Federal catastrophe cover?

The US government should scrap rate caps for reinsurers and offer subsidies to low-income homeowners in high-risk areas Howard Kunreuther says in a forthcoming book, according to Reuters.

He also suggests the industry develop long-term home-insurance policies, perhaps tied to the life of a homeowner's mortgage, to promote market stability.

But Robert Litan, a Brookings Institution senior fellow, says the government should be come an insurer. He proposes a federal reinsurance program to which all homeowners would have to contribute. Premiums would vary according to risk level, but everyone would chip in. The program would include not just hurricane-prone homeowners but also those in regions at risk for earthquakes or major wildfires, to spread out costs and coverage.