Sustainable development and the TWIA
It's popular these days to talk about "sustainable development" and to recognize a common obligation to preserve natural resources for future generations.
But the concept of sustainable development can be applied to government as well as the environment, especially during lean economic times.
When tax rates rise too high or the public debt becomes too burdensome, we have to ask if the government has gotten too big -- and if all the services it offers are sustainable.
Let's look at just one government program: the Texas Windstorm Insurance Association (TWIA).
Last year, more than 2,500 lawsuits were filed in Jefferson County District Court. One fourth of those suits were Ike-related claims against insurance providers.
More than 80 Ike suits have already been filed in the first month of this year, each one naming TWIA as primary defendant.
So far, TWIA has paid nearly $2 billion to 93,000 homeowners affected by Ike. The agency has about $100 million in cash on hand and can issue $2.5 billion in bonds (assuming anyone would buy them). It also has about $636 million in reinsurance.
It doesn't take a Ph.D. in economics to see that this is not sustainable.
One more hurricane like Ike and TWIA will be gone with the wind.
Of course, it wasn't just Ike that pushed the agency into its present perilous position. It was the greed of any number of claimants and their counsel, who milked the program for all they could without regard to its long-term viability.
It's one thing to come together as a community and pool resources for the common good. It's quite another to allow those resources to be plundered by opportunists.
TWIA was established as the insurer of last resort for Gulf Coast homeowners whose properties suffer wind and hail damage. Unfortunately, it's become a slush fund for plaintiffs attorneys.
In its present state, the Texas Windstorm Insurance Association is simply not sustainable. It must either be reformed or dismantled.