Insurance Programs State Flawed

 

Tuesday, Apr 21,2009, 11:34:37 AM   Click:

Copyright 2009 Los Angeles TimesAll Rights Reserved Los Angeles Times

20 April 2009 Monday Home Edition

SECTION: MAIN NEWS; Editorial Pages Desk, Part A, Pg 18

LENGTH: 176 words


TITLE: State insurance programs imperfect



Re insurance insurance, "editorial, April 9

The Times says that the federal government should provide a "support" for the State as the insurance Earthquake Authority in California. The Times is wrong. States like Florida that have experimented with backstops have found that they do not work.

Private reinsurance risk markets around the world, while the government backstops term, even backstops national, risk of concentrating in one place. This violates the right insurance practices. To break even, such backstops have to charge more than the private sector.

Rather than the rates that are really sufficient, however, public insurance programs under the cover price and leave the taxpayers with huge unfunded liabilities. Below, the market for insurance rates, in turn, encourage unnecessary, environmentally destructive development.


In support of federal insurance is a terrible idea.

Eli Lehrer

Washington

The author runs the insurance Competitive Enterprise Institute, a nonprofit organization dedicated to free enterprise and limited government.

LOAD-DATE: 20 April 2009