Flood Re: risk classification and distortion of the market
Flood Re: risk classification and distortion of the market
Insurance law, at least in the United Kingdom, has the reputation for being simply a sub-set of contract law rules, and of little social significance. This reputation is ill-deserved, because the regulation of insurance pricing plays a fundamental role in the relationship between citizen, markets and the State. Access to insurance is a vital element in functioning as a citizen, although this is often underplayed by insurers. In this paper we examine the role of Flood Re in continuing the long tradition of subsiding the real cost of flood cover for residential properties, and the consequential difficulties this creates for markets, insurers and non-residential markets.
The Water Act 2014 signals the move to a formal system of subsidy of high-risk houses, but on the proviso that this subsidy is temporary- it is to be phased out of the next 20-25 years. This statutory scheme was heavily influenced by the insurance industry, who argued repeatedly for the removal of this ‘distortion of the market’. Attempts elsewhere to shift the cost of natural disaster risk away from the State and on to the market have largely been unsuccessful. The question is whether Flood Re can buck this trend.
26-33
University of Southampton
Davey, James
6fe8c2ef-5959-4877-94a5-a55098975daa
15 August 2015
Davey, James
6fe8c2ef-5959-4877-94a5-a55098975daa
Davey, James
(2015)
Flood Re: risk classification and distortion of the market.
Hjalmarsson, Johanna
(ed.)
In Future Directions of Consumer Flood Insurance in the UK - Reflections upon the creation of Flood Re.
University of Southampton.
.
Record type:
Conference or Workshop Item
(Paper)
Abstract
Insurance law, at least in the United Kingdom, has the reputation for being simply a sub-set of contract law rules, and of little social significance. This reputation is ill-deserved, because the regulation of insurance pricing plays a fundamental role in the relationship between citizen, markets and the State. Access to insurance is a vital element in functioning as a citizen, although this is often underplayed by insurers. In this paper we examine the role of Flood Re in continuing the long tradition of subsiding the real cost of flood cover for residential properties, and the consequential difficulties this creates for markets, insurers and non-residential markets.
The Water Act 2014 signals the move to a formal system of subsidy of high-risk houses, but on the proviso that this subsidy is temporary- it is to be phased out of the next 20-25 years. This statutory scheme was heavily influenced by the insurance industry, who argued repeatedly for the removal of this ‘distortion of the market’. Attempts elsewhere to shift the cost of natural disaster risk away from the State and on to the market have largely been unsuccessful. The question is whether Flood Re can buck this trend.
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Published date: 15 August 2015
Venue - Dates:
Future Directions of Consumer Flood Insurance in the UK, London, United Kingdom, 2015-06-25
Organisations:
Southampton Law School
Identifiers
Local EPrints ID: 379903
URI: http://eprints.soton.ac.uk/id/eprint/379903
PURE UUID: 984cf440-c13d-4a92-952a-0a52ef31a2bf
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Date deposited: 27 Aug 2015 08:02
Last modified: 16 Mar 2024 21:30
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Contributors
Author:
James Davey
Editor:
Johanna Hjalmarsson
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