I have a feeling this story is going to be all over the news. It turns out that a bunch of insurance companies including AllState, Nationwide Mutual Insurance Co, and MetLife are either pulling home insurance are cranking up the requirements due to hurricanes. The punch line to this story is that its on the eastern half of Long Island New York, not Florida or Louisiana.

The story on the AP today quotes the chairman of Allstate “Homes in Long Island (N.Y.) have gone up in the last five years between 60 and 70 percent. Believe me, our rates have not gone up by 60 or 70 percent ..You look at our exposure and you say ‘We want to have enough capital to protect and care for all our 17 million households across the country.’ To do that, you may have to reduce your exposure in a small way in other areas..”

Is the government the solution? No, its the problem. This is simply a side effect of the Fed’s easy money policies starting in 2001 which have resulted in asset price inflation.