GlobalData’s 2021 and 2022 UK Insurance Consumer Surveys indicate that weather-related incidents are becoming more frequent reasons for home insurance claims. The National Infrastructure Commission’s (NIC’s) call for stricter building controls and greater investment in drainage systems will consequently be welcomed by the insurance industry.
Results from GlobalData’s 2021 and 2022 UK Insurance Consumer Surveys suggest that a greater proportion of home insurance claims were due to storms, floods, and other weather-related incidents in 2022 than in 2021. Of these, the most notable rise was for storm claims, which increased from 7.3% of total claims in 2021 to 9.7% in 2022. This is a known but nevertheless worrying trend for insurers, with claims of this nature likely to bring about high costs – especially within the context of high inflation in the UK.
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Surface water flooding is becoming an increasingly costly and hard to predict event. Climate change has brought (and is expected to keep bringing) warmer and wetter winters – increasing the risk of flooding across the country. Moreover, growing urban areas are placing greater pressure on existing drainage systems while also reducing nature’s role in mitigating surface-level flooding. To this end, the NIC has called for stricter regulations on property developments and for £12bn ($14.7bn) in investment over 30 years to improve and upgrade nationwide drainage systems to cope with the growing threat of excess surface water.
Flood Re is among those vocally backing the recommendations of the NIC report, especially the deployment of sustainable drainage systems to reduce the impact of floods in built-up areas. Flood Re’s Build Back Better scheme – allowing for insurers to offer up to £10,000 to customers to install flood resilience equipment and measures into their home after a flood-related claim – is now backed by 60% of the UK’s residential property insurance market. This includes the top three insurers in the market according to GlobalData’s UK Top 20 General Insurance Competitor Analytics: Aviva, RSA, and Lloyds Bank.
By creating a more resilient network of homes as well as developing and enhancing UK-wide drainage systems, the UK can reduce the impact of climate change and flooding going forward. The NIC report indicates that over 600,000 properties could be at high risk of flooding in the next 30 years (i.e., an over 60% chance). The NIC’s suggested risk-reduction measures that can be taken by insurers, infrastructure providers, water suppliers, and policymakers will make a big difference to the UK’s flood resilience over the next three decades.
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