Insurance - Taxpayers for Common Sense

The interaction between federal disaster policies and private insurance significantly affects taxpayers and communities, often leading to unintended consequences that drive up costs and risk. Programs like the National Flood Insurance Program (NFIP) were created to fill gaps in the private market, but federal subsidies and outdated pricing structures have distorted risk signals. These policies encourage development in high-risk areas while leaving taxpayers to cover mounting deficits.

Federal disaster aid, such as FEMA grants, can “crowd out” private insurance demand by reducing incentives for individuals to purchase adequate coverage—shifting more financial responsibility onto taxpayers. Meanwhile, rising home insurance premiums underscore the growing challenges of insuring against climate-driven disasters.

Taxpayers for Common Sense supports reforms that align federal policies with market principles, including risk-based insurance rates and investments in resilience. These measures would reduce moral hazard, protect communities, and ensure taxpayer dollars are spent effectively.