Important English Vocabulary from “The Economist”-(Day-29)

Important English Vocabulary from “The Economist”-(Day-29):

Dear Readers, to score good marks in English Section first and for most thing is you need to develop your reading skills, while reading a passage you need to highlight the tough words in it and you should know the correct meaning for those words. This will help you understand the passage clearly and also you can learn more new words, it means also you can develop your vocabulary. To help you in this part we have provided a passage along with meaning, synonyms and usages of hard words in the passage, make use of it. We also providing Important Vocabulary Quiz based on “THE ECONOMIST”.

Hurricane Harvey has exposed the inadequacy of flood insurance

Flood risk is tricky to insure, and state intervention hinders as much as it helps

THOSE who live on America’s coasts know to prepare for wrathful hurricanes in late summer—nailing plywood to their windows as the storm approaches. America’s property insurers and reinsurers are ready, too, using sophisticated models to track storms and estimate potential losses. But wind is not the only danger from hurricanes. Ask Houstonians who saw their homes inundated by Hurricane Harvey’s 52 inches (132cm) of rain in the six days to August 30th. Or those in the path of Hurricane Irma, which, as The Economist went to press, was wreaking havoc across the Caribbean. But whereas wind damage is covered under most standard insurance policies in America, flood insurance is a government-run add-on that far from all homeowners buy. As a result, of over $30bn in property losses in Texas, only 40% may be insured.

The National Flood Insurance Program (NFIP) was set up in 1968, after a series of large losses led private insurers to pull back. Those living within a 100-year floodplain (ie, with a 1% annual chance of a flood occurring), as defined by the maps of the Federal Emergency Management Agency, and holding a government-guaranteed mortgage, are obliged to purchase NFIP coverage. Others can buy it as an add-on, but few do. The programme covers only about 5m properties in all of America. In Houston much of the damage occurred outside the floodplain, so many properties may be completely uncovered, and left relying on ad hoc federal relief.

For political reasons, NFIP charges low premiums, pricing out private insurers. But this also means its income does not cover all losses, and it is forced to borrow from American taxpayers. After Hurricanes Katrina in 2005 and Sandy in 2012, the programme is $25bn in the red. Moreover, the rigid caps it puts on coverage ($250,000 per private house, $100,000 for its contents, $500,000 per business property, and $500,000 for its contents) do not suit all small businesses and homeowners. Large companies can and do buy private flood insurance (for which they pay a high price).

Might a private-sector solution be more efficient? One difficulty is that flood risk is tricky to model, and so to insure. As Dan Dick of Aon Benfield, a reinsurance broker, points out, assessing a property’s flood risk requires detailed and very localised data on topography. Insurers have, until recently, simply not had access to the right data, or to models sophisticated enough to gauge flood risk properly. That has changed over the past decade as specialised modelling firms like RMS, famous for its hurricane modelling, and JBA have started to offer flood models; Aon also has its own models. Still, private flood insurance remains a tiny part of the market (though last year the NFIP did, for the first time, take out private reinsurance on some of its risks).

Another obstacle is that flooding is very heavily concentrated and owners of high-risk properties are far more likely to seek insurance, making it difficult to spread risks. But other countries show how private insurance markets can play a bigger role. In Britain private insurers include flood coverage as part of standard policies, so risks are distributed across a wider pool of policyholders. But the government intervenes heavily in reinsurance through a body called Flood Re. This is meant to keep insurance affordable even for high-risk areas through mandatory cross-subsidies, financed by a levy on all insurers.

Germany, for its part, has no direct state intervention at all in flood insurance. Its mapping system divides the country into four zones: areas of ten-, 100-, and 200-year floods, and all those beyond. It was developed by the insurance industry, not the government, and allows for more sophisticated risk assessment and pricing than does America’s mandated purchasing.

Even so, no country has fully faced up to the thorny questions raised by flood insurance. Pooling flood risk means those in flood-prone areas pay little more than those in dry ones for insurance, which weakens the disincentive to build in such vulnerable areas. Exceptions, such as Flood Re’s exclusion of flood-prone houses built after 2009, or NFIP’s discounts for communities that take measures to reduce flood risk, are not enough to counter this effect. Meanwhile, losses from floods keep growing: so far, this has mostly been because of higher property values, says Michael Szoenyi of Zurich Insurance, but the trend will continue as climate change increases the incidence of floods.

An alternative approach has been taken by the Netherlands, which, despite its vulnerable position at sea level, does not have generally available flood insurance. The country has focused instead on building robust flood-protection infrastructure. Recurrent floods require more than better insurance arrangements. Dams and dykes may matter more.

Source: “THE ECONOMIST”

1). INTERVENTION (Noun)

Definition: the action or process of intervening

Usage: A high degree of state intervention in the economy.

 

2). HINDERS (Verb)

Definition: make it difficult for (someone) to do something or for (something) to happen.

Synonyms: hamper, be a hindrance to, obstruct

Usage: Technical difficulties have hindered our progress.

 

3). NAIL (Verb) gerund or present participle: nailing

Definition: fasten with a nail or nails.

Synonyms: fasten, attach, fix, affix

Usage: The strips are simply nailed to the roof

 

4). SOPHISTICATED (Adj)

Definition: having, revealing, or involving a great deal of worldly experience and knowledge of fashion and culture.

Synonyms: worldly, worldly-wise, experienced

Usage: A chic, sophisticated woman.

 

5). INUNDATE (Verb) past tense: inundated; past participle: inundated

Definition: flood

Synonyms: overflow, overrun, swamp, submerge

Usage: Many buildings were inundated.

 

6). WREAK (Verb)

Definition: cause (a large amount of damage or harm).

Synonyms: inflict, create, cause, result in, effect

Usage: These policies would wreak havoc on the British economy.

 

7). HAVOC (Noun)

Definition: widespread destruction.

Synonyms: devastation, destruction, damage, desolation

Usage: The hurricane ripped through Florida causing havoc

 

8). MORTGAGE (Noun)

Definition: a legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Usage: I put down a hundred thousand in cash and took out a mortgage for the rest.

 

9). INTERVENE (Verb) past tense: intervened; past participle: intervened

Definition: take part in something so as to prevent or alter a result or course of events.

Synonyms: intercede, involve oneself, get involved

Usage: She intervened in the row and drew up new guidelines.

 

10). MANDATE (Verb) past tense: mandated; past participle: mandated

Definition: require (something) to be done; make mandatory.

Usage: The government began mandating better car safety.

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