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The outgoing chief executive of the UK’s flood reinsurance scheme has urged the Labour government to step up spending on flood defences and to make sure that the 1.5mn houses it has pledged to build are not “making the problem worse” by adding to flood risks.
Speaking ahead of his last day on Thursday, Flood Re chief executive Andy Bord called on the government to go further than the previous administration’s pledge to spend £5.2bn on tidal barriers and other defences by 2027.
“Even with the current investment we are seeing flood risk rise, and we need to see flood risk reduce,” he told the Financial Times. “There needs to be a step-up in quantum and there needs to be a longer-term commitment to that investment.”
Plans set out by chancellor Rachel Reeves to build 1.5mn new homes in England, a centrepiece of Wednesday’s King’s Speech, needed to be accompanied by a “very clear framework about how those homes are going to be built, so that we are not making the problem worse”, Bord said.
That, he said, included both where the homes are built, and how, such as fully implementing previous government proposals requiring adequate drainage for new developments, such as soakaways for run-off water. Flood Re also wishes to see flood performance certificates used when people are buying and selling homes to give a sense of this risk.
Half a million households have had their home insurance policies backed by Flood Re, which effectively pools the flood risk of those properties, since its inception in 2016.
Flood Re’s latest financial year to March included Storm Babet, Storm Ciaran and Storm Henk, which were the three most material events since the scheme’s creation. But the scheme, which is funded by a levy on insurers as well as premiums they cede to it, still managed to turn a £24mn pre-tax profit.
The global home insurance sector is under pressure as global warming makes extreme weather episodes such as floods and fires more frequent and severe. Insurers have grown increasingly concerned that this is being made worse by development in at-risk areas.
The UK arm of Germany’s Allianz said on Wednesday that it was “concerning to see high volumes of houses being built in areas at the highest risk of flooding”.
A spokesperson for Defra, the environment department, said the government planned to launch a flood resilience task force to “turbocharge the delivery of flood defences, drainage systems and natural flood management schemes”, and would “take steps to ensure we are building more high-quality, well-designed and sustainable homes”.
Bord, who is departing after seven years leading Flood Re to run UK pension fund Railpen, also urged more insurers to adopt Build Back Better, a scheme whereby homeowners who have suffered a flood are given funds to make their homes more resilient. One option, said Bord, was to make offering this option a precondition for insurers to be able to use the Flood Re scheme.
He also said there needed to be more effective communication with customers to encourage take-up of the Build Back Better funds, given that most customers receiving claims for the recent storms had not taken advantage. “It’s a missed opportunity,” Bord said.
Mervyn Skeet, director of general insurance policy at the Association of British Insurers, said improving properties’ flood resilience was “vital” and the group had also “consistently called for increased investment in flood defences” and updated building standards.
