Lazarus Austin is a junior majoring in history. He can be contacted at [email protected]. Recently, Coastal senators have worked together to hold a Senate bill that would continue the National Flood Insurance Program (NFIP). The senators, who include those from Mississippi, hope to amend the bill to include wind damage. The House already passed such a bill with the wind coverage added, thanks in large part to Rep. Gene Taylor.
The NFIP was a program started back in the ’60s to provide flood insurance for those on the Coast; at the time, insurance companies were not providing flood insurance. Currently, there is a plethora of insurance companies that have either flood insurance, wind insurance or both. The problem is they are unaffordable for most citizens.
Moreover, after Katrina, insurance companies were the center of a great deal of controversy after they passed the yoke onto the federal government by refusing to pay up. Most believed that insurance companies were simply claiming all damage was done by the weather condition the recipient was not covered by. In other words, if a customer had flood insurance but not wind, the insurance company would claim the damage was done by the wind, or vice versa.
This has sparked widespread anger against insurance companies. As much as I do not like insurance companies and their ethics, this anger is a result of ignorance and Big Government.
People wonder why insurance companies can’t just combine wind and flood insurance as the House and Senate are trying to do now. Are they trying to cheat people out of their money? No. By separating the two, they are only being fair to all their customers. If I live in tornado country and pay for wind insurance, why should I also pay for someone else’s flood insurance? Vice versa, if I live in a flood zone that is far away from the Coast, why should I pay for someone else’s wind insurance? There is a distinct difference between wind and flood insurance, and combining the two for the few who live in hurricane zones would be just plain selfish and inconsiderate of everybody else who also pays insurance.
In addition, the government’s interference is, in the long run, only making things worse. First, the government is attempting to combine flood and wind insurance. Furthermore, people are still complaining about the high costs of flood and wind insurance on the Coast. The NFIP has superceded its original role and has now become a bona fide insurance company, one that is subsidized by my tax dollars. So, my tax dollars are going to support those people who voluntarily jeopardize their home by living on the Coast in the middle of a flood or hurricane zone. In other words, the way I see it, these people want special privileges and non-Coast dwellers to pay for their “right” to live where they want. It makes no sense for me to subsidize someone else’s choice of residence.
Not only is the government using other people’s tax dollars to provide these people with flood and wind insurance, they are also consequently raising the prices of private insurance. Is it not a simple matter of economics that the more people who buy your product, the cheaper you can make it? As it is, the government is providing tough competition for private insurers. When the government provides taxpayer-subsidized insurance, why would anybody buy private insurance? In response, insurance companies have fewer customers and higher prices.
More importantly, the government mishandles our money. After Katrina, the NFIP went $20 billion into debt. The government reallocates money from one program to another, not expecting to need the money in the program it got it from. Just like in Social Security, the government takes money from the NFIP (not expecting to need it) for other programs. Then, when disaster strikes there’s no money.
I’m not saying insurance companies are impeccable and innocent of all charges. However, I don’t think people understand the root of many of the problems. The NFIP has done a lot of good. I just think it can be done better. It takes my tax dollars (all $90 of it) to support someone else’s special privileges and at the same time is unfair to other insurers.