Some of the highest risk areas have federally subsidized flood insurance
And some people have rebuilt 4-5 times. The national flood insurance kitty is dry. The main reason is that the rates are "not actuarially sound and do not reflect the inherent flood risk."
http://www.ironshore.com/blog/2017-reauthorization-and-future-viability-of-the-national-flood-insurance-programIt seems obvious that there should be some provision in the policy that if your house located on a spot that has flooded in the last X years (say 10?), your policy pays out cash, but will not pay to rebuild your house on that spot or within any other flood plain.
Otherwise, someone like the person on the radio who had just had his house destroyed for the fourth time, would be paying 20% of the home value in annual premiums.
Even so, the nature of flooding (and with some of the recent fires, perhaps fire too), is that localized losses are so big that few private companies can pay out at that scale. So it's not unreasonable to me that there would be something like FDIC, but the current system where people pay way below actuarially sound levels just doesn't make sense.
I don't know much about that, but I have thought a lot about the cost/benefit of fire insurance.
We pay about 1.6% of our home's value ever year in fire insurance. Close call this year, but this subdivision has been here since 1966 with only one home lost to fire (operator error on the part of an appliance repairman). That's 53 years. At this premium, it would be about 62 years to breakeven for the insurance company. So in theory, if we had burned down this summer, we would have gotten a deal :-)
We have some houses near us that are owned as a small part of a large part of an investment portfolio. I found out during this fire that they self insure. In their investment calcs, it isn't worth paying.
The question is, on a warming planet where storms and fires are getting more severe, is 1.6% enough?
Currently, it is estimated that 50% of all homes in the Western US are at risk of wildfire. So basically, at my rates, insurance companies would have to see 0.8% of houses destroyed every year before they lost money. That would surprise me, even accounting for climate change and changing development patterns.
I don't know how the math would work out for flood insurance. But it seems like it's mostly a political problem, not a math problem.