2.3 Flood Compensation System Effectiveness
As the research question in this thesis pertains to both economic and social benefits from private flood
insurance, for a national flood insurance system to be considered effective, it has to able to deliver
benefit not only to the insurance companies that take on the financial risk but also to the wider society.
There are theories of effectiveness for insurance systems in general but also for flood insurance
systems specifically. Both are considered in the next section.
According to Swiss Re, Swiss Re (2012), one of the largest reinsurers in the world, to be able to deliver
both social and economic benefits an insurance system has to be both financially viable over the longer
term and also economically efficient. Swiss Re have condensed their theories for effective non-life
insurance systems into a set of business guidelines based on the following five principles of insurance:
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