As flood threats rise, federal reform to diversify the insurance risk sinks
Eli Lehrer, president of the R Street Institute, a Washington-based research group, believes it’s crucial to shift some of the government’s climbing flood exposure to private insurers.
But he cautions that bankers might have good reasons to choose federal coverage over the Lloyd’s policy. It might come down to efficiency. If it’s too burdensome for banks to vet private policies, then that may be a market distortion. A company that overcomes those challenges might find an opportunity to compete.
“It’s hugely important to work to shift exposure off of the federal government,” Lehrer said. “But certainly nobody expected it to happen overnight. And not everything that shifts exposure is, by that alone, virtuous. If there are real concerns or real administrative burdens in shifting exposure, then that has to be fixed.”
