How does flood insurance serve as a useful tool to deal with residual risks of flooding?

Flood insurance is an important risk management tool that can be applied at various levels: individual, corporate and government. It provides a mechanism for sharing potential economic losses with others.

The basic principle is to spread the risks over time, and among individuals and organizations, which pay insurance premium against a specific risk. Insurance can play an important role in a nation’s social and economic recovery by channeling funds for rebuilding purposes through insurance payments. Coupled with the appropriate land use control and flood emergency management measures, flood insurance can serve as a useful tool to deal with residual risks.

For more information, please refer to “Risk sharing in flood management