View from the Top: Future Flooding

The government is well aware of the serious threat posed to the UK by future flooding. Sir Bob Watson, chief scientist at the Department for Environment, Food and Rural Affairs, recently claimed that the issue was the "most dominant" of 100 separate challenges to Britain's economy, society and environment. The predictions in his Climate Change Risk Assessment are stark - by 2080, flooding could cost the UK a staggering £12bn a year in building and property damage. 

Pardon the pun, but we have been flooded by similar news in recent weeks. The House of Commons Public Accounts Select Committee criticised the government for a lack of clarity in its flood defence strategy, rightly arguing that local communities deserved to know who would be protecting them in the future. 

Of most concern is the replacement for the Statement of Principles, due to expire in June 2013. Some 15 months since the talks began between insurers and the government, we have been very disappointed by Defra's response. The Association of British Insurers issued a robust statement in December, demanding more urgency from the government, and this has been followed up by a regional and parliamentary campaign, which the entire industry must support.

But what happens now? The economic climate is tough, resulting in an estimated 10% reduction in investment by the government in flood defences, but no other country in the world has a free market for flood insurance. Other nations' authorities contribute in some way to ensure that people in high-risk flood areas have affordable cover. 

We have put a number of options on the table allowing the government to offer formal support. Among them is a risk-sharing scheme, with the authorities acting as the insurer of last resort, with funding provided via general taxation and an industry-wide premium levy, akin to the Motor Insurance Bureau scheme.

We are taking our responsibilities to our customers seriously and want a system that offers accessibility and affordability rather than one that denies cover. We can only achieve a satisfactory solution if the government plays its part. If flooding really is the number one climate change risk it needs to be addressed now.