Introduction to the Summer Floods Review

“Floods that occur once in a hundred years on the east coast today may happen once every 10 years by the end of the century.” Jason Lowe, climate scientist, the Met Office

The floods of summer 2007 were the most severe weather-related event that the UK has experienced in decades. In total, around £3bn of this loss was covered by insurance with insurers receiving around 165,000 claims. This is eight times the combined cost of the floods in Carlisle in 2005 and in Boscastle in 2004 and makes it the most costly insured weather event in the UK.

The full economic and social cost is likely to be many times higher, with thousands of people having to leave their homes, schools unable to open, companies unable to function and families having to move into temporary accommodation. While the public services provided much of the immediate response to the summer 2007 flooding, the Government funding of post-flooding reinstatement and repair has been limited to £57 million to date.

While the floods were more severe than experienced for decades, it would be wrong to conclude that we can therefore dismiss them as a freak event and for the passage of time to allow us to forget their significance and to continue as normal. Recent ABI polling reveals that two thirds of the residents in the areas hit by this year’s floods believe that they are likely to happen again on the same scale in their area.

Furthermore, the impact of climate change is here and happening now and affecting many countries around the world, including the UK. This is demonstrated by the increasing frequency of major weather events. Although it is not possible to directly attribute any one event to climate change, the flooding in the UK during the summer of 2007 typify the increase in such events around the world. For example, as a result of climate change, ABI research shows that it is highly likely that sea levels in the North Sea will rise by 0.4m by the end of the century, and possibly as early as 2040. This would increase the number of properties at risk of flooding in eastern England by 50%.

The UK needs to act now to prepare for the impact of climate change. No action is not an option: this will simply defer and increase the cost to the next generation, and lead to unnecessary economic and social cost for those affected by climate change in the interim. As the Government’s Stern Review on the Economics of Climate Change concluded: “if we don’t act, the overall costs and risks of climate change will be the equivalent of losing at least 5% of global GDP each year. If a wider range of risks and impacts is taken into account, the estimates of damage rise to 20% or more”.

Given the scale of this challenge, the Government needs to engage the public directly to build on the public’s support for the action and expenditure needed to protect the country from flooding. The Government needs to outline publicly and in detail both the risks that we already face and how these risks will increase in the future as a result of climate change, and to secure support and participation in a concerted and long-term action plan to reduce this risk.

An ABI survey into public attitudes and climate change reveals that the public would welcome such a national debate: 84% of people are looking to the Government to provide leadership on how to prepare the country for the impact of climate change.

In addition, there must be a strong partnership between the private and public sectors to rise to this challenge. The insurance industry wants to ensure that there continues to be a sustainable, accessible and affordable property insurance market in the UK that continues to offer customers insurance for the consequences of flooding.

The UK market is unique in providing flood cover as a standard part of a typical property insurance product on a voluntary basis and without financial support from government: it is available to all but a handful of customers in the UK. This is in stark contrast to many other markets.

Across the UK, over 90% of households have buildings insurance and over 75% of UK households have contents insurance.

In 2002, the insurance industry agreed a statement of principles on flood cover with the Government. The insurance industry agreed to continue to provide flood cover as a standard feature of household and small business policies where the risk of flooding was no greater than one in 75 years.

In return, the Government agreed to a set of actions intended to minimise the number of households and small businesses that would not be eligible for cover under this commitment. The insurance industry is currently reviewing the statement with the Government: the key aim for the insurance industry is to ensure that the Government commits to taking actions that will ensure that only a minimal number of households and small businesses are not able to continue to access flood cover. Otherwise, the Government will be denying people access to affordable insurance and are likely to face more demands to cover the cost of flooding from public funds.

The floods in summer 2007 have demonstrated where further action is needed. The Government now needs to develop a long-term strategy for the fight against flooding.

Following an industry-wide review into what lessons we should learn from the floods, the ABI believes action is needed in the following four areas:

• national targets and leadership supporting local empowerment;
• identifying and reducing flood risk for today and tomorrow;
• planning policy fit for the future;
• preparing for floods and how to respond.

You can read the full review below.