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My name is Reimund Schwarze from
the European
University Viadrina,
which is a small
countryside university
in the vicinity of Berlin,
and I'm teaching mostly
insurance of economics,
or what is called the
economics of natural hazards,
in fact, to students of
business and management.
I'm doing this for
almost 20 years.
I'm reporting in my talk
about, so to speak,
20 years of experience in
flood insurance in Europe
from an economic
perspective, in fact,
I have a specific school
of thought which proved to
my experience that
is very useful in
understanding what
we see in Europe,
but also beyond Europe,
on flood insurance-
that is called
institutional economics.
I will explain this in my talk.
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Here is what I have
to bring to you.
I am talking about a
very diverse landscape
of insurance for floods
and storms in Europe.
Not to confuse you and keep
it as simple as possible,
I did what scientists
usually do.
They reduce the variety of
existing schemes to a
stylized set of what I call
financial risks of natural
hazards transfer schemes
or abbreviated FRNH
transfer systems,
which is the most general
term I could find to speak
about insurance schemes
on the one hand
and schemes that are backed by
taxes for compensating damages,
which are also
frequent in Europe.
I relate these
stylized systems in
Europe to the existing
schemes in Europe.
This means, the real
variety of our landscape of
insurance and
compensation schemes
to demonstrate that often
in reality, these schemes are
mixed models of the
stylized schemes,
and also that there is a
systematic tradeoff between
a high level of private sharing
into risks and
little regulation,
and on the other hand,
a highly regulated market that
avoids a low density
of insurance.
I will come to this in a moment
and hopefully with full clarity.
The underlying
reasons why it's so
diverse and why it is so
difficult in some sense
to arrive at a well-functioning
insurance scheme for
natural hazards or
even a well-functioning
compensation scheme,
tax-based for natural
hazards relates to a set of
economic problems which
these institutions in
Europe adapted to
over a long period.
Some as far as going back
to the medieval period
or let's say the early
industrializing period,
so a few hundred years old,
so to speak, others are
more topical to the day
that means they are
evolving, let's say,
in the UK only
just six years ago
in terms of how it
is designed today.
But, often so this history of
insuring natural hazards or
compensating for
natural hazard damage
goes back a couple of
centuries in Europe.
We see how different
countries or even regions
adapted to the challenges
of the underlying
economic problems.
As scientists do,
we usually start
