ROLLING THE DICE ON HURRICANE SEASON!
Thursday, June 2nd, 2016
Baton Rouge, Louisiana
ROLLING THE DICE ON HURRICANE SEASON!
It’s the kickoff
for hurricane season and forecasters are predicting 14 named storms with
anywhere from 4 to 8 storms growing into major hurricanes. Here on the Gulf Coast,
we certainly perk up when this time of year rolls around. For years, a
good story in south Louisiana went like this:
“I’m a Catholic, so I certainly know a good bit about
suffering,” she would say.
“Yeah, I’m a Louisiana
homeowner,” he answered.
“Oh, so you understand.”
Louisiana homeowners know a good bit about misery, particularly
when it comes to being stuck with the highest property insurance rates in the
nation. Year in and year out, the Bayou State is at the top of the list of
states with the highest costs. No other state in the South comes close.
But that’s not the whole story. Congress merely put its finger
in the flood insurance dike with legislation that supposedly capped the
skyrocketing rates of property owners in flood prone areas. But what our
minions in Washington didn’t tell us is that the rates will continue to climb
dramatically in the years to come. Get ready for increases up to 25% this
year alone.
Because of the devastating hurricanes that seem to hit the Gulf
Coast at least once a decade, the federal government has bailed out these
southern states, literally and financially, time and time again. Some cynical
members of congress have even suggested that it’s time for many Louisiana
homeowners to relocate. But attitudes are beginning to change, because other
oxen are being gored. Mother Nature has given the Gulf South a pass in
recent years, but she has caused havoc in other parts of the nation.
Oklahoma has suffered an unprecedented surge in both earthquakes
and tornadoes, and is clamoring for federal help. New York and New Jersey
are still trying to recover from Hurricane Sandy. In Texas, hurricanes
and flooding have cost some $28 billion in recent years. California
witnessed rapid growth in both drought and wildfires, and earthquakes remain a
constant threat. A Wall Street Journal recent study concluded that almost
every state in the nation is subject to some major disaster.
So is there a national plan that doesn’t use taxpayer dollars
which and is both comprehensive and affordable been
discussed? Yes. Such a proposal was unveiled way back 1995 at a
catastrophe insurance conference sponsored by the American Insurance Services
Group and held in New Orleans. I attended as Louisiana’s Insurance
Commissioner.
The proposal called for a Natural Disaster Insurance Corporation
(NDIC) that would sell disaster reinsurance for residential and commercial
properties while also providing primary coverage for residential properties. We
all agreed back then that there would be a huge problem with catastrophic
insurance losses all over America unless a national disaster program was put in
place. And that’s just what’s happening across the country now.
Here is how it would work. Private insurance would take a
small portion of the premiums collected and contribute to a state created
fund. The state fund would then be backed up by a nationally created fund
that could borrow to pay for any shortfall, but no federal tax dollars would be
involved. Each state could buy in and have a rate set according to the
risk.
Hurricane prone states like Louisiana would pay more than a
state like North Dakota that has less natural disaster exposure. That was
the plan then. And the good news is that in reaction to the devastation of
Hurricane Sandy and the tornados in Oklahoma and Missouri, a number of states
are coalescing around this same plan now.
It’s taken almost 20 years, but it looks like it could be the
right time for problem solving. It’s just not a handout for the coastal
states. The whole country will benefit. And at a price that’s
affordable. Louisiana certainly cannot be any worse off than we are now.
********
Peace and Justice
Jim Brown
posted by Jim Brown @ 11:39 AM
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