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.
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