It’s not in FEMA’s purview to do anything about private insurance. But if the underlying problem — an underinsured populace — remains unsolved, it can only lead to more taxpayer subsidies. FEMA estimates the new reforms will add at at least another half billion dollars a year to the federal tab.
Fugate doubts the country will fix this feedback loop anytime soon. “We’ve been underpricing risk in this nation so long, we’ve built this dynamic now where people have built and live in areas that are increasingly vulnerable to these disasters,” he said. “The insurance industry can’t make it work, so the taxpayer will pay more and more.”