Presentation by Michael Wade. Old Library, Lloyd s

Transcription

1 Presentation by Michael Wade Old Library, Lloyd s 8 th December 2015

2 What are some of the roles for Government - funded by the Taxpayer - in regard to domestic flooding? To identify the risk and scope of responsibility To take macro action flood mitigation schemes ( coastal, river, ground water level etc ) To fund local organisations taking action ( local authorities, volunteer groups, charities etc ) To inform individual homeowners (methods to include social media ) To offer individual homeowners finance to take action per property ( grants, loans ) To ensure that there is both availability and affordable insurance for homeowners and decide whether this should be socialised.. 2 Old Library - Lloyd's December 8th 2015

3 Background on UK domestic flood Estimated number of domestic properties at risk of flooding in the UK: 5.2 million ( 23.8 million not at risk ) Of which: 3.8 million are at risk of surface water flooding, 2.4 million at risk from river and coastal flooding and 1 million at risk from each of river, coastal and surface water flooding. Highest risk where provision of flood insurance is challenging amounts to approximately 500,000 properties that is, given the choice, insurers would not offer cover or it would be prohibitively expensive Two recent seasons of flooding in the UK 2007 and 2012/3 Previous worst year was in Old Library - Lloyd's December 8th 2015

4 Scale of properties at risk in the UK 4 Old Library - Lloyd's December 8th 2015

5 Role of the Environment Agency in regard to flooding: Respond to severe weather and flooding Develop solutions to flooding Manage tidal flood risk to London Build and maintain flood risk management assets Manage and repair flood risk management assets Warn and inform people and businesses at risk of flooding Use technology to update flood risk maps Work with the insurance industry Report on flood and coastal risk management Raise awareness of flooding 5 Old Library - Lloyd's December 8th 2015

6 Total expenditure each year 2005 to 2014 on UK flood defences: Expenditure on Flood and Coastal Erosion Risk Management (FCERM) in England. UK Central Government is on course to invest more than 3.2 billion over the five years from April 2010 to March Taking total expenditure during this 10 year period to over 6.5 billion (inc current year) As well as the additional funding for 2015/16, a 6-year programme of capital investment has been announced of 2.3bn for the period 2015/16 to 2020/21. 6 Old Library - Lloyd's December 8th 2015

7 UK central Government funding sources Funding is administered through: Department for Environment, Farming & Rural Affairs ( Defra ), Environment Agency (EA) and Department for Communities and Local Government (DCLG). For 2014/15 7 Old Library - Lloyd's December 8th 2015

8 The winter storms of 2013 / 2014 in the UK In the UK 2013 to 2014 saw the wettest winter for 250 years in the south of England. The extreme weather tested the country's resilience to adverse weather and its consequences, causing flooding and disruption to energy supply and travel. On 5th and 6th December 2013, a storm surge coincided with spring tides producing east coast sea levels not seen since the surge of The surge and spring tide, combined with large wind-driven waves, also meant that water levels along the north-west coast were very high. Had the wind been from the east, the impacts along the east coast would have been even greater. This was followed by a series of winter storms, causing flooding from rivers, the sea, surface water and groundwater. 7,700 homes and 3,200 commercial properties were affected by flooding. 49,000 hectares of agricultural land were affected and 50 of England's most important designated wildlife sites suffered damage. However, the investment in flood and coastal erosion risk management assets and operational response meant that 1.4 million homes and businesses and around 2,500 square kilometres of farmland were protected. 8 Old Library - Lloyd's December 8th 2015

9 Recent UK flood experience 2007 floods Total insurance claims cost: estimated at 3bn Total number of claims: around 185,000 Total domestic claims: around 130,000 (50,000 major) 17,000 insured households into alternative accommodation Total commercial claims: around 35,000 Total motor claims: around 20, Cumbrian floods Total insurance claims costs of around 200m 2012 floods Total insurance claims costs of 594m 2013/14 winter floods Total insurance claims costs of 450m 18,700 flood claims 2015 consequences of Storm Desmond? 9 Old Library - Lloyd's December 8th 2015

10 Political initiative to create Flood Re Both Government and the insurance industry recognised that a long term solution needed to be found to ensure that an affordable domestic homeowner insurance market became available In essence, a subsidised policy cost for those homeowners living within the 500,000 properties most at risk And that the political parties achieved a consensus view Combined with a consensus support for the Scheme of the UK insurance industry ( negotiated via the Association of British Insurers (ABI). Creating Legislation to enable Flood Re ( part of the Water Act steered through the House of Lords - UK Upper Chamber ) With DEFRA as the sponsoring Department, the Cabinet Office as initiator and HM Treasury to agree financial guidelines With Flood Re owned by the insurance industry ( not HMG ) but to receive the proceeds of a tax levy made on all UK domestic homeowner policies ( empowered under the Water Act ) Flood Re designated as a Public Body reporting to Parliament and also requiring approval by the European Union ( to agree this is not unfair competition ). 10 Old Library - Lloyd's December 8th 2015

11 However, this only solves the provision of affordable insurance... The Environment Agency can plan & execute macro defences And there will now be affordable domestic insurance against flood risk in the UK ( by means of Flood Re or domestic insurers retaining each risk). It is important for the home owner to know the precise type of flood risk to which they are exposed not least that the EA measures might not protect them particularly against rising water table levels And what type of property level protection that could be installed to prevent water seeping or leaking into the building in the event of a flood Insurers have both a role and responsibility to their policyholders in raising awareness of risk and of the prevention measures available 11 Old Library - Lloyd's December 8th 2015

12 Betterment of the UK housing stock One of the key agreements with the insurance industry in forming Flood Re subsidised by Taxpayers was that insurers ( and Flood Re itself ) supported the principle of an objective of betterment of the UK housing stock where it is exposed to the risk of flooding. So the challenge to the insurance industry is to know what it proposes to do in response once Flood Re is in place? How will Flood Re communicate awareness and knowledge to UK policyholders via their insurer ( not directly )? How will the ABI embrace this principle and help too? In short, HMG expects the UK housing stock, where exposed to flood, to be better protected against water ingress per property as a part of a claims response and, preferably, prior to a flood event. 12 Old Library - Lloyd's December 8th 2015

13 Further information and research My thanks to colleagues in DEFRA and the Cabinet Office in pulling together this brief overview. Information on these organisations and also on the Environment Agency can be located via: Similarly thanks to Flood Re and the ABI. Their website: ********************************************************************************* Advisor to HM Government, Cabinet Office 13 Old Library - Lloyd's December 8th 2015