Should there be compulsory insurance against natural hazards for all homeowners? After the “flood of the century” in 2021 and a second one this year, the question arises with some urgency. The federal states are in favor, Justice Minister Buschmann (FDP) is against it. Compulsory insurance would “make living more expensive, entail a great deal of bureaucracy and would not relieve the state of liability.”
Interestingly, the liberal Buschmann does not argue in a liberal way. The liberal argument would focus on personal responsibility: house not insured, flood, damage unaffordable, ruined – your own fault. An argument that could also be used to reject health insurance, seat belt or helmet requirements: no health insurance, cancer, treatment too expensive – bad luck. But few liberals take their beliefs to such extremes. Even libertarians are often secretly happy to be forced into their happiness.
Let’s look at Buschmann’s objections. Firstly, the state would not be exempt from liability in the event of flooding, even if all homeowners were insured. Why not? It would only be liable if the insurers could prove that the state had failed to take protective measures. If the insurers had to be liable for all private damage, however, they would have reason to keep an eye on the state in this regard. That’s a good thing, and a good liberal thing, by the way.
Secondly, compulsory insurance would entail a lot of bureaucracy. This does not have to be the case. Every homeowner is already registered with the tax authorities. It would be easy to instruct the property tax authorities to check whether a homeowner has insurance. This can be done digitally today. Or to require insurers to compare their data – also digitally – with the tax authorities.
There are still the costs. I pay 69.71 euros per year for voluntary “elementary protection” for my house against “earthquakes, floods, backwater caused by heavy rain, subsidence, sinkholes, landslides, snow pressure, avalanches, volcanic eruptions”. Well, like 90.9 percent of German citizens, I live in ZÜRS zone 1: statistically, flooding occurs here less often than once every 200 years. There are no volcanoes in Berlin, and avalanches only come from the roof. These ZÜRS zones were determined by the German Insurance Association. Only 1.7 percent of our fellow citizens live in zones 3 and 4, where flooding occurs more frequently. It goes without saying that insurance is more expensive for them.
But if all homeowners pay in, it will be cheaper for the people on the Danube in Bavaria or the Elbe in Saxony-Anhalt – and probably for me too. The masses make it. That’s actuarial mathematics – and solidarity. Not a liberal principle. But when the waters rise, liberals will be happy to have an ark too.
