Alternative Approaches to Insurance of Extreme Flood Risk

Hana Bártová ()
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Hana Bártová: University of Economics, Prague

Chapter Chapter 16 in New Trends in Finance and Accounting, 2017, pp 173-182 from Springer

Abstract: Abstract Extreme flood risk belongs to actual issues of insurance industry. Flood risk is higher than in the past due to extreme events caused also by climate changes. This risk influences negatively the role of commercial insurance. Insurers make exceptions in cover of extreme flood claims. Risk of excessive floods becomes uninsurable and insurers look for alternative approaches to cover extreme impacts of flood risk realization. An effective solution is offered by cooperation among insurers, state and supervisor based on insurance pool. Reserves are concentrated within common flood fund. In case of extreme floods, fund covers excessive claims. Uninsurable flood risk is mitigated through pool system. Other approaches are provided by alternative risk transfer methods. Cover of extreme flood risk is provided by selected financial instruments and divided among different financial market participants. Extreme flood risk is also significant in conditions of foreign insurance markets. Alternative approaches have been introduced in the USA, Great Britain, Norway, etc. Common features of mentioned approaches are a system based on cooperation of related participants and a need to cover extreme flood risk.

Keywords: Uninsurable risk; Flood; Alternative risk transfer; Czech insurance market (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-49559-0_16

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DOI: 10.1007/978-3-319-49559-0_16

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