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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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  • Surminski, Swenja

Abstract

Flood Re is widely hailed as an innovative approach to disaster risk insurance. This paper 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 modelling and risk communication, technical underwriting, distributional aspects and the behavioural implications of Flood Re, particularly with regards to risk reduction and prevention. The paper concludes that the new pool is a transitional reinsurance arrangement that supports the private insurance market and secures affordability of flood insurance in the UK 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.

Suggested Citation

  • Surminski, Swenja, 2018. "Fit for purpose and fit for the future? An evaluation of the UK’s new flood reinsurance pool," LSE Research Online Documents on Economics 87106, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:87106
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    File URL: http://eprints.lse.ac.uk/87106/
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    Cited by:

    1. Hazra, Devika & Gallagher, Patricia, 2022. "Role of insurance in wildfire risk mitigation," Economic Modelling, Elsevier, vol. 108(C).
    2. 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.
    3. 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.
    4. 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.

    More about this item

    Keywords

    Flood Re; flood risk management; reinsurance;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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