Question: Should natural disaster insurance be made mandatory?
Bob’s answer: No
Mandates would prevent incentives to build risk-management processes and are very unpopular. Those in high-risk states must rely on lenders to require borrower insurance. States must enforce strong building codes and tort reform should be enacted to avoid frivolous lawsuits. Also, Army Corps of Engineers approval should be required to redevelop in disaster-prone areas. Lastly, tax reform should alter GAAP [generally accepted accounting principles] to permit insurance companies to establish reserves for potential catastrophes.