The answer to this mess is to add flood (and earthquake) peril to all homeowners' policies nationwide, with much more adequate limits on the home and its contents. This will also eliminate the impossible task of separating wind and water damage while adjusting the loss.With heroes like the insurance companies, who needs villains?
I have no illusions about the resistance that will be encountered to implementing a change of this sort. Regardless of the insurance companies' advertising slogans, the bottom line always trumps any notion of serving the public good.
The challenge is to develop a system to finance the very substantial losses that this will entail. Without federal government reinsurance, it would not seem possible to limit the exposure of the insurance companies to an acceptable level.
The House Financial Services Committee will soon hold hearings to look into the "failure of the insurance system" to deal appropriately with claims from Hurricane Katrina and Rita. The insurance industry will testify that within the "system" they were nothing short of heroes.
The problem is that the "system," which the industry largely created, is hopelessly inadequate to protect people's assets after catastrophic flooding. While this topic may not resonate in Western New York, eyes will open if we sustain an earthquake, as has been predicted. It will be interesting to follow the congressional hearings.