Flood Insurance

Flood insurance can be a long-term non-structural measure for building resilience among flood victims. However, there are a number of obstacles which prevent the widespread use of flood insurances so far. The most problematic aspect is the uneven spatial distribution of flood risks. Unlike exposure to earthquakes, storms and other natural hazards, flood risk exposure is usually limitied to comparatively small areas along river banks, depressions or areas with insufficient drainage capacity. The figure from SwissRe below shows an example how different risk zones can be delineated for the purpose of risk proportionate flood insurance.  

Experience so far indicates that people who need insurance most are often those who could least afford to pay the premium. This may be due to high premiums in particularly exposed areas and/or due to the fact that the most severely flood exposed areas in developing countries are often inhabited by low income groups. In many other cases flood insurances are just not available. 

One promising approach to make flood insurance more workable is to combine flood insurance with insurances to other natural hazards. This increases the pooling of risks significantly and reduces premiums. Another possibility to support the dissemination of flood insurances are subsidies, which can form part of recovery programmes. 

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SwissRe (1998)

Further Information

SwissRe: Floods - an insurable risk?