D5.3 Working paper: Novel insurance instruments for risk reduction
Deliverable D5.3, submitted on 27 February 2015, asked how insurance can be designed so that it encourages policyholders and governments to reduce disaster risk rather than simply paying for losses.
- Deliverable: D5.3, working paper, work package 5
- Full title: Novel and improved insurance instruments for risk reduction
- Named on the record: Swenja Surminski, as uploader; cited in the Letters from Sendai as Surminski et al., 2015
- Timing: delivery month 27, which corresponds to February 2015 (project month 1 being December 2012); the file is a submission version dated 27 February 2015
D5.3 is the ENHANCE working paper on insurance and risk reduction. Its question is how insurance instruments can be designed, or existing ones improved, so that they encourage people and organisations to reduce risk.
According to the seventh Letter from Sendai, written by Swenja Surminski in March 2015, the paper combines theory with qualitative and quantitative approaches and evidence from European cases (Letters from Sendai no. 7). The cases named include:
- the Po basin in Northern Italy;
- England;
- Chamusca in Portugal.
The letter also gave the paper’s practical conclusion. Risk-based pricing works as an incentive for large commercial clients but is much harder to apply to households and governments, and whether a scheme can influence risk behaviour has to be decided early, in its design.
That conclusion bears directly on the national schemes. The UK’s Flood Re and index-based parametric insurance both raise the same design question about incentives. D5.3 followed D5.1 and appeared alongside D5.2.
The report is listed in the document library.