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Development of a risk-based framework to integrate flood insurance



An appropriate distribution of flood losses over time span may dampen the degree of disruption. Flood insurance is one of the effective ways in order to cope with the aftermaths of flood events. In the absence of an acceptable risk-based assessment framework, flood insurance and its extensive benefits are not fully achieved yet. Consequently, flood insurance is trivially practiced worldwide. To ensure the integration of flood insurance into regular flood management practices, its acceptability by floodplain inhabitants is a prerequisite. Therefore, an admissible insurance rate is a vital factor for the acceptability of insurance policy. This article introduces a risk-based methodology to calculate insurance rate. Normally, insurance rates are based on historic flood events or on a specific design flood. Expected annual damages distribution map (EADDM) is developed to assess spatial distribution of risk. Distribution of flood losses against a specific flood is compared with EADDM. The impacts of both approaches on insurance provider and insured are studied. Single flood approach ignores the impacts because of other floods. Therefore, insurance rates based on single flood are not justifiable. The proposed framework not only facilitates risk-based insurance rate calculation but also endorse flood insurance acceptability.