Exploring Wind Insurance as a Pilot Program

Exploring Wind Insurance as a Pilot Program

Why a Half-Way Step Could be Very Expensive
By Eli Lehrer
September 10, 2008
As the House of
Representatives and Senate move towards a conference on proposals to reform the
National Flood Insurance Program (NFIP) members of Congress and staffers have
raised the possibility of adding a “wind insurance pilot program.” Rep.
Gene Taylor (D-MI), the chief sponsor of a national wind-insurance measure the
House of Representatives has passed, has taken a leading role in pushing for
such a “pilot program”.  As of mid-September, nobody has yet
introduced specific legislation calling for a pilot program. Thus, this memo
deals with general objections to a wind insurance pilot program rather than the
particular features of any proposal. In dealing with the concept of a pilot
program, this memo makes three interrelated points:
  • A pilot program could actually cost taxpayers more
    than a larger program.
  • Only a handful of states—all of them on the Gulf and
    Atlantic Coasts—would benefit.
  • Any wind insurance program would destabilize the already
    shaky National Flood Insurance Program.

Sections analyzing each of these points follow.

Related Files: 20080910 Wind Insurance.pdf