Comments on Henry Ergas “Neglecting to place a price on risk”, 14/01/2011, http://www.theaustralian.com.au/news/opinion/neglecting-to-place-a-price-on-risk/story-e6frg6zo-1225987393351
A good article and analysis from a respected economist.
What governments have done was to exacerbate the moral hazard problem. Undoubtedly many people either did not pay enough insurance in line with the risks, or were unaware of the risks due to the lack of information.
The government should consider how to balance compassion with right incentives.
Some lessons will need to be learnt, so we make progress, become wiser collectively and reduce future losses in events of natural disasters.
PS: my earlier comments on a proposal to make insurance accessible to all has foreshadowed this point.
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