60 R Elliott
funds that will compensate the losses of any one of its members (Baker &
Simon 2002; Lehtonen & Liukko 2015; Stone 2002). What the controversy
over existing cross-subsidies suggests, then, is that there is something at
stake in the matter of precisely how, on what terms, and with what effects
this takes place.
This chapter analyses aspirational projects to minimise or eliminate flood
insurance cross-subsidisation in the US and UK. My approach conceives of
a cross-subsidy as a kind of imagined ‘flow,’ where resources seem to move
around across insureds, as the revenue collected in one place makes it possible to continue building and living in another. It cognitively and financially
connects people who may have different orientations to and experiences
of living near the water. Efforts to minimise or eliminate cross-subsidies
from insurance arrangements frame this flow as a problematic one: there
is too much of something – risk, responsibility, reward – in one place and
too little of it in another. This flow needs correction. It needs to be reduced,
stopped, or redirected in ways that set normatively desirable boundaries –
floodwalls, say – around what people, private firms, or governments put in
and what they get out.
Insurance institutions reflect and enact the political cultures and moral
economies in which they are embedded. You can tell a lot about what a
society values, and how it defines the relationships between citizens, the
state, and the market, based on what it insures and how (Baker 1996; Collier
2014; Elliott 2021). In some countries, such as France, Spain, and Denmark,
where ‘solidarity system[s]’ exist, cross-subsidisation is regarded as a social
good. That premiums are decoupled from individual risks, that flows exist
between insureds, is not regarded as inappropriate, or at least not so inappropriate that it would outweigh the greater good of making sure everyone
can access affordable coverage (Lamond & Penning-Rowsell 2014).
In the United States and the United Kingdom, by contrast, to the extent
that cross-subsidisation continues in actually existing insurance arrangements right now, many decision-makers and observers consider this to be
a temporarily tolerated, and functionally or politically necessary, evil. In
both countries, plans for the future of flood insurance seek to minimise
or eventually eliminate cross-subsidisation, even as both systems continue
to rely on it to achieve certain aims. In the United States, the latest effort
to minimise cross-subsidies is framed as a technical achievement that will
immediately realise more equitable conditions for policyholders. In the
United Kingdom, a more gradual transition away from cross-subsidies is
framed as a political achievement that will realise more prudent outcomes,
redistributing responsibilities across individuals, the government, and the
private market.
Flooding is already the costliest ‘natural’ disaster in both countries, and
both countries are facing higher expected risks and losses due to further
climate change. Looking at the two cases together, I argue, illuminates a
core contradiction at the heart of these aspirational projects as they are
funds that will compensate the losses of any one of its members (Baker &
Simon 2002; Lehtonen & Liukko 2015; Stone 2002). What the controversy
over existing cross-subsidies suggests, then, is that there is something at
stake in the matter of precisely how, on what terms, and with what effects
this takes place.
This chapter analyses aspirational projects to minimise or eliminate flood
insurance cross-subsidisation in the US and UK. My approach conceives of
a cross-subsidy as a kind of imagined ‘flow,’ where resources seem to move
around across insureds, as the revenue collected in one place makes it possible to continue building and living in another. It cognitively and financially
connects people who may have different orientations to and experiences
of living near the water. Efforts to minimise or eliminate cross-subsidies
from insurance arrangements frame this flow as a problematic one: there
is too much of something – risk, responsibility, reward – in one place and
too little of it in another. This flow needs correction. It needs to be reduced,
stopped, or redirected in ways that set normatively desirable boundaries –
floodwalls, say – around what people, private firms, or governments put in
and what they get out.
Insurance institutions reflect and enact the political cultures and moral
economies in which they are embedded. You can tell a lot about what a
society values, and how it defines the relationships between citizens, the
state, and the market, based on what it insures and how (Baker 1996; Collier
2014; Elliott 2021). In some countries, such as France, Spain, and Denmark,
where ‘solidarity system[s]’ exist, cross-subsidisation is regarded as a social
good. That premiums are decoupled from individual risks, that flows exist
between insureds, is not regarded as inappropriate, or at least not so inappropriate that it would outweigh the greater good of making sure everyone
can access affordable coverage (Lamond & Penning-Rowsell 2014).
In the United States and the United Kingdom, by contrast, to the extent
that cross-subsidisation continues in actually existing insurance arrangements right now, many decision-makers and observers consider this to be
a temporarily tolerated, and functionally or politically necessary, evil. In
both countries, plans for the future of flood insurance seek to minimise
or eventually eliminate cross-subsidisation, even as both systems continue
to rely on it to achieve certain aims. In the United States, the latest effort
to minimise cross-subsidies is framed as a technical achievement that will
immediately realise more equitable conditions for policyholders. In the
United Kingdom, a more gradual transition away from cross-subsidies is
framed as a political achievement that will realise more prudent outcomes,
redistributing responsibilities across individuals, the government, and the
private market.
Flooding is already the costliest ‘natural’ disaster in both countries, and
both countries are facing higher expected risks and losses due to further
climate change. Looking at the two cases together, I argue, illuminates a
core contradiction at the heart of these aspirational projects as they are