Mark Hoban, former City Minister and outgoing Chair of Flood Re, has issued a stark warning, emphasising the urgent need for the UK to adapt to climate change and prepare for an increased risk of flooding.
In Flood Re’s newly released “Transition Plan,” which examines flood risk over the next two decades, Hoban calls for comprehensive measures to be taken to safeguard against floods by 2039 when Flood Re is set to exit the market.
According to the analysis included in the plan, climate change-related damages currently cost the UK approximately 1.1% of its GDP. Alarmingly, this figure is projected to rise to 3.3% of GDP by 2050.
In addition, global reinsurance costs have spiked by 40%, reflecting the increased incidence of extreme weather events worldwide due to climate change.
The Transition Plan outlines crucial actions that the UK needs to undertake to ensure flood resilience by 2039. These measures include integrating flood risk and climate change considerations into planning and environmental policies, ensuring that appropriate homes are constructed in suitable locations.
Research from AXA reveals that between 2009 and 2020, between 70,000 and 120,000 homes were built in flood-prone areas in England alone.
Furthermore, the plan emphasises the importance of maintaining and increasing investment in civil flood defenses, with a focus on benefiting economically disadvantaged households. These defenses play a vital role in protecting vulnerable communities from the devastating impacts of flooding.
Hoban, who has served as Chair of Flood Re since its establishment in 2016, highlighted the potential consequences if the UK fails to adequately protect homes and properties against flooding.
He warned that over three million urban homes are now at risk of flash flooding, stressing that leaving significant numbers of homes unprotected beyond 2039 could result in market instability for both the insurance and mortgage sectors, which collectively represent a value of £1.3 trillion.
Flood Re, a public-private partnership between the government and the insurance industry, was created in 2016 to ensure affordable flood insurance access for homeowners. It has been instrumental in increasing insurance options, enabling 99% of householders at high risk of flooding to obtain quotes from 15 or more insurers today. However, Flood Re’s statutory mandate requires it to provide plans for a flood-resilient UK and a risk-reflective market by 2039.
In line with this mandate, Flood Re’s Transition Plan includes initiatives such as supporting research for a comprehensive scoring methodology for property flood resilience (PFR) adaptations, introducing Flood Performance Certificates to assess the level of flood protection for properties, and establishing a Center of Excellence to drive innovation and adaptation in responding to flooding.
PFR measures, such as flood doors and non-return valves, have been proven to mitigate flood risks and reduce damages to homes, minimising the displacement of families during floods. The Transition Plan identifies significant economic opportunities associated with expanding this sector.
In 2022, Flood Re launched “Build Back Better,” the first betterment scheme in the UK’s insurance industry. This initiative enables participating insurers to offer up to £10,000 beyond the cost of repairs after a flood to install PFR measures.
