Mercatus on Policy: Ensuring Disaster

Professor Daniel Sutter examines the effect of state wind pools on insurance markets and discusses how policies could be improved without Federal involvement to better prepare states for disaster.

Little can be done to prevent hurricanes, but their impact on society depends greatly on actions taken before, during, and after the event. The insurance industry is one institution that particularly affects societal vulnerability to and recovery from disasters. Insurance spreads risk across a community and provides households and businesses with resources to recovery after disaster strikes. Although insurance is based on voluntary, contractual private agreements, many states regulate the industry extensively, guaranteeing coverage to high-risk properties at below market rates.

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