... affluent beachcombers who are accustomed to artificially cheap insurance. Businesses, vacation homes and homes with "repetitive" flood losses will see rates rise 25% a year until those "rates reflect true risk," according to the Federal Emergency Management Agency (FEMA), which administers the federal insurance program. About 20% of the national insurer's 5.5 million policyholders will be affected.Cue the caterwauling from the 1% and their elected representatives. In June the House voted 281-146 to delay premium increases for a year, a turnaround from the 406-22 vote that passed Biggert-Waters only a year ago. California Democrat Maxine Waters is protesting that she didn't know what was in the law that bears her name—which seems plausible to those who have followed her career. She'd like more Americans to build homes in flood zones and have poor Americans pick up the tab when insurance premiums don't cover losses.
Monday, December 2, 2013
Flood subsidies are difficult to remove
Subsidies destroy wealth by encouraging the movement of assets to lower valued uses. Flood subsidies,, for example, encourage home owners to build where they ordinarily wouldn't build because the insurance rates are artificially low.
But what happens when government tries to make these homeowners bear the costs of their insurance?