In the wake of Isabel, we get to examine once again the fragility of many of our systems. (Electric power in the DC area is still off for many residents -- mine was only down for 12 hours.) In the rush to put reporters in harm's way, the TV stations sent their fearless correspondents to the Outer Banks of N. Carolina. The "OBX" are a favorite vacation spot for lots of easterners. I am constantly amazed by the number of SUVs in No. Virginia that sport OBX stickers on their back windows....
These barriers islands are fragile, shifting, and waaayyy overbuilt. It is a huge, expensive effort to keep them from migrating, which is what barrier islands do. Luckily, Sergeant Silt of the US Army Corps of Engineers is on hand. I will let the reader ruminate on the heroic futility of keeping sandy beaches from washing into the ocean.
Watching the storm beat the living shit out of the houses on those islands, one's thoughts may run along the lines of "gee, hope they've got insurance." And indeed they do. However, you wouldn't catch any of those steely-eyed actuaries in the insurance business selling flood insurance to a "foolish man who built his house upon sand." (To quote one well-known 2000 year old source...) No way. Only the US taxpayer could be called upon to underwrite such a venture. Enter FEMA, and the federal flood insurance program. This huge, unsustainable boondoggle allows you and me (US readers only) to bear the risks for what no company in the business will -- building multi-million dollar houses in unstable, flood-prone, ecologically sensitive areas. Makes perfect sense.
We will all be bearing even more of the burden in pretty short order. Although these guys say Isabel isn't a problem, AIG says she is (at least for the weaker insurance companies). I think that we are going to be seeing lots more "weaker" companies. Check out Bruce Sterling's Viridian Mailing List for some timeless observations on why the world is becoming uninsurable.
Well, except for what you and I insure.