David Crichton is a Fellow of the Chartered Insurance Institute and a Chartered Insurance Practitioner. He has some 30 years experience in insurance underwriting, latterly as a senior manager in claims and underwriting for a major insurer, but is now an independent research consultant.

Flood Risk & Insurance in England and Wales

Flood insurance in Britain is going to become harder to obtain in the future. An

agreement by insurers to provide household flood insurance at a reasonable cost

anywhere in Britain expired at the end of 2002, and already many insurers are not

offering cover for new business. The stated reasons for this agreement being

discontinued are the lack of adequate planning controls and a lack of adequate

spending on flood defences. These reasons have caused some surprise in Scotland,

where since Devolution in 1999, planning controls have been tightened up by most

local planning authorities to limit any building in the floodplain, and spending on flood

defences has risen dramatically.

The insurance industry as a whole has mainly been concentrating on lobbying central

Government to spend more money on flood defences in England and Wales, a tactic

that has only been partially successful so far. Perhaps this is because flood defence

spending has to compete with many other, arguably more deserving, calls on the public

purse.

Since 1995, the author has been concentrating on non-structural measures, such as

planning controls and sustainable drainage. He hopes to show that this non-structural

approach has been particularly successful in Scotland. Many experts around the world

now see non-structural measures as being a more sustainable, efficient way ahead,

tackling the problem rather than relieving the symptoms. For example, years of regular

face to face meetings at a local level have given the author the opportunity to influence

planning strategies for all the main population centres in Scotland. Current planning

strategies for most of these communities now presume against allowing any new

housing development where the flood risk exceeds the 200-year return period. In

addition, differences in legislation in Scotland have resulted in preparations being made

for a test case for insurers to recover up to £70m in claims payments from a local

authority in Scotland. If successful, it could have important implications for the flood

insurance risk north of the Border.

The author’s confidential discussions with the senior underwriting managers of many of

the leading insurance companies indicate that there is a very low awareness in the

British insurance industry of what has been achieved in Scotland and he hopes that this

report will help to remedy that situation. While the solutions are working well in

Scotland, it may already be too late for the South East of England, where some radical

measures may be required in the future. Some of these measures are listed in the

future outlook section at the end of this report.

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