On the 28th-29th May the European Association of Law and Economics and the Geneva Association held a small, but focused, seminar on risk sharing and insurance for catastrophic events hosted by DIW Berlin in Berlin. Participants from all over Europe and across a wide range of sectors (universities, insurers, government risk reduction programmes for example) gathered to discuss the nature of risk sharing through insurance and how it can be used to improve society’s resilience to natural disasters.
The ENHANCE project was well represented at this seminar as Jeroen Aerts(1), Swenja Surminski(2) and Paul Hudson(3) providing the keynote talk to open the seminar. The research conducted under the umbrella of the ENHANCE project was well suited to this seminar due to our focus on insurance and the role that different stakeholders can play and interact with one another, and through this interaction share the risk faced.
Insights from ENHANCE regarding the potential trade-offs between affordability and disaster risk reduction incentives and that how this trade-off can met or how the design of insurance schemes can be guided to most efficiently link insurance and risk reduction. These insights provoked discussions on the potential role that behavioural nudging could promote the acceptance of risk reduction and insurance, the possible role of compulsory insurance; to the scope that insurance schemes are being designed to best suit their locations and the central message that their creators wish to provide.
The final conclusions of the seminar, combining the work of the ENHANCE project with a study on the Swiss model of disaster insurance, are that risk sharing requires a both insurance and prevention investment, combined with an active multi-sector partnership of the relevant stakeholders.
By Paul Hudson, IVM
Note to readers:
1. Institute for Environmental Studies, VU University Amsterdam, the Netherlands
2. Grantham Institute, London School of Economics, London, the UK
3. Institute for Environmental Studies, VU University Amsterdam, the Netherlands