Erstatning for skybrud skader og efficient ressourceallokering i et forsikringsmæssigt perspektiv

Zohal Nayebkhil

Student thesis: Master thesis


This Master Thesis has revolved around the legal challenges and the economic consequences for society that the insurance company TopDanmark experienced as a result of flood or cloudburst in Danish called 'skybrud' that happened in July 2011. This issue has been dealt with in two different parts consisting of a section about the economic and legal challenges respectively. The legal issue about whether the insurance company TopDanmark has the right to make a claim against the municipalities and the municipal supply companies has been dealt with in four types of flood damages. The analysis assumes that the insurance company TopDanmark has compensated the people insured and it now has to be decided, whether there can be made a claim against the municipalities and the municipal supply companies. The four types of flood damages I have worked with is; damages on supply or sewer pipes as a result of material failure, clogged supply pipes, inadequate sewer pipes as a result of cloud burst, as well as flooding from streams, seas or the ocean. The analysis has shown that the insurance company TopDanmark in some cases has a larger opportunity to make a claim than in other cases. For some types of flooding damages the legal basis are fault whereas it is an objective responsibility in other types. In the fault assessment the key criteria is about whether there exists causation between the liable behaviour and flooding that happened. This includes whether the flooding would not have happened if the specific municipal supply company had constructed the sewer pipes with a greater sizing degree or sizing opportunity. If there is damage on the sewer wires or on a supply wire due to failure of the material and if this results in flood damages, the specific municipal supply company is liable on an objective basis. The main view is that the burden of proof is about whether the flooding is due to materiel failure on sewer or supply wires. In the legal analysis there is mainly applied law since the rules in tort to a great extent are derived of case law. The result of the legal analysis has given rise to a consideration about which socio economic consequences the law causes. The economic problem has been divided into two problem formulations. First, I have examined whether municipal supply companies’ liability for damages occurs as a result of inadequate sewer wires and whether this is efficient for the economy. This problem formulation has been dealt with by the making of a graphical model. The model illustrates the efficient resource allocation in the economy by comparing transaction costs (that has happened as a result of flood damage) to resource allocation costs in order to prevent these floods for occurring. In light of the increase in climate change it can be expected that there will be more cloud bursts in the future, which may result in flood damages and cause great loss of resources as well as substantial transaction costs for society. An analysis of the graphical model has shown that society's 'efficient' resource allocation can be achieved when transaction costs equal the resource allocation costs. In the time before climate change it has not been necessary to build better and more efficient sewer systems. Since it is expected that cloud bursts will occur more frequently as a consequence of climate change it can be predicted that the transaction costs caused by flood damages will exceed the resource allocation costs, herein including investing costs in order to build up a better and more efficient sewer systems. This is due, to the fact, that the municipal supply companies ought to be imposed the risk of non‐sized sewer systems as it will create an incentive for investing in better and more efficient sewer systems. The other legal economic problem formulation is about whether there should be applied a Kaldor‐ Hicks optimal consideration instead of the fault rule in the case of floods that is caused by clogging of the supply wires. This has been examined by the creating an analysis model. The model shows which liability basis (fault or objective liability) that is adding value to the economy. Furthermore the analysis emphasizes that the municipal supply companies' level of vigilance has a crucial importance in the clogging of supply wires. In order to provide the municipal supply companies with a significant level of vigilance and do maintenance and regular controls of the supply wires, the liability for clogging of the supply wires ought to be fault. This will eventually promote Kaldor‐ Hicks optimal condition.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2012
Number of pages100