The demand and price of real estate (especially waterfront) means we will keep developing in flood plains, beaches, lowlands, barrier islands and river valleys. Everything will be "just fine" 99.9% of the time, until mother earth smacks us to remind who's boss.

If there were no Federal insurance, that wouldn't be a bad thing. But someone in the private sector would be willing to take those bets, and hopefully that someone isn't "too big to fail" (e.g. AIG).