8 ms·

> This actually makes sense, because the "free market" doesn't work properly when it comes to flood plains. "This item I want isn't cheap" does not mean that m

> This actually makes sense, because the "free market" doesn't work properly when it comes to flood plains. "This item I want isn't cheap" does not mean that markets don't work "properly", except where you define "properly" to mean whatever you want to happen.

jacoblyles 14y ago
I think what he means is that the people living on the flood plain want protection from risk at below the price it costs to provide that protection. The only way to do this is with taxpayer money.
- skylan_q 14y ago
  That's the correct conclusion. Now one has to ask why someone who didn't make the mistake of living in a flood plain has to pay for those who choose to continue to take that risk. This attitude is all about destroying the notion of personal responsibility. Let everyone else bail me out.
  - raganwald 14y ago
    Ayn Rand, is that you?
    - skylan_q 14y ago
      No, I just believe that this is an attack on personal responsibility. No need to demonize.
  - NateDad 14y ago
    This is a straw man. The point of the article is health insurance, and no one chooses to break their leg, get burned in a fire, or develop cancer. But I'll take you up on it anyway, because it's still BS. How about the people in tornado alley? Or hurricane alley? Or everyone in California with all those earthquakes? Or mudslides or forest fires or or or... can you tell me no one in your state/province/whatever has ever had a natural disaster destroy their home?
    - randallsquared 14y ago
      > The point of the article is health insurance, and no one chooses to break their leg, get burned in a fire, or develop cancer. I'm not sure if you're kidding. People do indeed choose to go rock climbing, smoke in bed, and smoke, period. These things are statistically very related to choosing to have accidents and get cancer. One would expect that removing some financial costs of these activities would cause some increase in those participating. You might say that you'd be fine with higher rates of accidents and cancer as long as the risk is spread, but it's not a straw man.
      - NateDad 14y ago
        I'm not kidding, are you? You think that if the thought of being burned over 90% of their body isn't stopping someone from smoking in bed... that the thought a big hospital bill will do the trick? Or that they're not afraid of breaking every bone in their body when rock climbing, but boy, that doctor bill sure would be steep, so how about a nice game of cards? Seriously?
- thedufer 14y ago
  No, the problem is that the insurance company can't average out this risk. Going without insurance is an all-or-nothing proposition - either you lose your house, or you lose nothing. By contrast, insurance companies average this out - they lose X% of houses each year, and charge enough to make a profit. But insurance in a flood plain is different. The insurance company can't average out the risk - either they lose all of the houses they're insuring, or none of them. Thus, they can't provide any averaging benefit to the consumer - they have to charge an exorbitant amount to ensure they don't go bankrupt if the flood happens the year they open their doors. The government _can_ handle this, because they are, in a sense, diversified across industries.
mcherm 14y ago
Yes, but in most cases private insurance companies do not charge high rates for flood insurance, they simply refuse to provide flood insurance. The issue for them is that floods tend to affect EVERYONE in an area (or no one at all) and so the losses due to claims cannot be averaged over a large customer base and thereby kept consistent from year to year. This creates a kind of risk that wise insurance companies will not be willing to take on. That is not to say that there is NO price: as an extreme case, an insurance company would be willing to sell a policy for flood insurance for an annual price of the full replacement price of the property. (Because they'd be guaranteed a zero or positive return in the first year.) But that's not what we traditionally mean by "insurance", which involves the concept of sharing risk over a broad pool so that each member pays for the average cost rather than risking having a high cost.

jacoblyles 14y ago

I think what he means is that the people living on the flood plain want protection from risk at below the price it costs to provide that protection. The only way to do this is with taxpayer money.

skylan_q 14y ago
That's the correct conclusion. Now one has to ask why someone who didn't make the mistake of living in a flood plain has to pay for those who choose to continue to take that risk. This attitude is all about destroying the notion of personal responsibility. Let everyone else bail me out.
- raganwald 14y ago
  Ayn Rand, is that you?
  - skylan_q 14y ago
    No, I just believe that this is an attack on personal responsibility. No need to demonize.
- NateDad 14y ago
  This is a straw man. The point of the article is health insurance, and no one chooses to break their leg, get burned in a fire, or develop cancer. But I'll take you up on it anyway, because it's still BS. How about the people in tornado alley? Or hurricane alley? Or everyone in California with all those earthquakes? Or mudslides or forest fires or or or... can you tell me no one in your state/province/whatever has ever had a natural disaster destroy their home?
  - randallsquared 14y ago
    > The point of the article is health insurance, and no one chooses to break their leg, get burned in a fire, or develop cancer. I'm not sure if you're kidding. People do indeed choose to go rock climbing, smoke in bed, and smoke, period. These things are statistically very related to choosing to have accidents and get cancer. One would expect that removing some financial costs of these activities would cause some increase in those participating. You might say that you'd be fine with higher rates of accidents and cancer as long as the risk is spread, but it's not a straw man.
    - NateDad 14y ago
      I'm not kidding, are you? You think that if the thought of being burned over 90% of their body isn't stopping someone from smoking in bed... that the thought a big hospital bill will do the trick? Or that they're not afraid of breaking every bone in their body when rock climbing, but boy, that doctor bill sure would be steep, so how about a nice game of cards? Seriously?
thedufer 14y ago
No, the problem is that the insurance company can't average out this risk. Going without insurance is an all-or-nothing proposition - either you lose your house, or you lose nothing. By contrast, insurance companies average this out - they lose X% of houses each year, and charge enough to make a profit. But insurance in a flood plain is different. The insurance company can't average out the risk - either they lose all of the houses they're insuring, or none of them. Thus, they can't provide any averaging benefit to the consumer - they have to charge an exorbitant amount to ensure they don't go bankrupt if the flood happens the year they open their doors. The government _can_ handle this, because they are, in a sense, diversified across industries.

mcherm 14y ago

Yes, but in most cases private insurance companies do not charge high rates for flood insurance, they simply refuse to provide flood insurance. The issue for them is that floods tend to affect EVERYONE in an area (or no one at all) and so the losses due to claims cannot be averaged over a large customer base and thereby kept consistent from year to year. This creates a kind of risk that wise insurance companies will not be willing to take on. That is not to say that there is NO price: as an extreme case, an insurance company would be willing to sell a policy for flood insurance for an annual price of the full replacement price of the property. (Because they'd be guaranteed a zero or positive return in the first year.) But that's not what we traditionally mean by "insurance", which involves the concept of sharing risk over a broad pool so that each member pays for the average cost rather than risking having a high cost.