When Taxpayer-Funded Insurance Turns Catastrophic

Rudy Giuliani keeps touting his plan for National Catastrophic Insurance. It's supposed to help people out in case of catastrophe, but I wish someone at the debate last night had asked this:

Could this sort of tax-payer funded insurance actually worsen the results of a hurricane by creating perverse incentives for developers to build in high-risk areas, while damaging the ecological integrity of natural barriers such as barrier islands, dunes and wetlands?

Former congressman Tom Evans of the Florida Coalition for Preservation this summer wrote:

Action is needed at the federal and state levels to better protect taxpayers from paying the tab for irresponsible coastal development that damages the environment and endangers our citizens.

When President Reagan signed the Coastal Barrier Resources Act in 1982, which I had the honor of sponsoring in the Congress, we told developers point-blank that "if you develop on these fragile barrier islands, you should do so on your own nickel and not the American taxpayer." In that spirit, Congress should consider expanding the Coastal Barrier Resources Act to eliminate all federal subsidies, including federal flood insurance or transportation funding, going to high-density developments on storm-prone barrier islands where such development explodes the population of a small area and dangerously stresses the surrounding infrastructure.

State lawmakers also have an important role. They should enact a policy similar to the Coastal Barrier Resources Act and ban state subsidies to new construction on barrier islands where such new construction greatly increases the population density of a small area.

If Florida truly wants to pave the way for a national catastrophe fund to spread the risk of natural disasters across the country, the state should lead by example. The state undermines the credibility of its argument when it continues to use taxpayer dollars to sanction and subsidize ill-advised barrier island developments in hurricane alley. Continuing this practice will likely alienate residents of inland states who could question why taxpayers in Peoria, IL, should assume the risk of building new oceanfront condos in South Florida destroyed by seasonal hurricanes.

If Floridians want inland states to throw in their lot with them and pool their insurance catastrophe risk in a national fund, we must prove that we are responsible enough to limit new development to risk-appropriate locations.

Now in the 2007 hurricane season, we must realize that our barrier islands are not those places. We must not play Russian Roulette with people's lives and property. Unfortunately, that's exactly what we do when we put people in harm's way on vulnerable barrier islands. And that's no place for us to use limited taxpayer resources.