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Developers are just responding to market signals. The underlying problem in the U.S. is that the federal government backstops 98% of flood insurance policies a
by ckinnan 9y ago
Developers are just responding to market signals. The underlying problem in the U.S. is that the federal government backstops 98% of flood insurance policies and does not charge the actuarial risk price. This government subsidy gives people incentives to overbuild and underprotect property in flood-prone areas.
- wwweston 9y agoI like the idea that un-socializing flood risk pools might align incentives better... but my guess is that's not what would happen. Instead, by and large, people would estimate risk the way most humans do, which is to say "badly," and would value the premium money more than protection from events whose cycle is long enough that they seem like freak occurrences to some. If that's the case -- if that's been the case in the past -- then putting the government as the cause is putting the cart before the horse. It isn't that the market bent to the shape it's in because of the government, it's that the government adapted to the shape of the market and provided the socialized form of insurance that people were most amenable to.
- brightball 9y agoExactly. To this day I don't understand how building on a slab is even considered insurable unless you're basically on a hilltop.
- anentropic 9y agoSounds like a good case for better building regulations and less reliance on hand-wavy free-market woo