Homes and businesses most at risk of flooding across England could face at least £818m in costs by 2055.
According to a new report from AXA UK there are an estimated 2.8 million properties in England already at risk of river and sea flooding and 3.4 million are at risk of surface flooding.
The Environment Agency has previously warned that over 5.2 million homes and properties in England are at risk from flooding and coastal erosion.
The AXA UK report draws on historical comparisons to emphasise the economic importance of flood defences and highlights that the 2015/16 winter floods cost the UK economy an estimated £1.6bn, compared to £333m for the November 2019-March 2020 floods. The latter figure reflects savings of £2.1bn, or 86% of potential costs, due to existing flood defences.
Despite the existing flood defence measures, the report says there is a sense of unpreparedness among the public.
The report combines insurance claims data and public information to analyse the impact of climate risks, including flooding and extreme heat, on properties across the country.
In England 10% of properties are classified as high risk, meaning that there is a 65-79% likelihood of flooding in the next 30 years. These high-risk properties are the focus of cost estimates.
The South East faces the highest financial toll, with costs projected to reach £187m by 2055, 66% higher than the South West, the second most costly region, at £113m. Households in the South East are estimated to face costs of £61m, nearly double the residential costs in London (£33.6m), the East of England (£30.8m), and the South West (£34.4m). At the other end of the spectrum, the North East faces the lowest costs at £19m.
London, Yorkshire and the Humber, and the East Midlands rank in the middle of English regions for financial impact. However, the Flood Index indicates that these areas are less resilient in recovering from flood damage compared to the South East, which has better resources and defences.
In a survey of 2,003 UK adults conducted by Public First for AXA, 52% said they felt ill-equipped to deal with flooding, and 51% felt the same about extreme heat. Additionally, 84% of respondents said they would avoid buying a home in a flood-prone area.
The survey also revealed gaps in awareness with three-quarters of respondents hesitant to install preventative measures against flood or heat damage—half of them because they did not believe they would be affected.
The report outlines several recommendations to boost the resilience of UK homes, including avoiding development in flood-prone areas, appointing a Minister for Resilience to lead adaptation efforts, and helping homeowners and businesses implement preventative measures.
Mark Dutton, director at W Denis, said: “Conventional insurance is not always suitable to deal with climate issues as there has to be physical loss or damage caused by a specified peril, e.g. fire or flood. However, extreme weather conditions can cause non-damage interruption to businesses“. Non-conventional insurance is available from W Denis to guard against extreme conditions of weather, linked to pre-determined temperatures (hot or cold) or excessive rainfall or drought. “Such parametric insurance – a non-traditional insurance product that offers pre-specified pay-outs based upon a trigger event – should be on the agenda for risk managers to routinely review as part of their exposure management” he added.
W Denis are one of the largest independent insurance brokers in the UK and arrange competitive insurance solutions. To discuss this further with a broker at W Denis, please make arrangements with Daniel Moss at [email protected] or on 0044 (0)113 2439812.
