Covering water damage – flood insurance around the world

THE HAGUE, Netherlands (AP) — The catastrophic flooding unleashed on Texas by Harvey was unprecedented. Elsewhere in the world, flooding associated with wild weather is a challenge confronting all types of communities from coastal cities in Asia to mountain villages in Europe.

In the last two months alone, floods have killed more than 1,000 people across India, southern Nepal and northern Bangladesh. Some 40 million more have seen their homes, businesses or crops destroyed.

Compounding the misery is the fact that many don't have access to insurance and even if they do, it can be prohibitively expensive. At least in the United States, there is a government-backed program that provides flood insurance to residents. But in the Houston area, which bore the brunt of Harvey, many residents didn't have the flood coverage and could have to dip into savings to pay for repairs.

Maryam Golnaraghi, director of the extreme events and climate risk program at global insurance think tank, The Geneva Association, said governments and the insurance industry have to work together to make insurance affordable and give people incentives to buy it.

"In the past, that marriage did not work," she said. "Now they've realized that neither the industry nor government can do it alone. They have to work together on provision of insurance."

Here is a glance at how other flood-prone regions deal with insurance.

ASIA

Of all natural calamities, floods are the most frequent and costly in Asia due to the combination of monsoonal weather and burgeoning populations in coastal cities and river flood plains.

Rising sea levels linked to global warming are also expected to increase the frequency of so-called once in a century floods such as those that swept through Thailand in 2011, costing tens of billions of dollars.

In Asia's developing countries, which make up the bulk of the region's population, private insurance against flooding and other natural calamities is beyond the reach of most.

From Bangladesh to Indonesia and India, the burden of losses as well as the costs of relief and reconstruction falls on individuals, businesses and the already over-stretched budgets of governments and charities.

The Geneva Association estimates that in 2014 only 10 percent of losses from all types of natural disasters in Asia were insured compared with 60 percent in North America.

In China, government-subsidized insurance against natural calamities has been available for farmers since 2007 — but crucially only covers crops and livestock. Private insurance is negligible with only 1-2 percent of flood losses insured and flood insurance for property not available at all in rural areas, according to the Geneva Association.

Thailand's government set up a National Catastrophe Insurance Fund after the 2011 floods with the intention of backing up hard-pressed domestic insurance companies so they would continue to offer natural disaster insurance. However participation is not compulsory and according to media reports, local premiums have still soared, counter to the government's intention, while insurers have reduced the amounts they'd pay out.

EUROPE

The 28-country European Union has a fund to help member states tackle natural disasters like floods and earthquakes. However, the so called EU Solidarity Fund is intended to help governments meet the cleaning-up costs and rebuilding. It is not meant to cover private insurable losses — that is down to homeowners in member states.

There's perhaps no country in Europe more alert to the threat of flooding than the Netherlands. The low-lying nation of 17 million has a well-developed network of dikes, dunes and water barriers that have largely succeeded in containing the water.

For a country constantly battling the elements, it may come as a surprise that flood insurance is not so well-advanced. Only one Dutch insurer offers it.

The national association of insurers wants to change that and has long called for a mandatory scheme that would involve adding a small amount — 50 cents to a euro — to existing homeowner insurance premiums.

"England, France, Belgium have flood insurance. It is crazy that a delta country like the Netherlands doesn't," the association's spokesman Rudi Buis said.

"Maybe people think we are so good with our dikes and everything else we can fix it, it won't happen. But we think that's an illusion, particularly in light of climate change."

The country's Consumer and Markets Authority rejected the proposal back in 2013, however, arguing that consumers must have a choice of whether or not they insure against flooding.

Now, if there is a flood, Dutch homeowners who suffer damage have to hope that the government activates a national program that pays out for damages suffered in major natural disasters or serious accidents.

In France, all insurance contracts covering houses, businesses, public entities or vehicles must by law include protection against natural disasters, including floods, said Stephane Penet of the French Insurance Federation.

Insurers must cover flood losses up to a certain amount, above which a state fund kicks in, he said.

"If there is a huge catastrophe in France . from a certain amount of losses it's no longer the insurers that pay, it's the state," he said.

In Romania, fewer and fewer people are insuring their homes against flooding. The National Pool against Natural Disasters reported that at the end of July about 1.7 million homes were insured, down 4 percent on the previous year.

Of those homes that were covered, only 24.4 percent were in rural areas, which face the highest risk of flooding. It is not clear if the cost of policies is preventing locals, who are generally less well off than those in the cities, from taking out insurance.

In Britain, several damaging floods prompted the government to step in to make insurance more affordable, flooding consultant Mary Dhonau said in a telephone interview.

The government launched Flood Re, a not-for-profit scheme funded by insurers that covers flood losses.

"Over time, we estimate that Flood Re will benefit over 350,000 households by having access to those more affordable policies," the organization says on its web site.

Associated Press writers Stephen Wright in Bangkok, John Leicester in Paris and Alison Mutler in Bucharest, Romania, contributed.