I'm making an initial mental list of readings for a proposal for a possible law school seminar at the Insurance Law Center at Univ. of Connecticut School of Law, many of which would be multi-disciplinary.
I'm just finishing Jared Diamond's "Collapse: How Societies Choose to Fail or Succeed."
On my stack are:
..* Richard A. (aka "Judge") Posner, "Catastrophe: Risk and Response"
..* Ted Steinberg, "Acts of God: The Unnatural History of Natural Disasters in America"
..* R.A. Scotti, "Sudden Sea: The Great Hurricane of 1938"
Suggestions are welcome.
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A threat similar to Katrina may exist in the Sacramento and San Joaquin river valleys in California, where Prof. Jeffery Mount at U.Cal. Davis says: "Levee failure is not an 'if', it's a 'when'. * * * There seems to be a willingness to tolerate the human suffering and property loss that might come with these events." Underpriced flood insurance, land subsidence and under-investment in levee maintenance, plus thousands in the vulnerable area who have no autos, appear to be an issue there, as in New Orleans. See "Thousands in California at higher flood risk than in New Orleans," Mercury News, September 14, 2005. See also the New York Times, Sunday, September 11, 2005 "Disasters Waiting to Happen" (p. BU 1).
Galveston, Texas was wiped out in a hurricane in1900, and hit hard since then, but in recent years invested a great deal in raising the level of their Gulf Coast island.
For example, I want to find (or build) an objective legislative and policy history of flood insurance in the U.S., which is not that old, dating back to the 1968 National Flood Insurance Act. It's administered by FEMA.
There is a theory that while federally subsidized flood insurance may be good for developers and home builders (e.g. California), those who want cheap nearby housing for minimum-wage labor (e.g. New Orleans), Katrina has shown that encouraging people to build and to live in flood plains inevitably kills some of them and traumatizes many more.
In this country, few of our legislators live in flood plains without cars. In Holland, almost the whole country lives below sea level, and legislators take the situation more seriously because its their mother, spouse or child who could drown. Especially since 2,000 Dutch citizens died in the February 1953 flood caused by bad flood management (another good case study) and have since taken things much more seriously.
The GAO study of "Risk Retention Groups: Common Regulatory Standards and Greater Member Protections Are Needed," just out in August 2005, can provide another case study about groups that federal law encourages to voluntarily self-subsidize their own liability insurance, possibly leading members into economic traps that take years to discover, and only when it is too late. Similar traps have been found in self-insurance pools. See, e.g. Unintended Consequences: AIK Comp Members Liable for $97 MM: Dangers of Forced "Affordability"
Similar circumstances exist in states (like Massachusetts, Maine, Louisiana and others) who for years suppressed residual market prices on workers comp or auto liability insurance, in order to make "essential insurance affordable." Those systems eventually became abused and insolvent and they collapsed, at significant hidden "back-end" costs to taxpayers and ratepayers. They were typically replaced by similar but "new" systems. How many unsafe conditions on our roads and in our workplaces were subsidized by those political decisions, if any? Might make an interesting study.
I fear I reveal a certain bias. Perhaps, by postponing the inevitable reckoning and saving the cost of commercial insurance rates (or the lost opportunity cost of undeveloped flood plains), those politicians and member organizations are making a sound economic decision. Judge Posner addresses some of those issues in his book and weblog. The Becker-Posner Blog: The Tsunami and the Economics of Catastrophic Risk
I'm willing to be persuaded. But those whose loved ones drowned in Katrina, and who may drown in California, should have a representative voice. And the public safety implications for coming and past legislation should be evaluated in light of current awareness.
Do you see the way this seminar might go? Comments or suggestions by email to doug "at" dougsimpson.com. (I've turned off my Trackback and Comments because I grew tired of spending hours deleting porno and pharma spam).
Posted by dougsimpson at September 15, 2005 09:25 AM