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Below you can click to read a recent article from PropertyCasualty360.com regarding President Obama asking to increase the borrowing limit of the Nation Flood Insurance Program (NFIP) to $25 Billion.  For those of you who may not understand how it works, local agents handle the application process for flood insurance.  The actual risk is incurred by the NFIP.  There is a reason that the private market does not handle the risk associated with flood insurance -it is a losing proposition.  Companies who insure homes against wind, fire, hail, etc. all know that insuring a home in a flood prone area against flooding is a sure loss.  

So, ultimately tax dollars end up getting spent to cover the difference between that amount flood customers pay in and what the NFIP ultimately pays out.  Is this appropriate?  Not in my opinion.  If someone wants to take the risk of living on the coast why should I as a tax payer have to help cover their losses.  I have no choice in the matter because I don't have the choice to pay taxes or not.  People willing to take that risk should be on their own.  Or, if the NFIP would get out of the insurance business with their artificially low rates then the private market may enter if they could charge rates high enough to offset the risk.

What are your thoughts?  We're always interested in what others think.


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