8.3.9 The Future of Public Flood Compensation in the Netherlands
The WTS - or revised form of it - could be beneficially integrated with a free market in private flood
insurance. As a sovereign guarantee to cover losses that exceed the commercial capacity of private
insurance markets, it would lead to more affordable premiums and greater financial resilience in the
sector. Public private multi-level arrangements work well in both France and Belgium. In theory a multi-
level PP system integrating a form of the WTS, could, as proposed by Botzen and van den Bergh
(2008), combine the strengths of both private and public actors to overcome the challenges of providing
flood insurance in the Netherlands. However, leaving the WTS in its current form would probably not be
conducive to introducing private flood insurance. Therefore, a condition would be to replace or reform
the WTS in order to complement and not crowd out private insurers from entering the Dutch market.
Supporters of a true free market n flood insurance would not agree that a public sector level of risk
transfer is necessary and would argue that it will only lead to market distortions and cartel behaviour as
private companies collude to capture more profits by passing bad risks ‘up’ to the public’s purse.
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