B - IBC Flood

Question 1

IBC FLOOD

Discuss Insurers and Govt NEW AGREEMENT about Flood Risk Insurance in UK

Answer 1

1) Creation of FLOOD RE
2) RSP financed by insurers as a non-for-profit fund to subsidize high-risk properties
3) Levy charged to all other policyholders
4) Always operates at a loss:

• to ensure availability/affordability to high-risk properties
• to help the transition to risk-based pricing

5) Gov’t roles are:
- setting price ceiling for flood coverage
- responsible for extraordinary cat losses
- investing in new flood defences

Question 2

IBC FLOOD

US Flood Insurance Program

Answer 2

1) Public
2) Voluntary
3) Optional End’t. Homeowners can buy coverage only if living in SFHA (Special Flood Hazard Areas)
4) 20-30% take-up rate
5) Gov’t set pricing (based on Flood Insurance Rate Maps (FIRMs))
6) Financial impact to taxpayers
7) Federal program - NFIP (National Flood Insurance Program). NFIP system cannot be financially sound by design.

Question 3

IBC FLOOD

3 roles of government for Flood Insurance

Answer 3

1) invest in infrastructure, zoning, floodplain development regulation, up-to-date flood maps for land-use planning
2) increase public education
3) address the issue of high-risk properties