A must?: Beach insurance is not a public entitlement

Fayetteville Observer

It’s called “the Beach Plan.” Remember that, because this state insurance program exists primarily for the benefit of property owners in 18 coastal North Carolina counties.

Here are some of its problems:

Private insurers don’t like it because its potential risks far outstrip its ability to make good, and a bad hurricane season could mean they’ll be hit with a heavy assessment to make up its losses.

Most policyholders don’t like it because they live inland and don’t want to cover, through higher premiums, the losses of the small percentage of North Carolinians who live where hurricanes do their worst and most costly damage.

Coast-dwellers complain that the program is underfunded and could be wiped out in a single storm, leaving them at the mercy of private insurers who are either jacking up premiums as a hedge against heavy coastal losses or refusing to write suitable wind-and-water coverage at any price.

State lawmakers don’t like either the prospect of seeing insurance companies emigrate or the thought of the plan being bankrupted.

Did you notice? All of those concerns exist because there is such a thing as the Beach Plan.

That’s not to say that the plan should be summarily abolished. Not every coast-dweller builds castles on the sand and then feels victimized when nature does what nature was doing long before humans walked the Earth. But it is not wrong to slow down, when state Insurance Commissioner Wayne Goodwin says that we “must” do this and we “must” do that and we “must ensure that consumers have as much insurance as possible,” and think.

Insurance is a good thing, but why must we rescue this plan, and why must it be fixed in one particular way: by an infusion of money rather than by sloughing off some of that liability?

The plan is institutionalized interference with the law of supply and demand. We’re not doctrinaire enough to promote strictly ideological fixes. Economics isn’t a religion. But how did it become the legislature’s responsibility to make certain that everyone who builds a pleasure palace at the water’s edge has not only an insurer, but terms and rates that he finds agreeable?

The big debate can hold for another legislative session, or several of them. But with the economy a mess and the budget a mess and this program a mess, it is reasonable to demand some fairly bright line beyond which the elevated risks and costs of coastal living are not transported to the interior. We’re in it together, but everything has its limits.