2.1 CONCLUSION TO ANSWER THE MAIN RESEARCH QUESTION, IT HAS TO BE...

8.2.1  Conclusion  

To answer the main research question, it has to be approached in two parts.

First, in the previous chapter, the recommended conditions necessary for the introduction of private

insurance were identified. It was then ascertained whether or not these conditions are currently to be

found in the Netherlands. The result of this analysis is as follows:

Entry conditions currently present:

A Free Market in Flood Insurance

Sufficient Size of Insurance Community

Entry conditions currently absent:

High Public Flood Risk Awareness (Demand)

Removal or Reform of Public Flood Compensation

Political Support

A Standalone National Flood Risk Model

A Strong Independent Regulator

Operational conditions for effective private flood insurance:

An Active Financial Role for Government

Public Reinsurance or State Guarantee

Affordable Basic Coverage

Market Based Incentives to Overcome Adverse Selection

Community Level Mitigation Incentives

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Clear Boundaries for Public and Private Sector Responsibility

As can be seen, at present only two of the entry conditions for the introduction of effective private

insurance can be identified. It can be inferred, therefore, that the conditions are not ideal in the current

Dutch flood risk compensation context. Significant changes and reforms to the current system would be

required if the conditions for effective private flood insurance are to be created.

The second part of the main research question concerns whether private flood insurance would deliver

social and economic benefits to the Netherlands. Private flood insurance is said to be effective when it

is both financially viable and economically efficient. Several of the conditions identified above (high

demand for flood insurance; reform of the WTS public flood compensation system and a standalone

national flood risk model etc.) are necessary if private flood insurance in the Netherlands is to be

effective, yet they are currently not present.

Pulling the two parts of the answer together, it can be concluded that the introduction of private flood

insurance to the Netherlands will not contribute significant social or economic benefits because the

conditions for it to be effective are currently not optimal.

As a policy recommendation, if the Dutch government would like to reduce the public sector’s financial

liability for flood risk, rather than relying on mandatory regulation to force the uptake of private flood

insurance, it should instead foster the necessary economic and political conditions for the effective

operation of the sector. If, however, the Dutch government were prepared to remove the WTS public

compensation entirely then the introduction of some form of mandatory private flood insurance would be

both legitimate and beneficial for the Netherlands socially and economically. The rest of this chapter will

critically discuss the argumentation behind the conclusion.