Sandy Could Spur Renewed Flood-Insurance Reform
Ray Lehmann, senior fellow at the R Street Institute, a free-market think tank focused on insurance issues, said Congress should require FEMA to use reinsurance or sell catastrophe bonds to offload some risk to the private sector. A bill passed over the summer allows the agency to do so but doesn’t require it.
Mr. Lehmann added the government in the long run should phase in market rates for all consumers who buy flood policies, eliminating subsidies for properties before the mid-1970s. Doing so would gradually allow the private sector to provide flood insurance, he said.
“That creates the conditions that, over the longer term, can make a full privatization of the (flood insurance program) a real possibility,” he said.
