Sandy highlights need for private flood risk transfer via catastrophe bonds again
R Street Institute, a strong voice on these issues, provided some comments to InsuranceNewsNet here. Senior R Street fellow R.J. Lehmann said; “It appears likely that Sandy will exhaust the NFIP’s remaining $3 billion of statutory borrowing authority, meaning it will need to request more money from Congress to pay its claims. In the short term, we would insist the NFIP use its existing authority to raise rates, buy reinsurance and issue catastrophe bonds, so that the private market, rather than taxpayers, assume the risk of these sorts of catastrophes in the future. Over the longer term, further NFIP reform must include phasing in actuarial rates for all policies, and possibly selling some of the NFIP’s 5.6 million policies to private insurers.”
