Insurance

Apocalypse Soon: Florida to Partially Privatize Disaster Insurance Program

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Credit: NASA

Over at Vanity Fair, Kurt Eichenwald, a former New York Times reporter, laments "the most discomforting" display of crony capitalism he's covered in a "long career of writing about business." Florida is in the process of privatizing a small portion of its government-run disaster insurance program, and everything is not exactly on the up and up.

The plan is for the state to pay a connected insider $52 million to handpick 60,000 policies (out of over a million) to take off the state's hands. Presumably, he'll choose those with the least amount of risk. The way Eichenwald tells it, it's a sweetheart deal for sure.

But the veteran reporter's explication of government-run insurance is a bit off the mark.

Says Eichenwald:

I hate that I have to address this through the "here's why it's good for you" approach, rather than just saying working people shouldn't be forced [italics added] to be homeless simply because they live in Florida, but here goes:

If hundreds of thousands of people could not afford property insurance, that means that hundreds of thousands of pieces of property could possibly be destroyed in a hurricane and then never rebuilt. Florida could become a wasteland of wrecked homes and businesses. Hundreds of thousands of people could be homeless—meaning either taxes go up to help them, they simply wander the state, or they leave.

To which I have to say, if you cannot purchase insurance from a private provider that is the free market screaming, pleading, tearing its hair out, and repeatedly punching itself in the face all in an earnest attempt to get you not to build where you're building. Forcing—word used correctly this time—taxpayers to subsidize such development encourages people to live in hurricane-prone areas in housing ill equipped to withstand a hurricane.

Moreover, the policies in question aren't limited to just the poor and middle class as far as I can tell. As John Stossel has repeatedly and heroically explained, these programs often subsidize oceanfront living for the rich.

Eichenwald also weirdly wraps his narrative around the Tea Party, the bashing of which must be SEO maximizing or perhaps just psychically satisfying, for the Tea Party has naught to do with the story. Still though, it is crony capitalism and it's a bad business—just maybe not an apocalypse to be laid at the feet of Eichenwald's ideological opposites.  

Click here for a handy Reason reading list on disaster response policy.