Floods are insurable!
The devastating floods in Germany, Austria and the Czech Republic in the summer of 2002 acutely threatened or even ruined many livelihoods. This was largely due to the fact that only a comparatively small part of the material damage and the resulting economical losses was insured.
This is highly unsatisfactory for the insurance industry, whose overall societal function is to provide economic security and to facilitate rapid recovery by offering adequate insurance cover.
The greatest distress was mitigated by remarkably generous donations and government aid. Nevertheless, it will take years to eliminate the hardship completely. In Swiss Re's opinion, funding catastrophe damage via voluntary donations and taxpayers' money is only the second-best solution.
An approach based on traditional insurance according to the solidarity principle is better for all concerned and it is feasible: from an underwriting point of view, there is no reason why comprehensive cover for flood damage should not be available, provided that the essential principles of insurability are observed. This presupposes a close partnership among the insurance industry, policy-holders and governments.
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