As the losses due to flood events keep increasing in Europe, the role of insurance as a tool for managing and mitigating the impact of flooding becomes ever more important. A well-functioning insurance system reduces the impact and facilitates a quicker recovery after a flood event. Moreover, insurance can play a pivotal role in encouraging the implementation of flood risk reduction measures at the individual property level. For households, several studies have explored how an insurance incentive can motivate homeowners to invest in protective adaptation measures, such as installing water-resistant materials.
However, while the influence of insurance incentives on household-level flood preparedness is relatively well documented, a comparable analysis has not been conducted for businesses. This gap is particularly relevant given the potentially high economic and social costs of business interruptions during flood events.
Researching the effect of an insurance incentive for increasing business-level flood adaptation in the Netherlands is the focus of the ACCREU case study conducted by Vrije Universiteit (VU) Amsterdam. Obtaining a better understanding of how an insurance incentive can promote building-level flood risk adaptation measures enables insurers and policymakers to design targeted programs that contribute to risk reduction.
Additionally, this study assesses the effect of insurance reforms such as different insurance supply systems on the insurance protection gap in the Netherlands. This includes examining the impact of transitioning from a fully voluntary private insurance model to a government-supported system, as well as expanding coverage to include multiple types of flood events.
Initial results reveal that an insurance incentive has the potential to increase adaptation effort for businesses and that insurance premium reforms can contribute to higher insurance uptake.
This research and its preliminary results were presented at the European Geosciences Union General Assembly in Vienna, where the poster received positive feedback that has contributed to refining and advancing the ongoing research. If you are curious about the abstract, it can be found here.
Image credit: European Geosciences Union (EGU), egu.eu