{"id":17999,"date":"2012-12-01T09:57:25","date_gmt":"2012-12-01T14:57:25","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=17999"},"modified":"2014-01-24T08:57:59","modified_gmt":"2014-01-24T13:57:59","slug":"the-problem-with-flood-insurance","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2012\/12\/01\/the-problem-with-flood-insurance\/","title":{"rendered":"The problem with flood insurance"},"content":{"rendered":"<p>Talking about a very topical issue in Britain, <a href=\"http:\/\/timharford.com\/2012\/12\/the-high-risk-of-living-on-a-low-flood-plain\/\" target=\"_blank\">Tim Harford<\/a> explains why flood insurance is so expensive for some areas:<\/p>\n<blockquote><p>I\u2019m not sure this is really an insurance problem.<\/p>\n<p><strong>How could it not be an insurance problem?<\/strong><\/p>\n<p>It seems to me that there are three kinds of hard-to-insure risks. First, there are unimaginable events, \u201cunknown unknowns\u201d, if you like. Yet floods are all too easy to imagine. Then there are risks that are subject to what economists call adverse selection. To take an extreme example, imagine a town ruled by some all-powerful Mob. Nobody in this town is ever robbed without warning. The Mob will be sure to let you know what\u2019s coming to you and why they think you deserve it.<\/p>\n<p>[. . .]<\/p>\n<p><strong>But that doesn\u2019t sound like a good description of flood risk.<\/strong><\/p>\n<p>Quite so. Now the third kind of hard-to-insure risk is stuff that\u2019s expensive and happens quite often. I\u2019m trying to buy a house, I\u2019m nearly 40 and so I\u2019m trying to buy insurance for my family in case I die or become too ill to work. This is perfectly possible: it\u2019s just expensive, because it\u2019s not unusual for middle-aged men to get seriously ill. This sounds like a much better description of allegedly uninsurable homes: if there is a one in five chance of a flood, and a flood is going to cost \u00a350,000, don\u2019t expect to pay less than \u00a310,000 a year for flood insurance.<\/p>\n<p><strong>But that\u2019s unaffordable for a lot of people.<\/strong><\/p>\n<p>Yes, but unaffordability is not uninsurability. It\u2019s insurable but expensive.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Talking about a very topical issue in Britain, Tim Harford explains why flood insurance is so expensive for some areas: I\u2019m not sure this is really an insurance problem. How could it not be an insurance problem? It seems to me that there are three kinds of hard-to-insure risks. First, there are unimaginable events, \u201cunknown [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,25],"tags":[946,121],"class_list":["post-17999","post","type-post","status-publish","format-standard","hentry","category-britain","category-economics","tag-flooding","tag-insurance"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-4Gj","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/17999","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=17999"}],"version-history":[{"count":2,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/17999\/revisions"}],"predecessor-version":[{"id":23938,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/17999\/revisions\/23938"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=17999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=17999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=17999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}