The epic storm known as Hurricane Sandy should become Exhibit A in a renewed push to create a national windstorm insurance program. This monster storm should convince lawmakers — and the next president — once and for all of the crucial need to put this issue near the top of the national agenda.
Why does a national windstorm insurance program make sense? Let us count the ways:
• As Sandy makes clear, this is most assuredly not a localized problem. The storm is threatening all or parts of 10 states where 50 million Americans live. And, by the way, it’s the second storm to hit the area in as many years, while Florida has escaped major hurricanes during the same period.
• State programs don’t work very well.
Sure, having a state-financed insurer of last resort (Citizens), is better than not having one at all, but all such programs are riddled with problems. In Florida, years go by without a major storm hitting the state, and yet premiums keep rising, consistently. Under the policies crafted by our Legislature, parts of Florida have become the most expensive places in the world to insure a home. Regulators have approved rates as high as $13,000 a year on a $150,000 home in Monroe County. Meanwhile — it’s enough to make us cry — the average annual premium for the federally-run national flood insurance program in 2010 was about $570.
But — and here’s the point — other states have the same problems all across the Gulf Coast. At the moment, the Texas Windstorm Insurance Assn., the counterpart of Citizens, is trying to figure out how to make rates “more equitable” because no one’s happy with the state’s system. They’re talking about “overhauling” the program because they don’t have enough of a geographic spread (in Texas!) or enough revenue to cover liabilities and potential losses. Gosh, where have we heard this before?
• The current system represents a double standard. When the storm finally passes, millions will be able to turn to the national flood insurance program for help in the recovery.
Meanwhile, victims of the windstorm will be left to fend for themselves or deal with private insurance companies. If history is any guide, the storm could become justification for huge rate increases by private insurance companies down the line.
• The federal government is the right venue. Governors love to talk about states’ rights, and some of them are quick to criticize the federal government. But when the wolf’s at the door in the form of a natural disaster, they’re quick to run to Uncle Sam for help. President Obama responded appropriately this week to beleaguered governors, vowing to cut red tape to make sure assistance reaches those who need it as quickly as possible.
We have to note with appreciation that even our own Gov. Rick Scott, no fan of big government, said back in late June, just before the start of the hurricane season, that maybe it’s time to consider whether a national windstorm program makes sense.
Wow. If Rick Scott can see that — no matter how well crafted or well intentioned — state programs aren’t up to the task, there just may be hope that Congress can see the light, as well.
The notion that the market can handle these big disasters without ruining the budgets of affected families represents the triumph of ideology over experience. Hurricane Sandy should offer proof to all but the most obtuse that it’s time to adopt a national program.