> Yes, the insurance companies have been telling the Government 
> they'll have to improve the flood defences and drainage in those 
> areas.  Can't have
> them risking having to actually pay out any claims, eh?  :-)

Insurance is a risk spreading mechanism.
If you keep acquiring risk to spread it is sensible to see if its 
cheaper to reduce the risk than to keep having the spreadees pay for 
it. In the short term peaks in realised risk (the water comes 
in)(collapse of the wave function assumes a whole new meaning) in one 
area can be reasonably covered by income from other areas whose 
realsied risks are lower in the short term than long term actuarial 
projections. In the long term this is untenable and adjustments must 
be made to either reduce the rate of realisation in the problem areas 
or to modify the relevant actuarial projections and the fees which are 
based on them.

More succinctly: Insurance is meant to be a means of averaging peaks 
in cost due to short term fluctuations away from long term 
statistically based projections. Where situations change so that the 
cost projections are no longer valid one needs to either reduce the 
costs or increase the charges.

Failure of TPTB to install improved flood protection systems may lead 
to the insurance companies leaving the market entirely and leaving the 
home owneres to carry their own risk, or to increase premiums by a 
factor of 10 to 100 times. Neither outcome tends to be desirable.

Or: Insurance is meant to cover "accidents" - not near certainties.




            Russell






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