Nation Bailout Nation—Should the Government Step in to Insure Disaster-stricken Areas? | | Merlin Law Group

A recent article in the Duke Law Journal stated that the current property insurance market cannot cover high-risk areas, and the government needs to step in. This article shows that the situation is similar to the problem of national health insurance and wants to respond in the same way. Here is a preview of Improving Homeowner’s Disaster Insurance Through Federal Intervention: Lessons from the Affordable Care Act:

One of the major impacts of climate change in recent years has been the increase in the number and severity of natural disasters, even in areas that are not known to be prone to natural disasters. These disasters have destroyed untold amounts of property. Often, the cost of rebuilding a home is underestimated by private insurance companies, but many homeowners have limited insurance coverage for disaster-related damage. In addition, in areas where natural disasters are on the rise, insurance companies have found it no longer profitable to offer large sums without paying sky highs, which leaves many homeowners without access to cash. This notice argues that this requires government action. Specifically, it compares home ownership to pre-existing health conditions as defined by the Affordable Care Act. Using the lessons here as an example, the Declaration proposes a federal law requiring all homeowners to purchase natural disaster insurance and says that such a policy would be made possible through the taxing power of Congress. In addition, the Notice argues that the proposed measures, such as loan repayment and subsidized insurance, make it better than the insurance that was previously tested.

The idea that a person’s health – which cannot be sold or exchanged for another – is quite similar to the ownership of a house, which naturally includes the ability to pay for the same property and can be sold or exchanged, is just a little jump. However, at this time, we have several government-sponsored insurance programs, including a national flood insurance program.

Currently, we are facing significant resistance from the private insurance market to protect fire zones, hurricane zones, flood zones, hurricane zones, and earthquake zones. The collapse of the private insurance market has some offering alternatives, including government-sponsored programs to fill the gaps.

This article argues for the need for government action and shows that the national insurance program provides support to do so. But, it goes much further:

This knowledge lays the foundation for such an analysis. Specifically, it opposes a new approach to government action, which achieves greater protection and accident prevention at a lower cost. This new model will create a stable basis on which the federal government provides large sums of money for natural disasters as a consideration of public liability. This action is not limited to property damage caused by wildfires; on the contrary, it will include all losses related to disasters so that the government can benefit from the distribution of international risks as an insurance provider.

Part 1 introduces insurance in general, and discusses how it works and why risk assessment related to disaster insurance is closely related to environmental justice. This section also examines current issues in the California legislature, showing that the problems in the homeowner’s insurance market are far from the problems of the past. Examining the emergency laws after Hurricane Katrina and the ones already established by the ACA, this Section finally tells the next story of how the United States has failed to respond to insurance crises in the past and what needs to be done in the future.

Part II serves three purposes. First, it discusses the government policies that affect the insurance industry. Second, it addresses important questions about the right of the federal government to intervene in the homeowner’s insurance market. Third, it provides an excellent framework for federal intervention in the homeowner’s insurance market. This last section ends with the permanent intervention of the federal government which provides disaster insurance through taxes on the houses. Such taxes support the use of global risk strategies, ultimately reducing the financial burden associated with natural disasters for homeowners, insurance companies, and countries themselves.

The Law Journal note is just an idea. It is not written by a government or insurance wonk. I found his statistics and concerns to be worthwhile. I am not sure how to solve this problem. However, this case is a useful lesson for those involved in the insurance market who are leaving disaster areas.

Thought of the Day

The problem with socialism is that eventually you run out of other people’s money.
—Margaret Thatcher