Should Disaster Insurance Be Compulsory?

A masthead editorial (full text by subscription only) lays out a compelling case for mandatory purchase of catastrophe insurance. I’ve long supported something close to a mandate for health insurance purchase, but I’m not sure if anything like that makes sense for property insurance. Under all circumstances, I do think that government does have an obligation to rescue people in serious trouble (although it might well send them a bill if they’re able-bodied and ignored clear evacuation orders).

But, unlike health care — where longstanding ethical rules make it impossible to deny treatment altogether — I can’t think of anybody who would argue that the state has an overarching public obligation to make everyone whole following catastrophes (although Florida Governor Charlie Crist might come pretty close). In fact, much of the best disaster mitigation involves not rebuilding, and any compulsory purchase law carries with it some sort of obligation to help people of modest means purchase insurance. Society has no obligation to subsidize people who wish to live in risky locations.

To encourage insurance purchase without mandating it, I’d go back to an original provision of the National Flood Insurance Program that quickly fell by the wayside: If you are eligible for insurance and don’t purchase it, government aid should be limited to rescue and basic human needs. If enforced, that would have many of the positive consequences of a mandate without actually imposing one.