How fair is actuarially fair flood insurance pricing?

Insurance systems currently transfer flood risk from those exposed to those almost<br>certain not to face flooding. However, recent modelling has enabled pricing flood<br>insurance based on local risk. Hypothetically, insurers may abruptly switch from<br>a system where flood risk is mostly shared to one where dwellings at high risk<br>pay the bulk of total premiums. This paper investigates how this change would<br>affect people of various ethnicities, incomes, and material wellbeing in Aotearoa<br>New Zealand. We find that this adjustment would cause substantial premium<br>increases or loss of insurance for a small group and minor decreases for most. We<br>find that Māori and households with lower material wellbeing are more likely to<br>be significantly harmed by risk-based flood insurance.