Right about now, when hurricanes such as Dean storm through the Caribbean, US coastal areas are reminded how vulnerable seaside building can be, and how costly if destroyed. And yet, development in these areas continues, hurricane or no hurricane.
One reason is the lure of the water and warmer climes. That's next to impossible to turn off. But a more controllable factor is government interference with the market price of hurricane insurance. This manipulation can be corrected, though the trend is not very encouraging.
Insurance rates are based on risk, and high rates act as a brake on risky behavior. Since hurricane Katrina, premiums in many coastal areas have more than doubled. Those rates are based on forecasts of more intense and frequent hurricanes, and on projected losses from growing development, which is becoming ever more luxurious and costly to replace....
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