A Stitch in Haste

As hurricane season ramps up, here's the latest FEMA embarrassment:

The Federal Emergency Management Agency has asked thousands of Floridians whose homes were damaged by last summer's four hurricanes to give back more than $27 million in aid overpayments.
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Many of the problems stem from FEMA providing money for items that were later covered by property insurance policies, from more than one person from the same household applying for benefits or from processing errors.

FEMA has committed more than $5 billion to Florida's hurricane recovery.

If it could be demonstrated that there is some sort of market failure in the homeowner insurance industry, then perhaps the government could consider establishing an "insurer of last resort" program comparable to the federal flood insurance program (although I'm not sure that federal flood insurance was needed to correct a market failure either). In any case, given that these homes are (Kelo notwithstanding) private property and that a functioning private insurance market clearly exists, then why is FEMA even involved?

Hurricanes aren't rare, unforeseeable events like earthquakes or tsunami, and although they may be catastrophic for individual property owners, they are rarely crippling to an entire local economy. The government is simply playing too fast and loose with the definition of "disaster." Which means, of course, that they are also playing too fast and loose with our tax dollars.

Insurance is a fundamental cost of owning property, no different than electricity, air conditioning or plumbing. It's a private expense stemming from private property enjoyed by private individuals. It can be, and therefore should be, strictly privately financed.