I wonder where the Burkett Moss paper is heading. There are hints but no clear statement. This para:
A third model is what has been called ‘Fairness as Social Justice’. On this view, insurance in the provision of goods that are basic requirements of social justice should be provided independently of individuals’ risks and choices.
Seems to be where their heart is. When you add on:
The risk of bushfires has been (at least partially) caused by decades of government inaction on climate change. Australia is one of the highest per-capita emitters of greenhouse gases (GHGs) and the world’s largest exporter of coal and gas. Yet, Australia has done little to address climate change.
Also, currently, around 97% of all Federal funds spent on disasters are spent after a disaster occurs and not before.
They are saying that the government is responsible to find a solution. This starts to look like a subsidy to allow those in high risk areas to afford higher premiums. The question is where does the subsidy come from? I may be wrong here but I if I am I don’t see where they are heading at all.
If that is the case then we are talking about moving household insurance to a community rating like health insurance. As the authors mention this parallel this does look like their destination. In this case the high risk insured are subsidised by both government and the low risk insured. You can see the insurance industry are going to be ambivalent about that kind of solution. They will love it if the public purse pumps billions into their industry and they will hate the idea of higher premiums all round instead of just in the high risk postcodes. We can expect some exquisite lobbying over the details of any such plan.
As with health insurance one of the points of argument will be if the degree of personal responsibility is going to be assessed and if so how. The argument goes that it is not right for society to support the poor choices of the individual.
If the individual says: why should I subsidise your hospital stay if you are morbidly obese and smoke like a chimney when I think you could choose not to be like that? In the same way one might say: why should I subsidise your home insurance because you choose to live on the top of a hill above a forest where an uncontrollable bushfire can be expected to rip through about every 50 years?
The question of who is responsible is raised, the individual or the government who has been so inactive about climate change. The answer is both and neither.
People do build inappropriate houses in most inappropriate places despite all advice to the contrary and the government has been lax about climate change.
Some have little choice but to live in a risky house that was built 50 years ago and not all the climate change outcomes are due to our poor governments.
So where does that leave us? At the moment the problem is in the too hard basket. I don’t expect to see any action until insurers start to refuse insurance on the basis of fire risk. Even then it will be likened to flood risk, we currently have the situation that flood insurance is not available in flood prone areas, insurers will say they have no choice. My crystal ball says it will stay in the too hard basket for a decade at least.