A recent Defra report on flood insurance outlined a number of principles to govern future flood insurance. One particular principle is that the provision of flood insurance should be equitable. It does not elaborate though on how this can or should be defined.
The Joseph Rowntree Foundation report suggests there are at least three different principles of fairness or ‘equity’ that might govern an equitable insurance provision.
- Pure actuarial fairness – where individuals bear the cost of their own risk.
- Choice-sensitive fairness – reflecting those risks that are a result of each individuals choices, but not risks where the individual has no choice or fault.
- Fairness as social justice – the provision of at least some class of basic goods regardless of the risks and choices of individuals, as a basic entitlement.
The National Flood Forum suggests there is now some consensus in wishing to address issues of inequality with various models under consideration. However the hands-off approach remains a concern.