Exploring Wind Insurance as a Pilot Program
Why a Half-Way Step Could be Very Expensive
A pilot federal program could cost taxpayers more than a larger program while destabilizing the National Flood Insurance Program
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.