Finland experienced exceptionally severe flooding both in Ostrobothnia and in southern parts of the country last year. After the water had subsided, the state set up a committee to ponder ways to cover the damages in the future. The state would like to see insurance companies share the financial burden.
"The current law dates back to the early 1980s, and it should be updated", comments Senior Inspector Veli-Pekka Reskola from the Ministry of Agriculture and Forestry. The committee's report should be completed by March next year.
The damage caused by flooding rivers has turned out to be most problematic. At present, the state is the only party to compensate these losses. Reskola estimates that nearly six million euros will be paid in compensation for flood damage from 2004. Hannu Ijäs, manager of non-life insurance at the Federation of Finnish Insurance Companies and an expert member of the committee, says that one proposed alternative is to amass a flood fund alongside some other insurance premiums.
According to Ijäs, the most important thing for insurance companies would be to receive clear ground rules for flood compensation. At present, the companies have met with harsh criticism because a significant portion of flood damages has been unequivocally left out of the coverage of insurance policies.
Helsingin Sanomat / First published in print 19.8.2005
