“Hopefully, at some point soon, the invisible hand …”
I-Fans,
First of all, thanks for all the response in recent days. I will be doing an ITP Mailbag soon.
Second, I’ve got to be brief again. ITP is on the West Coast doing a geothermal analysis of the San Andreas Fault
Third, sorry about the sloppy long links. The transition to MacBook Pro is a little bumpier than expected.
The headline above is part of a quote from a banker and member of the Gulf Coast Business Council, who is lobbying the Mississippi State House for a state appropriation to shore up the state wind pool.
“Hopefully, at some point soon, the invisible hand of
competition is going to reach in and make insurance premiums - I won’t
call them reasonable - but halfway reasonable.”
You’ve got to read the story to appreciate 1. how bad things look down there and 2. the poverty of what pass for solutions.
http://www.sunherald.com/mld/sunherald/business/industries/insurance/16379472.htm
whole story
ITP recognizes the letimate concerns and good intentions of the council, lawmakers and insurers, too, for that matter.
But, the invisible hand is not going to come to anybody’s rescue anytime soon. It’s not even a relevant concept in a market that has this much government intervention, particularly the government’s insistence on dividing up markets into irregular pools of various size, some tiny, like Mississippi, with outsized risks, like the coast.
Sure, the Mississippi coast is risky, but the entire coastal United States is, by definition, less risky. Insurer pals, check me here, but it’s more spread out geographically and has a lot more people paying premiums, making it more efficient right?
I haven’t had time to invite onto the list the National Association of Insurance Commissioners, the main bulwark of support for state-based insurance, but is there anyone out there who can make a good case for it? And what are the policy benefits of McCarran-Ferguson?
http://insurancetransparencyproject.com/2006/12/07/mccarran-ferguson-and-its-discontents/
January 4th, 2007 at 1:48 pm
I know this may sound naive,but how about instead of working with the business community to cope with huge rate increases, the states instead say to big insurance “First, pay what you owe according to all the agreements in place before Katrina. Then, once we’ve settled that, we’ll talk about what the new, post-Katrina deal will be.” At that point, they could determine how business will be affected. Seems like they’ve given up on insurance paying for damages, and already focussed on how to cope with paying increased rates in advance of insurance not paying for the next disaster. Crazy, right?
As far as the policy benefits of Maynard Ferguson, I would say he lost relevance after Conquistidor, his impressive 1977 release.
January 4th, 2007 at 3:52 pm
Posting an opinion here feels kind of like being a child-savant in a japanese giant-monster disaster flick.”Hey, this can defeat godzilla”. Perhaps the film archetype is a bit too idealistic. Here, on the other side of the lens, one begins to wonder about all the scientists in their white robes, what exactly is the cant of this assemblage. Are they rife with predators like the catholics, have they had their shots? (are they safe to eat)
Anyhow, many of us have been led to live in places not suitable for human habitation (no, New Orleans is not one of them). Opportunistic land developers in concord with do-nothing government have transferred a significant portion of our population to places unsafe. We must begin an orderly retreat. Enforced hazard zoning is a necessity, not something to be dismissed as contrary to the invisible hand or the needs of the property owner. Without it we will continue to find people living in messes that are not in their power to fix, and not profitable to be fixed by others no matter what the premium.