Kading: Smart Government Investments in Resilience Save Taxpayers Dollars and Protect Citizens
STAMFORD, Conn., Oct. 8, 2014 /PRNewswire/ -- In comments delivered at the Northeast Risk and Resilience Leadership Forum, Brad Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), the association representing the interests of 21 commercial insurers and reinsurers with underwriting operations in Bermuda, highlighted the projects governments should "green-light" to provide the maximum benefit to voters and policyholders alike. In remarks before an audience of 300 federal and local government officials, mitigation experts, environmental organizations, insurers, regulators and academics, Kading said the following:
"Governments are uniquely situated to write and enforce the standards that make communities and homes safer and restore wetlands or dunes to absorb hurricane wind and waves. Governments should focus on land use planning, infrastructure, building codes, and enforcement. Let private insurance markets work to deliver risk signals with prices. Assigning a price on risk boosts investments in storm proofing. Put a stop or a "red-light" on subsidizing insurance costs for those that can afford to protect themselves.
"Recent research from the University of Pennsylvania Wharton School shows that for every $1,000 of disaster aid, consumers purchase $6,400 less of flood insurance – proof of misguided government programs. Humanitarian disaster aid is necessary, but aid that is encouraging consumers to avoid common sense insurance purchases is counterproductive and, as research documents, will contribute to a never ending spiral of government disaster payments. Research from the Wharton School demonstrates that only 20 percent of 1989's Hurricane Hugo losses were paid by government disaster aid while 80 percent of losses for 2012's Hurricane Sandy losses were paid by government funds."
"We know that for every $1 spent on hazard mitigation, $4 is saved. Let's figure out what the right incentives are to encourage the purchase of catastrophic flood, wind, and earthquake insurance, and then carefully target disaster aid to humanitarian and smart infrastructure improvements. For example, wetland restoration is incredibly important in acting as a shock absorber for hurricane wind and waves. In fact, research documents that wetlands provide an annual $23 billion in protection from hurricanes. This is the smart infrastructure that government must direct their investments towards."
"If governments are going into debt to pay annually for subsidized flood, hurricane, and earthquake insurance then the government's scarce resources are misdirected away from longer term investments that will protect people and property. This forum is a perfect place for public officials to work on retooling government programs to avoid the mistakes of the past and prevent the escalation of the $25 billion in debt now held in the National Flood Insurance Program or the reoccurrence of the $5 billion plus in hurricane taxes that Floridians have paid in the last eight years to subsidize state insurance funds."
About ABIR: The Association of Bermuda Insurers and Reinsurers (ABIR) represents 21 commercial insurers and reinsurers with underwriting operations in Bermuda. Bermuda is the center of global expertise on underwriting for catastrophe risk transfer products. For more information, please visit: www.abir.bm.
Contact: [email protected] | @abir_bermuda
SOURCE Association of Bermuda Insurers and Reinsurers (ABIR)
Share this article