Happy Presidents’ Day!

February 15, 2010 – 12:25 pm

Many readers are out of the office today celebrating Presidents’ Day by buying furniture or attending white sales. I write that in jest. I hope all are spending time with their families and enjoying the day.

Throughout U.S. history, presidents have often struggled with the issue of what role (if any), government should have in the insurance market. For example, this quote:

“the time is at hand this year to bring comprehensive, high quality health care within the reach of every American. I shall propose a sweeping new program that will assure comprehensive health insurance protection to millions of Americans who cannot now obtain it or afford it, with vastly improved protection against catastrophic illnesses. This will be a plan that maintains the high standards of quality in America’s health care.”

Can you guess which president made this pledge? Would you believe it was President Richard Nixon in his 1974 State of the Union Address.

Not only health insurance, but other markets have perplexed presidents. What level of government involvement is necessary? Can a private market support insurance for a particular risk? The National Flood Insurance Program, as an example, was passed in 1968. Flood insurance became “mandatory” in 1973 under a Republican president when it became clear that the earlier “voluntary” program was not working. Under President Reagan, a president who was anticipated to kill the program, the program was expanded, premiums increased and regulations strengthened to make the program self-sustaining by 1985.

Finally, terrorism insurance is another market perplexing to various presidents. Seldom considered before 2001, the massive single-day loss on 9-11 led many insurers and reinsurers to look at whether such a market could exist without a government component. President Bush committed government money and guarantees and President Obama suffered criticism when he suggested shifting more of the burden to the private market.

Presidents have always and will always look to the concepts of risk sharing that are inherent business insurance concepts regardless of party or political beliefs.

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