An investigation of flood memory, insurance and property value: The UK regime

Bhattacharya-Mis, Namrata; Lamond, Jessica

Abstract

Availability of insurance cover is considered to be a key issue in saleability and reinstatement of property. With increasing flood risk properties are likely to find it harder to access easy and cheap insurance. Premium levels will increase if there is fully adjusted risk based prices. Evidence suggests that the underwriting process of insurance often tries to bring a balance between history of claim and estimated or predicted risk. Therefore the memory of claims remains inherent within the system and affects future insurance terms. Literature reveals that properties with repeated impacts of flooding having memory of flood event are more prone to issues concerning high premium during renewal of insurance. Property insurability is often discussed in literature, but focused research on insurance in the context of system memory is disproportionately scarce. Such a void in the knowledge domain of what affects insurability for properties facing higher frequency of flood events and memory of claims in the system motivated the requirement for a re-examination of existing work. This research draws its lessons from a purposive literature review from recent surveys in flood risk literature both in the residential and commercial property sectors interpreted through the lens of flood memory. The review suggests that suitable management of memory within the insurance system can provide positive impact in risk reduction, reduce moral hazard and adverse selection of insurance, and enhance resilience for the property for future renewal of insurance.

• Presentation Conference Type: Conference Paper (unpublished)
• Conference Name: RICS COBRA 2015
• Start Date: Jul 8, 2015
• End Date: Jul 10, 2015
• Publication Date: Jul 1, 2015
• Publicly Available Date: Jun 6, 2019
• Peer Reviewed: Peer Reviewed
• Keywords: flood memory, insurance, property value, repeat flood, resilience
• Public URL: https://uwe-repository.worktribe.com/output/831682
• Publisher URL: http://www.rics.org/uk/knowledge/research/conference-papers/an-investigation-of-flood-memory-insurance-and-property-value---the-uk-regime/
• Additional Information: Title of Conference or Conference Proceedings : RICS COBRA AUBEA 2015