A useful scapegoat
By developed-world standards, and particularly for a country with such a benign climate, the recent flooding has caused hardship on quite a large scale.
At the same time, some people will inevitably benefit from it. Most of that is entirely legitimate: builders and repairers, suppliers of food and goods to replace what’s been damaged/lost, etc – all indirect beneficiaries whose markets suddenly grew.
Will there also be direct beneficiaries? Well, there’s financial and political capital to be had. There’s damage and dilapidations, both preexisting and caused by the flood. Large figures are floating around: estimates for total damage, insurance payouts, uninsured losses, and state help (taxpayer payouts). The latter is the most controversial, with politicians and other representatives of the affected areas staking out their claims.
First up was about a month ago when Yorkshire caught the brunt of the first round of flooding. The prime minister announced help for the afflicted areas, and someone from Hull (Mayor? Council leader?) complained bitterly that it was utterly inadequate. That’s reasonable: it’s his business to get the best deal he can for his city, and he’d be failing in that if he sounded satisfied when he judged he could hope for more. Today we had a councillor for Gloucestershire telling us road repairs alone would cost £25M in her county. Same story: she wants the best she can get for her area. And they all want to stake out positions.
All of which begs the question: what is insurance supposed to be for, if the taxpayer is going to fork up when a disaster happens? And why is a victim of flooding more deserving of being bailed out than a victim of vandalism, burglary or fire? Could it be because it’s a public/media event, and politicians need to be seen to do something? What, me, cynical?
Well, if I were from the insurance industry, I’d be looking at policies with explicit exclusions for large-scale natural disasters, on the grounds that there’s public money to cover them. Save a fortune!
Where there’s public money, corruption inevitably follows. The representatives of Hull, Gloucestershire and other affected areas have legitimate needs, but how could they resist the temptation to absorb at least some general backlogs in repairs and maintenance into the cleanup budgets? Shortfalls in funding – real or manufactured – may then become a convenient scapegoat for general failings.
And if there’s a hardship fund for uninsured individuals, the same applies. The insurance industry has ways (albeit imperfect) to detect and deter fraud. Taxpayer-funded schemes lack the expertise and manpower to detect either fraud or real hardship, so it’ll be the professional con-men who stand to benefit most from public money.
That at least could be alleviated if distribution of the public funds was outsourced to the insurance industry. Except of course, they’re already working flat out to deal with their own business.