UK insurance sector welcomes DEFRA plans on flood defences

The UK insurance industry has welcomed plans revealed this week of a new long-term plan to tackle flood risk and coastal erosion from the Department for Environment, Food and Rural Affairs (DEFRA), which includes an investment of £5.2bn in flood and coastal defences by 2027. The British Insurance Brokers Association (BIBA) said it was particularly pleased to see proposals for improvements to Flood Re, the government-backed flood insurance scheme, that would make its coverage more accessible. The details of the plan were provided in a letter from UK environment secretary The Rt Hon George Eustice MP to Sir John Armitt, head of the National Infrastructure Commission (NIC), in response to the NIC’s flood-related recommendations in its first National Infrastructure Assessment. DEFRA’s plan includes proposals for investment of £5.2bn to create about 2,000 new flood and coastal defences to better protect 336,000 properties in England by 2027, alongside support to help households and businesses get back on their feet more quickly after flooding. The environment secretary said the government would publish its National Infrastructure Strategy in time but for now decided to publish its government policy statement on flooding and coastal erosion, which sets out its long-term ambition to create a nation more resilient to future flood and coastal erosion risk. The government policy statement includes the new six-year funding programme to deliver longer-term certainty and unlock greater efficiency in infrastructure funding. “The doubling of government investment shows our level of ambition, and recognition of the increasing pressures posed by climate change and population growth. It exceeds the level of investment that NIC recommended,” pointed out Mr Eustice. It also strengthens strategic planning for flood and coastal risk management, based on catchments and coastal cells in a move that DEFRA says makes local flood and coastal erosion plans “clearer and more ambitious”. The plan also calls for action to strengthen local understanding of surface-water flood risk and better manage the impacts, and clarifies how it will maintain and enhance its planning policies to direct new development away from areas at risk and ensure that new developments take into account future climate change and do not increase flood risk elsewhere. DEFRA said it does not agree with the NIC’s proposals to focus on standards and would rather see a sharper focus on action. “While we welcome the NIC’s work on resilience, we do not consider that standards of resilience to flooding are the right approach. Developing such a method, and then any resilience standards based on it, would be a complicated and resource-intensive process, and would not be effective for engaging the people and communities who are facing flood risks. We are keen instead to focus resources on taking action and providing real, tangible improvements for those at risk,” it stated. The Association of British Insurers (ABI) welcomed the DEFRA statement. “We welcome the government’s long-term plan to tackle flooding, in particular its holistic approach to flood risk management with investment in flood defences, innovative projects to reduce the impact and improve the take-up of property flood resilience measures,” said James Dalton, director of general insurance policy at the ABI. “We also welcome the review of whether further reform is required of the policy for building in areas at risk of flooding and for local authorities to seek advice when considering development proposals. With Flood Re due to end in 2039, it’s really important that we’re all working towards the same goal of reducing the damage caused by flooding," he added. BIBA pointed out that the DEFRA announcement is largely a discourse on the £5.2bn committed in March’s Budget, but noted that it also includes significant changes to Flood Re that are designed to improve the efficiency and effectiveness of the scheme and are largely in line with those set out in Flood Re’s Quinquennial Review. The broker association explained that these proposals include: Allowing Flood Re to offer discounted premiums to homes that have fitted property flood resilience measures, such as airbrick covers or non-return valves Allowing the payment of claims to include an additional amount to repair homes in a more flood resilient way – what BIBA has called ‘Build Back Better’ Exploring whether Flood Re can do more to accelerate the uptake of property flood resilience, such as contributing part of the scheme’s currently available funding Working with Flood Re and the insurance industry to explore whether it would be beneficial for insurers to share more information with customers about their flood risk, in order to encourage all parties to take responsibility for the uptake of resilience measures. BIBA explained that technical changes will also be made to the Flood Re scheme to allow it to amend the level of the annual levy raised from insurers and the maximum it is liable to pay out each financial year, in order to deliver better value for money. “BIBA’s 2020 Manifesto called for promotion of new standards in flood resilience measures that would help insurers to build back better. It has also long campaigned for better access to Flood Re. We will ensure we do all we can to ensure these changes are effected,” concluded the association.

UK insurance sector welcomes DEFRA plans on flood defences

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