Taking Eco-Social Risks Seriously: Explaining the Introduction of Compulsory Insurance for Natural Hazards

Given the ongoing climate crisis, the frequency and severity of natural disasters are increasing. These events result in enormous reconstruction costs, pose a high burden on state budgets, and potentially drive homeowners into private insolvency. One policy instrument for collectively covering such costs is a compulsory insurance scheme for natural hazards. As the impact of natural disasters is uneven, introducing mandatory insurance regulation has a range of social and financial implications. While some European countries have introduced compulsory schemes, others have adopted different policy responses. Taking this variation as the main puzzle, I consider what factors can explain the introduction of compulsory insurance for natural hazards. Building on public risk and quiet politics literature, I identify several factors and test these against three empirical cases: Germany, Austria, and Switzerland. This analysis finds that focusing events are necessary for policy change, but the position and power of interest groups, as well as exogenous shocks within the EU context, were also crucial to explaining the introduction, rejection, and even termination of compulsory insurance schemes for natural hazards.