"What people living on the Pacific Palisades, on east coast barrier island or in midwest flood zones forget (doublethink?) is that insurance companies are businesses which have to make profitable decisions, not public charities. In a similar vein, neither should the federal government be. If people insist on living in vulnerable areas (especially those wealthy enough to live "anywhere"), they should either take the risk of "self-insuring" or pay a fair price based on the actuarial probability that their house will have to be replaced in a relatively short period of time. This is not the insurance companys' fault nor the government's."

This is a legitimate point of view, but not entirely fair. The homeowners neither create the risk nor can they abate it except by relocating. The government and the utilities are the ones in control. The onus should be on them to protect the public. The homeowner is basically defenseless. They don't approve the utilities' plans nor allow building in fire-prone areas. Why do they bear so much of the risk?

Insurance is an extremely valuable mechanism for spreading these kinds of inevitable risks. If the system fails, it is bad for all. But requiring local homeowners to absorb all of the increased costs of growth and development is also problematic. People aren't going without insurance as a form of protest -- they can't afford it.

Perhaps the cost of insurance in certain areas should be subsidized by the utilities or the government? The policy justification would be that universal basic honeowner's coverage, like universal basic medical insurance, is desirable for lots of reasons. We'd just have to figure out how to pay for it lol. I am sure Ajit and Greg are thinking about this as we speak.

abromber