Insurance Denial not Only for Mining, but also for Residential and Private Parties?

At Riskope we have been writing and discussing insurance denial issues hitting miners around the world since 2009. Now there is evidence that the problem of Insurance Denial not Only for Mining and is extending to flood insurance (and most certainly to other natural hazard-linked events in the future).

From a societal risk management point of view the problem is quite intriguing

Seen from a societal risk management point of view the problem is quite intriguing:

1) Governments (at all level, from Central to Municipalities) have allowed residential development of areas that were already, or may become (because of climate change) hazardous (at higher frequency than “calm” areas). Reasons for those decisions vary from demographic pressure (need to find a place for people to settle) to “business like” (more people means more income taxes, more employment, etc.)
2) People have gladly gone into “hazardous” area unknowingly, or because they were affordable. Finally,
3) Insurances were happy to insure, as it meant more business. In some cases they established “agreements” with the government, as they were almost replacing a “public service”.

Whatever the reasons and the history, now insurers are finding themselves overexposed. In fact, governments cannot offer that “public service” (people in “calm” areas would not agree to “pay for the others”) and people in the hazardous area demand safety, rescue and support.

Three actors, three sets of “historic reasons”, three sets of diverging interests.

Any ideas and comments?

Tagged with: climate change, flood insurance, Hazard, insurance denial, issues

Category: Consequences, Hazard, Mitigations, Risk analysis, Risk management