... it's the government's job to take the current incentive structure that promotes rebuilding and create a disincentive instead.
Do you also view it as idiocy that people continue to live in areas of India that flood during monsoon season?
Depends. Monsoon flooding is a somewhat different situation than hurricanes. We need the monsoons to grow crops. The times they go overboard and cause flooding should drive better land management and irrigation practices than abandonment, I'd say.
I'm more forgiving of situations where the land is chosen for practical reasons like "crops need water" than "seaside property is more prestigious". The first is a fact of nature. The second is a construct of human society, and weighed against loss of life and property, should ideally count for less.