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Natural Hazards Insurance in Europe - Tailored Responses to Climate Change Needed

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  • Reimund Schwarze
  • Gert G. Wagner

Abstract

This paper provides an overview on the existing systems of natural hazards insurance in Europe, their structural characteristics and peculiarities. It also discusses the difficulties of an adaptation of these systems to climate change and a growing number of natural disasters. Using the case of Germany as an example, the paper demonstrates that the obstacles facing system change are numerous, including failure to recognise the role of state guarantees in enabling private insurance markets, mistaken legal objections against mandatory insurance, distributional conflicts between central and state governments and re-election considerations by politicians. The adjustments to new weather conditions should reflect existing differences in the regional and national insurance systems in the EU. 'Change in diversity' is seen to offer the best chance to arrive at insurance systems which are prepared for climate change while being adapted to local particularities. Efforts to harmonise national and regional systems as well as top down EU initiatives are rejected in this paper.

Suggested Citation

  • Reimund Schwarze & Gert G. Wagner, 2009. "Natural Hazards Insurance in Europe - Tailored Responses to Climate Change Needed," Working Papers 2009-06, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2009-06
    as

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    References listed on IDEAS

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    2. Paul A. Raschky & Manijeh Schwindt & Reimund Schwarze & Hannelore Weck-Hannemann, 2008. "Risikotransfersysteme für Naturkatastrophen in Deutschland, Österreich und der Schweiz: ein theoretischer und empirischer Vergleich," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 77(4), pages 53-68.
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    7. Paul Raschky & Hannelore Weck-Hannemann, 2007. "Charity hazard - A real hazard to natural disaster insurance," Working Papers 2007-04, Faculty of Economics and Statistics, Universität Innsbruck.
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    9. Thomas Url & Franz Sinabell, 2008. "Flood Risk Exposure in Austria – Options for Bearing Risk Efficiently," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 128(4), pages 593-614.
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    Cited by:

    1. S. Surminski & J. Aerts & W. Botzen & P. Hudson & J. Mysiak & C. Pérez-Blanco, 2015. "Reflections on the current debate on how to link flood insurance and disaster risk reduction in the European Union," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(3), pages 1451-1479, December.
    2. Fabrizio Terenzio Gizzi & Donatella Porrini & Francesco De Masi, 2021. "Building a Natural Hazard Insurance System (NHIS): The Long-lasting Italian Case," Sustainability, MDPI, vol. 13(21), pages 1-22, November.
    3. Achtnicht Martin & Osberghaus Daniel, 2019. "The Demand for Index-Based Flood Insurance in a High-Income Country," German Economic Review, De Gruyter, vol. 20(2), pages 217-242, May.
    4. Swenja Surminski & Paul Hudson, 2017. "Investigating the Risk Reduction Potential of Disaster Insurance Across Europe," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(2), pages 247-274, April.
    5. Owen, Sally & Noy, Ilan, 2017. "The unfortunate regressivity of public natural hazard insurance: A quantitative analysis of a New Zealand case," Working Paper Series 20247, Victoria University of Wellington, School of Economics and Finance.
    6. Daniel Osberghaus, 2017. "Prospect theory, mitigation and adaptation to climate change," Journal of Risk Research, Taylor & Francis Journals, vol. 20(7), pages 909-930, July.
    7. Lara Johannsdottir, 2017. "Climate Change and Iceland’s Risk-Sharing System for Natural Disasters," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(2), pages 275-295, April.
    8. Surminski, Swenja, 2014. "The role of insurance in reducing direct risk: the case of flood insurance," LSE Research Online Documents on Economics 60764, London School of Economics and Political Science, LSE Library.
    9. Sally Owen & Ilan Noy, 2017. "The Unfortunate Regressivity of Public Natural Hazard Insurance: A Quantitative Analysis of a New Zealand Case," CESifo Working Paper Series 6540, CESifo.
    10. Donatella Porrini & Reimund Schwarze, 2014. "Insurance models and European climate change policies: an assessment," European Journal of Law and Economics, Springer, vol. 38(1), pages 7-28, August.
    11. E. Keskitalo & Gregor Vulturius & Peter Scholten, 2014. "Adaptation to climate change in the insurance sector: examples from the UK, Germany and the Netherlands," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 71(1), pages 315-334, March.
    12. Franz Prettenthaler & Hansjörg Albrecher & Peiman Asadi & Judith Köberl, 2017. "On flood risk pooling in Europe," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 88(1), pages 1-20, August.

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    More about this item

    Keywords

    Natural Hazards; Insurance; Climate Change; Europe; Germany;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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