Image via WikipediaA recent article in the Philadelphia Inquirer, link above, highlighted the fact that the National Flood Insurance Program is out of money. Congress has apparently been looking for ways to fix the program the past couple of years, but in the absence of a fix, recently voted to extend the program as is through March 6th of next year. The article went on to say that the program is currently $17.3 billion in debt to the U.S. Treasury, which doesn't include the bills coming due for Hurricanes Gustav, Hanna and Ike, assuming the rest of the hurricane season passes uneventfully. Once losses from the aforementioned hurricanes are added to the total, the total taxpayer bill is in excess of $20 billion. You might recall a previous post here dated September 3rd, 2008, discussing increasing federal involvement covering flood related hazards on the coasts. As described above, the more the government is involved, the more the U.S. taxpayer has to ante up to cover the expenses. Private insurers have to set aside money to pay claims, called reserves, which the government doesn't do, instead relying on the largesse of the U.S. taxpayer. Private insurers are set up to come up with programs to cover specific perils, price them accordingly, and pay covered claims. I'm not even going into detail about how the rest of the country is subsidizing those of us who have chosen to live in a coastal area and are required to purchase flood insurance. Just some food for thought.
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Image via WikipediaA recent article in the Philadelphia Inquirer, link above, highlighted the fact that the National Flood Insurance Program is out of money. Congress has apparently been looking for ways to fix the program the past couple of years, but in the absence of a fix, recently voted to extend the program as is through March 6th of next year. The article went on to say that the program is currently $17.3 billion in debt to the U.S. Treasury, which doesn't include the bills coming due for Hurricanes Gustav, Hanna and Ike, assuming the rest of the hurricane season passes uneventfully. Once losses from the aforementioned hurricanes are added to the total, the total taxpayer bill is in excess of $20 billion. You might recall a previous post here dated September 3rd, 2008, discussing increasing federal involvement covering flood related hazards on the coasts. As described above, the more the government is involved, the more the U.S. taxpayer has to ante up to cover the expenses. Private insurers have to set aside money to pay claims, called reserves, which the government doesn't do, instead relying on the largesse of the U.S. taxpayer. Private insurers are set up to come up with programs to cover specific perils, price them accordingly, and pay covered claims. I'm not even going into detail about how the rest of the country is subsidizing those of us who have chosen to live in a coastal area and are required to purchase flood insurance. Just some food for thought.
