"They're such high risk, that no actuary will quote them a reasonable price." That is just plain wrong. The reason it's hard to insure people on a flood plain

"They're such high risk, that no actuary will quote them a reasonable price." That is just plain wrong. The reason it's hard to insure people on a flood plain is not that they are high risk. It's because the risk of flood is too statistically dependent: if you get flooded, your closest 1000 neighbors probably also got flooded. Unless you are a very large insurer (to the point bailing out ten thousand homes is just another day at the office), it's just really hard to hedge that risk. Same thing for earthquakes. Insurance works best on independent risks: car accidents, major medical events, lawsuits, even fires. "The prevailing thought is, when nature strikes, the government must bail people out." So the author's claim is essentially that the people of Canada want to subsidize the risky lifestyle of people on flood plains? I guess it's probably true to a degree; people prefer to have costs hidden from them by indirection. But that doesn't mean that it makes sense economically. What might be a better analogy is flood insurance and insuring the health of people with unhealthy lifestyles. Do we want to subsidize people who eat junk food all the time and never exercise? For the most part, we are (in US and Canada, at least), but I don't think that's a good idea, either.