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Extended-form Case Study
Flood insurance in Switzerland: an institutional-economic analysis
Published on April 28, 2022 15 min
Other Talks in the Series: Economics of Disasters and Climate Change
Natural disasters: damage and loss
- Prof. Ilan Noy
- Victoria University of Wellington, New Zealand
My name is Reimund Schwarze from the European University Viadrina, which is a small countryside university in the vicinity of Berlin where I'm teaching mostly insurance economics, or what is called Economics of Natural Hazard to students of business and management. I've been doing this for almost 20 years and I'm reporting in my talk about 20 years of experience in Flood Insurance in Europe. I will use, as a case study for my talk, Switzerland, which has within itself two systems. I will explain this in my talk.
What are the forces at work that make systems more or less efficient? I use the example of Switzerland not only because it's the most efficient in terms of my analysis, but also because it's very clear in identifying those forces that make natural hazard insurance more efficient. In fact, in Switzerland, in terms of FINH insurance or transfer system, is a combination of two regions. The pale green one is the so-called Kantonale Gebäudeversicherungen or the Household Insurance at the Canton level, mostly in the northern part of Switzerland. 19 of those Cantons or regions of Switzerland have a compulsory insurance-based on a non-profit regional monopoly. In terms of our terminology, we introduced M1. It's practically a public body that insures, but at the same time, it's in charge of prevention and fire protection. You may think of it as being the fire brigades under the same roof as the insurance for fire. The dark green regions or Cantons, there are actually only seven, have a private insurance scheme where fire brigades are obviously not under the same roof as fire insurance but they have compulsory insurance or some form of compulsory bundling of insurances. They have some form of regulation but a mild one compared to M1.