1. Review the articles concerning the NFIP under Public Policy Issues.
a. Under the National Flood Insurance Program, have coastal property owners historically been charged an Actuarially Fair Premium?
b. Consider the characteristics of an Ideally Insurable Risk. Is the peril of flood an ideal risk from the insurance companies' perspective?
c. Is it fair to have US taxpayers subsidize the insurance cost of property owners who choose to locate in flood zones?
d. What will be the effect of the dramatic increase in premium price for flood insurance required under Biggert-Waters law of 2012?
e. The government requires automobile owners to purchase automobile insurance. Should flood insurance be treated the same?
f. Should the federal government continue to provide Disaster or Charity Relief to property owners in flood-prone areas?
2. Review the article Lessons for Insurers and Regulators From Catastrophic Events and Insurers Running Out of Cover in the Catastrophe Events folder under Topic 9.
a. Briefly explain why Hurricane Sandy is not covered by most homeowner insurance policies and why it is difficult to find coverage after a hurricane? Which requirement of an insurable risk is violated here?
b. Which solution to solve the problem in question (a) above is discussed in the second article but the insurance industry failed to do?