UK house insurance premiums to rise dramatically as climate change increases flood riskUnited Kingdom
Climate change will increase the risk of flooding in the UK, which could lead to dramatic rises in insurance premiums for homeowners and businesses and make some areas of the country uninsurable, the Association of British Insurers has warned.
"Flood risk is the main catastrophic risk in the UK and we know that climate change will bring increased flood risk to the UK," said Nick Starling, director of general insurance and health at the ABI. He said the pattern and nature of floods in recent years suggested that global warming was starting to have an impact: the severe floods in the summer of 2007 and the Cumbrian floods last year were caused by heavy downpours that did not dissipate.
"What our members are concerned about is the increase in areas of flood risk so that some areas may become impossible to insure," he added. He pointed to some "frankly daft planning decisions" where new homes were being built on flood plains. The insurance industry has already warned that it may not insure new developments in flood plains if the properties were granted planning approval against Environment Agency advice.
The agency estimates that one in six homes in England and Wales are at risk of flooding. A spokesman said: "The latest UK climate change data shows this will increase in future due to rising sea levels and more frequent and heavy storms. Since the 2007 floods, the Environment Agency has completed 158 schemes and increased protection to 128,000 properties."
The ABI's forecast modelling shows that if temperatures rise by 2C, average annual insurance losses would go up by £47m and the risk of a once-in-a-century event would increase by £769m, which could push up the price of insurance by 16%. A temperature rise of 4C is estimated to increase annual losses by £80m and premiums could go up by 27%, while an increase of 6C would lead to additional annual insurance losses of £138m, pushing up prices by 47%.
Starling argues that while public spending is being squeezed, cutting back on investment in flood defences would be a false economy. "Damage done to schools and hospitals, not to mention homes and businesses, can cost billions to repair. For every £1 spent on protecting communities from the devastating impact of floods, £8 is saved to the economy," he will tell the Local Government Flood Forum on Thursday.
The 2007 floods, which hit Northern Ireland, Yorkshire, the Midlands, Gloucestershire, Worcestershire, Oxfordshire, Berkshire and South Wales, cost the insurance industry £3bn while the Cumbrian floods last November led to property and motor insurance claims worth £200m.
"We all want flood insurance to continue to be widely available and competitively priced beyond 2013," says Starling. "But for this to happen we need the government to keep to its pledge, under our agreement, to deliver a long-term flood management strategy backed by the right level of investment. This must include robust planning decisions, so that new homes are not built in areas at high risk of flooding.
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