Insurers should keep urging developers and customers in flood-prone locations to employ flood resistance and resilience measures more effectively, as flooding and storms account for nearly a fifth of home insurance claims. In January 2023, the UK government mandated sustainable drainage systems as a preventative measure against flooding.
According to GlobalData’s 2022 UK Insurance Consumer Survey, 17.9% of home insurance customers made a claim in 2022, of which a fifth reported that it was caused by floods or storms. This proportion has been increasing in recent years as the impact of climate change continues to have an adverse effect on the weather. Flooding is already the UK’s biggest natural catastrophe risk, with the Environment Agency estimating that 5.2 million homes and businesses in England are at risk of flooding. Recently, the government accepted AXA’s recommendation to mandate sustainable drainage systems for new home developments in England in order to reduce the risk of surface water and sewer flooding and relieve pressure on traditional systems.
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GlobalData’s survey indicates that 40.2% of home insurance claims resulted from a weather-related event, of which 10.5% came directly as a result of flooding. Given the economic climate and inflation having an impact on the cost of repairs, damages from floods significantly impact individuals. According to long-term forecasts from the Met Office, record-breaking rainfall might be 10 times more frequent by 2100 as a result of climate change, which means the risk of flooding will also increase. Implementing sustainable drainage systems will enable the construction of more sustainable and insurable buildings, reducing risk in the system for all involved.
Sustainable drainage systems include elements such as permeable surfaces, wetlands, and grassed areas to promote drainage in order to lessen the effects of rainfall on homes and other structures. Additionally, they can provide metropolitan regions with much-needed green space, enhancing the image of towns and cities. In its Building for the Future report, AXA stated that putting these steps in place would make it possible to develop buildings that are more sustainable and insurable, lowering risk for everyone concerned.
The implementation of sustainable drainage systems will protect many individuals and businesses that reside in at-risk areas from the detrimental impacts floods can cause. This will undoubtedly reduce the number of claims resulting from floods, in turn protecting insurers from large payouts as well as policyholders from substantial losses. This new development – paired with Flood Re’s role in making flood risk insurance more affordable – will bolster support for both consumers and insurers.
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