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Insurance Against Climate Change and Flooding in the Netherlands: Present, Future, and Comparison with Other Countries

Wouter Botzen and Jeroen van den Bergh

Risk Analysis, 2008, vol. 28, issue 2, 413-426

Abstract: Climate change is projected to cause severe economic losses, which has the potential to affect the insurance sector and public compensation schemes considerably. This article discusses the role insurance can play in adapting to climate change impacts. The particular focus is on the Dutch insurance sector, in view of the Netherlands being extremely vulnerable to climate change impacts. The usefulness of private insurance as an adaptation instrument to increased flood risks is examined, which is currently unavailable in the Netherlands. It is questioned whether the currently dominant role of the Dutch government in providing damage relief is justified from an economic efficiency perspective. Characteristics of flood insurance arrangements in the Netherlands, the United Kingdom, Germany, and France are compared in order to identify possible future directions for arrangements in the Netherlands. It is argued that social welfare improves when insurance companies take responsibility for part of the risks associated with climate change.

Date: 2008
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Handle: RePEc:wly:riskan:v:28:y:2008:i:2:p:413-426