7.3.8 Clear Boundaries for Public and Private Sector Responsibility
In most countries where there is a public flood insurance system that is either mandatory, quasi-
mandatory, or even voluntary, private insurance, while not impossible, will likely struggle to gain market
share. Private flood insurance could slot under the Dutch WTS in a multi-level public-private system,
but this could lead to problems. A private insurance offer would suffer from being crowded out if the
promise remained that the state would also pay compensation. This is indeed a likely scenario. While
the WTS includes an annual maximum limit to the amount of flood compensation the state could
theoretically pay out in flood compensation each year, it is unlikely that this figure would be adhered to.
If the flood were severe enough to merit higher levels of emergency aid or public compensation, it is
probable that the government of the day would opt to offer greater amounts of flood compensation as
refusing to do so would be politically unwise. The WTS in effect a relatively minor part of the actual
unwritten guarantee the Dutch state provides for flood along with other perils, that threaten the
country’s security or future prosperity. Demand for private flood insurance will be curtailed while the
WTS is in operation in its current slightly ambiguous form. Clear boundaries, particularly lower limits, for
government involvement would be recommended in the Dutch context, as is the case in the multi-level
Belgian and French arrangements. In the UK system, the government has no financial responsibility for
flood compensation so the boundaries are very clear and there is no danger of crowding out private
sector insurance products.
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