Sunday, August 20, 2006

Insurance

Ben Stein posted an article today about the Terrorism Risk Insurance Act over at his permanent column with Yahoo. Ben and I disagree on many things, but not, as far as I can tell, about the role the Federal government should play as the Insurer of last resort in the case of terrorist attacks.

The Terrorism Risk Insurance Act was passed after 9/11, because Insurance companies stopped covering for terrorist related incidence, because their exposure was difficult to measure. A large terrorist attack could bankrupt the insurance industry.

As Ben notes, anti-government Republicans want the Terrorism Risk Insurance Act to end as soon as possible. As much as I detest the insurance industry right now, it's important that the government remain involved. Indeed, I would much rather see the Federal government stop bailing-out homeowners on barrier islands after hurricanes, than stop terrorism.

Insurance is about controlling for risk. Hurricanes are fairly predictable and people who build fancy houses along the Florida coast are aware of the risk. Terrorism is a different beast entirely. It is designed to surprise people. It is designed to destabilize the center of our economy and the will of our people. The insurance industry has no fiduciary responsibility to our nation-state, but our government does. Acting as the insurer of last resort for terrorist acts is as, if not more important than our defensive measures.

This provides a similar argument for why I support limited national health coverage, but i'll save that for another post.

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