Friday, July 30, 2010
| Make Florida More Hurricane-Resistant
published: Sep 28, 2009
by: Eli Lehrer and John Hallman
As hurricane-ridden September passes by, much of the news in Florida appears good: Hurricanes, so far, have stayed away from U.S. coastlines, the Legislature has passed a few common-sense reforms to the state's property insurance system and state CFO Alex Sink says that the state's troubled Hurricane Catastrophe Fund (Cat Fund) has gained a firmer fiscal footing. more... |
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| A catastrophe waiting to happen
published: Sep 15, 2009
by: Jonathan Orszag
This month marks the fourth anniversary of Hurricane Katrina. That raises a simple question: Are we prepared as a Nation for the next mega-catastrophe (one, perhaps, worse than Katrina) that will inevitably strike our country? more... |
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| The Meltdown Next Time: The financial danger nobody knows about.
published: Sep 12, 2009
by: Eli Lehrer
When the insurance giant American International Group was threatened with collapse in late 2008, its credit default swap business and other international operations were cited as the heart of its troubles. But the largest consequence of AIG's uncontrolled failure on consumers' pocketbooks could have come from the domino-like collapse of its businesses writing insurance on boats, cars, homes, lives, and just about everything else. If these businesses fell apart as a result of AIG's overall collapse, the argument went, the contagion could have brought a collapse of everything from retirement savings plans to auto insurance claims payments from companies unconnected to AIG. (In theory, the operations were firewalled from AIG's other operations, but the extremely slow rate at which they've found buyers indicates that many had significant exposure to the company's other woes.) more... |
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CEI Asks: Is a Beach House Bailout Next? |
by: Eli Lehrer, Senior Fellow, CEI
published: Mar 17, 2009
AIG’s Bailout Will Look Like Peanuts Compared To The Bill Taxpayers May Have To Foot To Cover Property Insurance Costs for Beach Houses Owned By Millionaires Like Tiger Woods and Sylvester Stallone
With the taxpayer bill for the AIG bailout mounting every day, a Washington, D.C.-based free market think tank warned that the latest Wall Street giveaway might be the tip of the iceberg as it raised questions about proposals almost certain to come before Congress that would subject taxpayers to even larger liabilities.
In 2008, the House of Representatives passed the ''Homeowners' Defense Act'' which would have set up an enormous government-run consortium—a national catastrophe fund—that would provide reinsurance for insurance companies that experience large catastrophe-related claims. These large claims are most likely to come from hurricane-prone areas such as Florida's Gulf Coast and, ultimately, the money would end up in the pockets of wealthy owners of beach-front property. Rep. Ron Klein (D-FL), a lead co-sponsor of the 2008 legislation, has vowed to try again this coming year.
''Tiger Woods, Sylvester Stallone, and John Travolta all own property near the coast in Florida. Donald Trump just sold his Florida mansion for $100 million,'' says CEI Senior Fellow Eli Lehrer. ''There's no way that taxpayers should work to support lower property insurance rates for the super-wealthy.''
Lehrer says that proposals for national catastrophe funds would redistribute wealth to people who already have a lot of money. ''If taxpayers are disappointed to see more than $100 billion of their money being risked on AIG, then they should just wait for what some in Congress want to do next,'' says Eli Lehrer. ''Florida alone has just about $2 trillion in potential coastal losses but taxpayers throughout the entire country could potentially be on the hook for the whole amount.''
Lehrer says that inland states are likely to pay the bills. Citing a recent study from former Clinton administration official Robert Schapiro, Lehrer predicts enormous bills for just about every state that doesn't have lots of beach houses. ''We're talking about nearly a third of a trillion dollars in one bad hurricane season—all to help pay for property insurance for beach front-homes.''
He suggests instead that state government simply stop tinkering with insurance rates. ''While most Americans live somewhere near the coasts, only a handful live right on the beach. Most people who own beach houses are wealthy. They are the last people who need government help.''
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CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government. For more information about CEI, please visit our website at www.cei.org.
Contacts:
Eli Lehrer, 202-615-0586
Richard Morrison, 202-331-2273
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