HOMEOWNERS who previously thought their properties were un-insurable due to flood risk may soon be eligible to qualify for cover again.Insurance is based on the principle of accurate risk assessment, and this new procedure will help that task:
The insurance giant, Norwich Union, has developed a new digital computer model that will identify individual properties at risk of flooding, the company announced yesterday.
The new technology should mean far more accurate premiums for an estimated five million people living in flood risk areas across the UK.
Unlike previous systems, which tended to lump all post codes together and penalise some homeowners who had never been flooded, the insurer believes that more people are likely to benefit from the computer model as it may indicate that their property is not in fact at risk, or will not flood as often as previously thought.So here is a fine example of the market in action. Those living in less-risky areas will benefit from falling insurance premiums and house builders will need to avoid flood-prone sites.
Regular readers may suspect that I haven't got to the punch line yet. And they are correct!
Our friends in Brussels don't approve of the insurance principle. A few days before the article on flooding, the IEA's John Blundell had this to say:
I have just stumbled upon a proposal so ludicrous that I can only take pleasure in putting in the boot. The innovation comes from the European Commission. You may think it a wee bit technical and tedious but there is comedy if you are patient.And so in the name of the sacred religion of "equality" it will be illegal for insurers to discriminate between male and female drivers.
"The Impact Directive implementing the principle of equal treatment between women and men in the access and supply of goods and services" sounds mildly virtuous, even blameless. Yet it is a heavy-handed imposition of falsehoods. It requires that insurance companies do not differentiate between men and women, whether it be for motor insurance or pensions.
But actions have consequences:
Paul MacDonnell of the Irish Insurance Federation expresses his exasperation: "In motor insurance, where objective sex-specific claims data justifies differences between men and women drivers, particularly amongst younger, less experienced drivers, equalising the premiums to the benefit of young males without improving their risk profile will bring more high risk drivers on to the road, thus making our roads less safe for all road users."The same nonsense is proposed for pensions. At present, a lump sum of £100,000 will provide an annual pension of £6,658 for a sixty-year-old man, but only £6,331 for a woman of similar age. That's because women live longer than men: the insurance companies' actuaries expect the total payout to be the same for both sexes. But that's "unfair", whine the arithmetically challenged bureaucrats of the Frankenreich, who want both sexes to receive identical annual amounts. So instead we'll get an even more unfair system that will result in men getting a smaller lifetime payout than women.
In reality, of course, single men will simply invest less in private pension plans, thus putting even more pressure on state schemes.