The institution of insurance as it is known today has been largely neglected by sociologists, even though it is the central institution, alongside government, responsible for risk management (Ericson et al 2003: 44). A central focus of risk management is the protection of society from damage caused by natural hazards. This thesis aims to frame insurance and other institutions involved with risk management into a particular viewpoint of social problems.
Natural hazards constitute the largest shore of the market for insurance while at the same time pose the largest challenge for the institution. One may question why this is so. Well into the 21st century anthropogenic climate change or global warming is no longer merely a theory, it has become reality. International reinsurers, scientists and politicians agree that anthropogenic CO2 and other gases are increasing the temperature on earth. Consequentially natural hazards are increasing in frequency and impact (Munich Re 2009). This poses problems for societies dealing with impacts from natural hazards. Much research has been done on individual behavior in deciding whether or not to insure against natural hazards (Kunreuther 2004; Kerjan 2008a; Grace 2006).
This line of research views individual as myopic in assessing risk, thereby underestimating risk and the relevance of insurance. The emphasis of this research is mostly on the irrationality of individuals as regards the benefits of insurance. This perspective fails to take into account the influence of societal institutions on individual decisions; for example, whether or not to insure against disasters. Theoretical exercises in this direction are common, whereas attempts to consider the environment of a specific risk management system are rare. Michael Huber’s observation (2004a) represents an exception as it describes the institutional arrangement for the management of floods in England while emphasizing the influence it has on insurability.
The assumption that institutions exercise an effect on the insurability of natural hazards remains central. Generally when regarding natural hazards one can differentiate between those affected and those unaffected by anthropogenic climate change. Natural hazards which are not amplified by global warming are earthquakes, volcano eruptions and tsunamis (Munich Re 2009). [...]
Table of Contents
Introduction
I. Insurability of natural hazards
II. Current institutional arrangements (USA, UK, Germany)
The United States
1. Floods in the United States
1.1 Main institutions involved with US floods
1.1.1 The NFIP
1.1.2 The SBA
1.1.3 Federal Government
1.2 Interaction between institutions
2. Windstorms in the United States
2.1 Private insurance
2.2 The Federal Emergency Management Agency
2.3 Governmental insurance regulation
2.4 Interaction between Institutions
2.5 Hurricane Katrina
3. Droughts in the United States
3.1 The perception of drought in the US
3.2 Main institutions involved with drought
3.2.1 Monitoring U.S droughts
3.2.2 The role of the RMA and FSA
The United Kingdom
4. Floods in the United Kingdom
4.1 Institutions managing floods in the UK
4.1.1 DEFRA
4.1.2 The Environment Agency
4.1.3 Private Insurance
4.2 Interaction between Institutions
4.3 The 2007 Floods
5.0 Storms in the UK
5.1 Institutions managing storms in the UK
5.1.1 Private Insurance
5.1.2 The Met Office
5.1.3 Central Government
5.2 Interaction between institutions
5.3 Impact of windstorms
5.4 Hurricane Kyrill
6. Drought in the UK
6.1 Institutions managing drought in the UK
6.1.1 The Environment Agency (EA)
6.1.2 Defra (Department of the Environment Food and Rural Affairs)
6.1.3 The water industry
6.1.4 Ofwat (The Water Services Regulation Authority)
6.1.5 Secondary institutions involved with drought
6.2 Interaction between institutions
6.3 Impact of drought
Germany
7. Floods in Germany
7.1 Institutions managing flood risk
7.1.1 German flood insurance
7.1.2 Federal Government
7.1.3 The role of State Governments
7.2 Interaction between institutions
7.3 Impact of floods
7.4 The Century-Flood “Jahrhundertflut”
7.5. Mandatory insurance in Germany
7.6 Flood effects in detail
8. Windstorms in Germany
8.1 Institutions managing windstorms
8.1.1 Private insurance
8.1.2 Central Government
8.1.3 Monitoring windstorms
8.2 Interaction between institutions
8.3 Impact of windstorms
8.6 Winterstorm Kyrill
9. Drought in Germany
9.1 Private insurance
9.2 Federal Government
9.3 Possible impacts of drought
9.4 The 2003 summer drought
III. Comparative approach
10. The United States
10.1 Floods
10.2 Storms
10.3 Droughts
11. United Kingdom
11.1 Floods
11.2 Windstorms
11.3 Drought
12. Germany
12.1 Floods
12.2 Storms
12.3 Droughts
13. Functional difference between institutional arrangements
IV. Global warming a perpetuation
14. The United States
14.1 Are floods in the United States insurable?
14.2 Are windstorms in the United States insurable?
14.3 Insurability of United States droughts
15. United Kingdom
15.1 Are floods in the United Kingdom insurable?
15.2 Insurability of windstorms in the UK
15.3 Insurability of drought in the UK
16. Germany
16.1 Insurability of floods in Germany
16.2 Insurability of windstorms
16.3 Insurability of droughts in Germany
17. Insuring natural hazards in a global warming environment
17.1 The protective institutional arrangement
17.2 National differences and prospects
17.3 Insurability of natural hazards
Conclusion
Research Objectives & Key Themes
This thesis examines the insurability of natural hazards—specifically floods, windstorms, and droughts—within the institutional frameworks of the USA, the UK, and Germany, under the increasing pressure of anthropogenic climate change. The core research question addresses whether these weather-related disasters remain insurable under current institutional arrangements, and how governmental intervention influences risk management and individual decision-making.
- Impact of anthropogenic climate change on natural hazard frequency and severity.
- The concept of "protective institutional arrangements" and their role in risk management.
- Comparative analysis of national institutional regimes in the USA, UK, and Germany.
- The problem of adverse selection and its mitigation through different institutional strategies.
- The influence of governmental disaster aid and insurance regulation on individual mitigation behaviour.
Excerpt from the Book
I. Insurability of natural hazards
Social scientists have seldom investigated insurance, except for some narrow specialisms of law and economics. Concerning sociology, Ericson et al. (2003) state that “… the sociology of insurance remains nascent”. They follow this by offering a theory of “Insurance as Governance” which illustrates how insurance, alongside central government, is the main contributor to social security, solidarity and freedom (Ericson et al: 2003). Other sociological contributions view insurance under different perspectives (Burchell 1991; Beck 1999; Stone 1999; Huber 2008).
Generally the concept of insurance as such can be tracked back as far as the first millennium. The procedure of insuring their freight against losses remained feasible for seamen aiming to meet the expectations of an investor throughout the middle age (cf. Luhmann 1993: 17) (cf. Jaffee et al. 1999: 207). The range of populations interested in this concept hardly changed over the following centuries.
The institution of insurance, as known today, arose at the beginning of the 19th century. It evolved from a combination of growing wealth and society’s demand to be able to deal with risk. The coverage of industrial labour accidents was the first example of a successful application of insurance. At first opposed by the workers of the 19th century, compensation for industrial labour accidents developed to be an appreciated element of modern society (Burchell 1991: 197). This was the introduction of insurance into modern society. Following this, a tendency grew for governments to promote the benefits connected with the purchase of private insurance policies. For example, by the end of the nineteenth century governments encouraged individuals to purchase life insurance policies, glad to be rid of the responsibility taking care of surviving dependents (Ericson et al. 2003). Rapidly society accepted and embraced these new usages of the institution. Insurance evolved into a concept that could be applied for dealing with various social uncertainties.
Summary of Chapters
I. Insurability of natural hazards: This introductory section explores the historical evolution of the insurance institution and defines the core challenges, such as adverse selection, in covering natural hazards.
II. Current institutional arrangements (USA, UK, Germany): This chapter provides a detailed overview of the risk management structures for floods, windstorms, and droughts in the three respective countries, highlighting governmental and private sector roles.
III. Comparative approach: This section tests the functional equivalence of the different national systems by analyzing their resistance to systemic disturbances and the specific policy failures within each framework.
IV. Global warming a perpetuation: The final part assesses how the permanent factor of global warming impacts the existing institutional arrangements and discusses the long-term insurability of natural hazards.
Keywords
Natural hazards, Insurance, Global warming, Anthropogenic climate change, Institutional arrangements, Risk management, Adverse selection, Moral hazard, Flood, Windstorm, Drought, Government, Disaster aid, Insurability, Comparative analysis.
Frequently Asked Questions
What is the fundamental objective of this work?
The thesis aims to analyze whether floods, windstorms, and droughts remain insurable under current institutional frameworks in the USA, UK, and Germany, specifically in the context of climate change.
What are the central thematic fields?
The work integrates insurance theory, sociology of risk, and policy analysis, focusing on how different governmental and private structures manage natural hazard risks.
What is the primary research question?
The primary research question is: Are floods, storms, and droughts insurable under current institutional arrangements, and are these arrangements functionally equivalent across the analyzed countries?
Which scientific methods are utilized?
The author employs a comparative institutional analysis, testing the stability and resilience of various national risk management regimes against systemic disturbances.
What topics are covered in the main body?
The main body details the specific institutional roles (like the NFIP in the USA, the "Gentlemen's Agreement" in the UK, and state-led structures in Germany) for flood, storm, and drought management, followed by a comparative stability assessment.
Which keywords define this publication?
The key concepts include natural hazard insurability, adverse selection, moral hazard, protective institutional arrangements, and the impact of anthropogenic global warming.
How does the author define a "protective institutional arrangement"?
It is defined by four factors: subsidized insurance premiums, federal protection (such as flood defenses), government disaster aid, and price regulation, which tend to mask the true risk signal to individuals.
What is the "politician's dilemma" described in the book?
It refers to the trade-off faced by elected officials: they gain more social approval and political credit by acting after a disaster occurs rather than investing in invisible, proactive mitigation measures.
- Arbeit zitieren
- Peter Nicholson (Autor:in), 2010, Is global warming insurable? A comparative analysis, München, GRIN Verlag, https://www.hausarbeiten.de/document/283832
