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Fit for Purpose and Fit for the Future? An Evaluation of the UK's New Flood Reinsurance Pool

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  • Swenja Surminski

Abstract

Flood Re is widely hailed as an innovative approach to disaster risk insurance. This article offers a mixed‐methods evaluation of the new pool, asking whether it is “fit for purpose” and “fit for the future.” The investigation considers the roles of the public and private sectors, risk modeling and risk communication, technical underwriting, distributional aspects, and the behavioral implications of Flood Re, particularly with regards to risk reduction and prevention. The article concludes that the new pool is a transitional reinsurance arrangement that supports the private insurance market and secures affordability of flood insurance in the United Kingdom through premium subsidies. However, this approach is likely to come under pressure in the face of rising flood risk as it fails to incentivize flood risk management and risk reduction efforts.

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  • Swenja Surminski, 2018. "Fit for Purpose and Fit for the Future? An Evaluation of the UK's New Flood Reinsurance Pool," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 21(1), pages 33-72, March.
    • Handle: RePEc:bla:rmgtin:v:21:y:2018:i:1:p:33-72
    DOI: 10.1111/rmir.12093
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    6. Surminski, Swenja & Eldridge, Jillian, 2015. "Flood insurance in England: an assessment of the current and newly proposed insurance scheme in the context of rising flood risk," LSE Research Online Documents on Economics 66256, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Unterberger, Christian & Hudson, Paul & Botzen, W.J. Wouter & Schroeer, Katharina & Steininger, Karl W., 2019. "Future Public Sector Flood Risk and Risk Sharing Arrangements: An Assessment for Austria," Ecological Economics, Elsevier, vol. 156(C), pages 153-163.
    2. Hazra, Devika & Gallagher, Patricia, 2022. "Role of insurance in wildfire risk mitigation," Economic Modelling, Elsevier, vol. 108(C).
    3. Chloe H. Lucas & Kate I. Booth, 2020. "Privatizing climate adaptation: How insurance weakens solidaristic and collective disaster recovery," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 11(6), November.
    4. Garbarino, Nicola & Guin, Benjamin & Lee, Jonathan, 2022. "The Effects of Subsidized Flood Insurance on Real Estate Markets," Bank of England working papers 995, Bank of England.
    5. Robinson, Peter John & Botzen, W. J. Wouter & Kunreuther, Howard & Chaudhry, Shereen J., 2021. "Default options and insurance demand," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 39-56.
    6. Jie Shao, 2022. "Model assessment of public–private partnership flood insurance systems: an empirical study of Japan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(1), pages 79-102, January.
    7. Carolyn Kousky & Howard Kunreuther, 2018. "Risk Management Roles of the Public and Private Sector," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 21(1), pages 181-204, March.
    8. Neelke Doorn & Lieke Brackel & Sara Vermeulen, 2021. "Distributing Responsibilities for Climate Adaptation: Examples from the Water Domain," Sustainability, MDPI, vol. 13(7), pages 1-16, March.
    9. Selene Perazzini, 2020. "Public-Private Partnership in the Management of Natural Disasters: A Review," Papers 2006.05845, arXiv.org.
    10. Steven Koop & Fabian Monteiro Gomes & Laura Schoot & Carel Dieperink & Peter Driessen & Kees Van Leeuwen, 2018. "Assessing the Capacity to Govern Flood Risk in Cities and the Role of Contextual Factors," Sustainability, MDPI, vol. 10(8), pages 1-21, August.

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