Federal Wind Insurance Is Still a Huge Mistake

David C. John / July 21, 2010

Like the monster in a third-rate horror movie that seems to be destroyed but comes back again and again, some bad ideas in Washington keep popping up. Adding wind insurance coverage to the National Flood Insurance Program (NFIP), a program that already needs to be bailed out every few years, is one of those irresponsible policy mistakes that legislators continue to push well after it should have been declared dead and buried. Its latest incarnation, H.R. 1264, the Multiple Peril Insurance Act, introduced by Representative Gene Taylor (D–MS), contains all of the mistakes of earlier versions.

As we wrote back in July 2008:

Expanding the NFIP in any way is fiscally irresponsible. Some believe if coverage against wind-caused damage is provided at unsubsidized rates, the revenue brought in would cover the real cost of providing the insurance. But a study by Towers Perrin reveals that the proposed wind insurance program would actually run regular operational deficits. Even if Congress forgives the amount that the NFIP already owes, increasing its costs by running additional deficits is a step in the wrong direction. (more…)