IForty years ago, France created a compensation scheme for natural disasters (CatNat). The law of July 13, 1982 now makes it possible to compensate (almost) all victims, in the event of recognition of the state of natural disaster by the government and the causal link by the expert. Today, 95% of French people are covered by multi-risk home insurance which must include a CatNat guarantee. The universal and united nature of the system has made it an essential protection.
But given the acceleration in the frequency and intensity of these disasters, there is reason to fear that insurance is reaching an intervention limit. France Assureurs, the professional organization of the sector, estimates that the cost of climatic hazards covered by insurance could double by 2050, rising from 73 billion to 143 billion euros.
The essence of the activity of insurer is to indemnify the victims of disasters, in order to erase the effects monetarily. This approach is based on certain principles whose application is increasingly difficult.
The traditional concept of repair ad integrum (returned to the previous situation) becomes theoretical. How to restore a previous situation if the environment has changed radically (for example, if a house is threatened by rising sea levels)?
Similarly, the insurer traditionally calculates the amount of premiums and indemnities according to the frequency of occurrence of claims. This principle applies to one risk at a time. Admittedly, the cover offered is in the form of bundles of guarantees (multi-risk insurance), but the intensity, frequency and interaction of disasters can lead to the effects of amplifying the compensation due. Finally, since retrospective analysis of the occurrence of risks is not sufficient, insurers are increasingly using models to consider prospective risks. But experience has shown that modeling itself has its limits when the risks reach an unprecedented and cumulative scale.
Risk awareness tools
These developments thus tend to reduce the field of insurance intervention. Too high frequency risks become uninsurable; the increase in the share payable by the insured (the deductible) can become unbearable. Conversely, the rarest events, the consequences of which are too costly to be fully absorbed by the insurance markets, lead the State to intervene as a reinsurer of last resort. This is the case of the CatNat scheme, born of a partnership between private insurers and the State. Thus, the damage caused by floods occurring more frequently than once a decade remains the responsibility of the insured, while the damage due to an exceptional event sees the State intervening in relay of the operators of the market and the Caisse reinsurance centre.
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