Abstract
There is a high potential for recovery mechanisms to be used to incentivise the uptake of flood mitigation and loss reduction measures, undertake adaptation and promote community resilience. Indeed, creating a resilient response to flooding requires flood risk management approaches to be aligned and it needs to be ensured that recovery mechanisms to not provide disincentives for individuals and business to take proactive action to reduce risk. However, the degree to which it is desirable and effective for insurers and governments providing compensation to promote resilience and risk reduction depends upon how the cover or compensation is organised and the premiums which are charged. A review of international flood recovery mechanisms has been undertaken to identify firstly the types of schemes that exist and their characteristics. Analysis of existing instruments highlights that there are various potential approaches to encourage or require the uptake of flood mitigation and also discourage the construction of new development in high flood risk. However despite the presence of these instruments, those organising recovery mechanisms could be doing much more to incentivise increased resilience.
Highlights
There are many ways in which those who suffer the impacts of flooding can financially recover from losses
How flood insurance provision is structured, what losses are covered and excluded and how it is purchased all impact upon the effectiveness of the scheme for recovering from flood losses and how burden sharing is split between the at-risk individual and society
5.3 Higher and risk-reflective premiums. In those situations where insurance is compulsory or a condition on a mortgage, the use of risk-reflective premiums may be sufficient to incentivise householder actions to reduce the risk to their properties so that in turn they will receive a premium reduction
Summary
There are many ways in which those who suffer the impacts of flooding can financially recover from losses. These mechanisms can be broadly characterised by the level to which those who receive financial assistance, directly pay for the recovery mechanism and the formality and rigidity of the device. Available flood insurance within a well-functioning and solvent market has the potential to assist the recovery from hazard events; and positively influence mitigation behaviour. How flood insurance provision is structured, what losses are covered and excluded and how it is purchased all impact upon the effectiveness of the scheme for recovering from flood losses and how burden sharing is split between the at-risk individual and society
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