Proposed New York Hurricane Fund Appears to Make Things Worse
Managing the risk of hurricanes and other natural disasters is a very difficult problem, but New York State’s proposed special hurricane fund appears to be the wrong solution. The proposal being considered would force insurers to set aside a portion of their premiums for hurricanes, but insurers would not be able to deduct this expense until it is actually spent on a hurricane. This proposal is discussed in Joe Treaster’s article in this morning’s New York Times. Special Fund Proposed for Hurricane Insurance, 10/9/07, at C4. Insurers would be setting aside money now, paying taxes now, and receiving deductions later. Rather than solving the hurricane burden, this proposal seems to exacerbate that burden. This program would quickly become another illustration of how New York is a tough place to do business.
