Fires are still raging across Los Angeles in what is shaping up to be one of the most expensive calamities on American soil, with estimates of the economic damage and losses running as high as $275 billion. Thousands of residents have lost their homes, which are often their most valuable asset.
Yet there are few signs that policymakers and regulators are grappling with the decisions that brought so many people into high- risk areas to begin with. Their refusal to do so sets the stage for an even bigger, and potentially deadlier and even more expensive disaster down the line.
Financial markets, if left to their own devices, would naturally force Americans to confront the ugly realities of our changing climate and deter them from flocking to places where human habitation is increasingly untenable. Unfortunately, this basic system of supply and demand has been stymied by regional and federal policies — policies supported by both Democratic and Republican lawmakers in both blue and red states who buckle under the short-term political pressure to keep home insurance premiums artificially low.
The result is highly unfair and distorts the market. It endangers our economy by sending scarce resources into the path of natural disasters and will likely devastate still more lives.
Opinion | Our Insurance System Subsidizes Moves to Disaster Zones
