consumers we already pay our share of the insurance load based upon actuarial tables in use by insurance companies. The main question is, do we want to pay more for disaster losses, in the form of increased taxes, for states that are located in disaster prone areas. Are we encouraging increased development in these areas with more federal backstops? Food for thought.
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Image via Wikipedia With Hurricane Gustav thankfully having passed through and done it's worst, it's looking like the last few months of the hurricane season are going to be quite active. As of this writing there are 4 more storms forming in the Atlantic, Hanna, Ike, Josephine and Karina. The current estimate of insurable losses from the damage caused by Gustav are currently between $2 and $4.5 billion. I mention the insured loss estimate because currently there is a move afoot by the federal government to expand government control of disaster relief and also increased federal disaster insurance coverage. With more federal involvement and more federal dollars spent for disaster coverage, take a look again at the numbers I previously mentioned regarding estimated insurable losses from Hurricane Gustav, came ashore as a Cat 2 and quickly became a Cat 1, and extrapolate the numbers of a busy hurricane season. The private insurance market has done the job it is supposed to do in the past, notwithstanding some insurance coverage issues that arose after Katrina, which were blown way out of proportion in the media. As consumers we already pay our share of the insurance load based upon actuarial tables in use by insurance companies. The main question is, do we want to pay more for disaster losses, in the form of increased taxes, for states that are located in disaster prone areas. Are we encouraging increased development in these areas with more federal backstops? Food for thought.
