Flood risk: financing for resilience using insurance adaptive schemes.

This paper shows how insurance markets can be used for mitigating the economic consequences of climate changes, in particular for facing flood risk. Not only providing financial compensation for losses, but also for financing resilience through mitigative infrastructures. This approach is similar to one allowed by the so called resilience bonds, financial instruments whose cash flows depend on the occurrence of contractually settled (catastrophic) events and part of the economic value of the investment is devoted to finance resilience actions. Our propose is based on an adaptive design of the insurance contract, based on information collected at each checking time and the (eventual) surplus of the premium paid respect to the payments occurred for damages has to be (automatically, settled in contractual conditions) used for financing mitigative infrastructures. The cost of these infrastructures, the time to build up, the implied risk reduction, have to be assessed by an engineering expertise and even we need a legal framework into which the actuarial quantitative model can be implemented. The periodic renewals of the contract (surplus evaluation, changing in risk exposure due to the infrastructures already built, … ), can be interpreted as a sort of smart contracting and in this framework the novelty of blockchain technology could be used to collect new information from various sources.