Solidarity, Markets, and the Regulation of Flood Risks: Insurance and Its Limits

Insurance is a key mechanisms through which societies have for centuries managed risks. For some, insurance is an efficient mechanism to manage risks providing both regulation of risk-increasing behaviors and compensation for material damages. Others, in particular Ulrich Beck, have pointed to limits to insurability on the basis of the scale of damage and the complexity of contemporary risk. This paper takes a different stance by asking three questions: How is insurance organized at the limit of insurability? What implications does organizing insurance at the limit of insurability have in terms of regulation and compensation? How can we make sense of (different forms of) the organization of insurance at the limit of insurability? This paper explores these questions by analyzing the evolution of private flood insurance in Germany and England from the 1990s onwards. Drawing on in-depth empirical research, the paper argues that limits to insurability are contingent upon institutional, political and politico-economic conditions. Specifically, interactions between state and private flood insurers, as well as past and present market conditions shape how private insurance is organized at the limit of insurability. The findings of this research provide important insights as to the limits, variety and implications of insurance as governance mechanism for addressing contemporary risks.