#FloodResilience: me for @SMFthinktank on incentivising household action on flooding

#FloodResilience: Insurance plays an important role in mitigating the financial and non-financial impacts of flooding.

1) It can provide peace of mind that support will be available; and

2) Insurance provides the finances and organisation required to repair and reinstate property and belongings and re-house residents during repairs.

However, in high-risk areas, international experience shows insurance against flood can be incredibly expensive

In response to this, Governments internationally support access to flood insurance through various schemes in cooperation with the insurance industry.

#FloodResilience: In the UK, Flood Re exists to support those households at risk of flooding to be able to afford insurance. 

#FloodResilience: But Flood Re is only a temporary scheme. The legislation that underpins it states that it will have a limited life, to 2039. After that time, the expectation is that a market for flood insurance with risk reflective pricing will exist.

To ensure that households at risk can still afford flood insurance, Flood Re's first transition plan highlighted that the cost of providing household insurance would need to come down. In turn, this rests on:

1) Reducing the risks of flooding;

2) Reducing the costs of reinstating households that have been flooded; and

3) Improving competition in the household insurance market.

Individual households can take action to support this by improving the resistance of their property (reducing the likelihood that flood water will enter the house) and the resilience of their property (reducing the damage that flood water does once it has entered the property).

#FloodResilience: Resilience and resistance measures can be cost effective. 

Existing evidence suggests packages of measures (combinations of resilience and resistance) are most likely to be cost effective. However, the cost effectiveness will vary based on a range of different attributes, including

- Type and location of properties; 

- The risk of flooding and nature of potential flooding;

In future, innovation, improved understanding and cost savings are likely to meant that many properties would benefit from some form of resilience / resistance measures.

#FloodResilience: But a range of barriers stand in the way of households taking action to protect their properties:

#FloodResilience: The report outlines a set of key recommendations and future work, including:

1. Increasing understanding of risk and damage

To do this – a range of pilots could be undertaken in order to understand the impacts of:

- Type of messaging; and

- Route of message (who is the trusted voice?).

2. Increasing household ownership of the need for action

This could be delivered by introducing a mandatory resilience survey for at-risk households when they are bought, sold, built or let. 

The results could be captured in Flood Performance Certificates, which outline the scale and nature of risk and the actions (in terms of resilience and resistance) that are recommended.

3. Reducing costs

Improving the grant scheme:

– Some measures undertaken and costs recouped by insurer;

– Co-payment so that overall size of grant could increase;

– Expanding coverage;

– Considering who pays.

4. Bypassing consumer decisions 

Here, a range of benefits could be delivered through changes to how insurers, surveyors and trades approach property repair once it is flooded. This could be embodied in a presumption for resilient repair and delivered through a change in building regulations.

#FloodResilience: full report and recommendations are available on the @SMFthinktank website