Source: New York Times ( Free Registration )

There is impeccable logic to the argument that taxpayers should not be made to pay for the risks incurred by people who choose to live along a hurricane-prone coast or atop a major geological fault. More than half of all Americans, however, live within 50 miles of a coast. With premiums rising relentlessly and insurers cutting hundreds of thousands of homeowner policies from the Gulf of Mexico up the East Coast to Florida and Long Island, there is a real danger that millions might soon be unable to purchase insurance. That’s a compelling argument for government help. A well-designed program — one that priced insurance in a way that encouraged homeowners to think twice about where they build and local governments to think twice about their zoning policies — could mitigate the so-called “moral hazard” of encouraging people to make riskier choices than they otherwise would. The alternative of millions of Americans’ going without insurance is a far worse option.

Read Full Article: Insurance for the next Big One