Thursday 13th February - Saturday 15th February 2003
Copenhagen, Denmark

Session 4: Insurance, Law and Sustainable Technology

Michael Huber
Insurance as Technology. The Example of Flood Insurance in the UK
Avon Senior Research Fellow, Centre for Analysis of Risk and Regulation, London School of Economics and Political Science, London WC2A 2AE, United Kingdom

Insurance can be regarded to be one of the most advanced social technologies to allow individual risk taking. The main task of the insurance is to transform (external) hazards into (internal) risks, making them calculable and predictable. In most cases insurance works smoothly. When the climate changes, however, these routines are challenged by political and economic expectations. The main effects of
political intervention is to curb the responsiveness of insurance, the useful technology generates misleading results.
How weather related, environmental risks challenge the use of the insurance technology can best be tested at the example of a private insurance scheme against flooding established in the UK in the late 1950s. It covers virtually all risks related to flood damage at the cost of a compulsory system including all properties. The security to have all damage covered, however, persuades all actors to act in a lax manner (moral hazard). The initially good protection undermines its own foundation. In the case of flood insurance, moral hazard is not a problem of individual deviance but of systemic aberration. After the floods of 1998 and 2000, the features of this aberration became evident when insurance coverage was suddenly judged unaffordable in the long run. The institutional basis of insurance coverage was challenged when insurability cannot be determined by economic calculations but it had to be re-negotiated among industrial and political
actors - and even other stakeholders.
The political boundaries of the insurance technology should be scrutinized. Political expectations tend to use the insurance technology to veil environmental risks. The technology - in its own rights - would be a helpful tool to predict environmental risks, its openness to political influence (specially in the case of natural hazards) leads to systematic failure. Applying the technology for the good of the public leads to the worst possible outcome for all.

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Paul Toyne
Law, Technology and the Environment in Natural Resource Management: Forestry & Illegal Logging
Article 13, Bradley House, 26 St Albans Lane, London NW11 7QE United Kingdom www.article13.com

No abstract is presently available

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Paul Street
Foreign Direct Investment, Sustainable Development and Technology Transfer
School of Law, University of Nottingham, NG7 2RD, United Kingdom

Foreign Direct Investment (FDI) in goods and services is promoted as a means of aiding sustainable development in the Two-Thirds World through the transfer of environmentally friendly technologies. Even the 2002 World Summit on Sustainable Development (WSSD) explicitly emphasised a substantial role for private business in attaining the somewhat limited targets of the WSSD Plan of Action. However, the positive benefits of FDI for the economies and environments of the Two Thirds World are less than certain, for, as research is beginning to show, despite some exceptional examples not only do Two Thirds World countries attract a relatively small share of FDI, but, to date, in relation to both the services and manufacturing sectors FDI appears to have achieved little in aiding those countries sustainable development.

Local regulatory contexts remain an important consideration for companies in not only influencing their investment choices but also in governing their corporate behaviour. Consequently international business associations such as the USCIB, CSI, UNICE and the ESF continue to lobby transnationally for a more liberalised international investment regime that places even less responsibility on their members than is currently in existence. It is against this background that this paper examines three interrelated themes. Firstly it explores the extent to which FDI can be said to be aiding technology transfer and sustainable development in the Two-Thirds World. Secondly it asks not only whether it is right to devolve responsibility for achieving development objectives to private business but whether business can actually achieve these objectives, and, finally given the realities of FDI, the paper considers what might be done to strengthen corporate responsibility in a global context.