The Transition from Private to Public Insurance for Natural Hazards: A Comparative Review of International Experiences

Payments to ameliorate disaster damages are typically provided through public assistance programs or insurance. For large-scale natural hazard disasters, governments have historically played a major role in providing this assistance, especially as comprehensive private disaster insurance coverage can rarely be sustained over time. In Switzerland, New Zealand, and Spain, publicly owned disaster insurance schemes were established as early as a hundred years ago. Currently, with an increasing risk of climate change–related disasters, private insurance retreat is happening more frequently in more places, and the need to devise sustainable public disaster insurance (PDI) systems is gaining policy attention. Useful lessons can be extracted from analysing the processes that have led to the establishment of existing PDIs. Using a narrative review, we describe the process of PDI establishment and identify recurrent themes associated with this process, including the incentives involved, role of risk knowledge, government deliberations, legislative proposals, and associated changes in disaster mitigation policies. We analyse the main implications of these past experiences for current and future transitions to PDI systems following private insurance retreat and explore what is still missing in our knowledge about PDIs’ performance.