Building flood resilience in the UK

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With climate change exacerbating flood risk in the UK, building up flood resilience is becoming more important than ever. Investment from governments into flood defences, increased education and proactivity from home and business owners, and improving forecasts and early warning systems can all help to improve resilience.

Flooding is already the UK’s primary natural hazard risk, and it is widely acknowledged that climate change is increasing the frequency and severity of flood events. According to the Association of British Insurers (ABI), the average payout for a domestic insurance flood claim in February 2020 was £32,000, while commercial flood claims averaged £57,000. By applying these average claim amounts, research by Gamma Location Intelligence suggests that by 2050 there will be a potential insurance liability of £122 billion in Britain from floods as a result of climate change. 

InsTech London has been investigating the main measures for increasing flood resilience and how they can reduce the impact of losses and payouts made by insurers.

Flood defences

Flood defences offer protection against different types of floods: surface water flooding, coastal storm surge and river flooding. 

In a 2021 report commissioned by Flood Re and the ABI, the importance of continued investment in flood defences was highlighted. Modelling by JBA found that river flood defences provide protection valued at £568 million a year. Maintenance of these defences was also shown to be cost effective - for every £1 increase in maintenance spending, £7 is saved in capital spending on defences.

Although flood defences can reduce a lot of potential damage caused by flooding, there are inevitably events where flood water reaches properties. Increasing resilience on a property level is important to reduce losses.

Property resilience

Property flood resilience (PFR) refers to various measures to limit the damage to a property from flooding. Some measures can prevent water from entering a property entirely, such as flood doors, whereas others aim to limit damage and to make it easier for properties to recover, such as elevated plug sockets.

survey conducted by the UK Department for Environment, Food and Rural Affairs (Defra) found that only 27% of UK households and businesses that have previously experienced flooding have taken up protection measures, whilst for those without previous experience the figure is significantly lower at 6%. 

In order to drive the uptake of property resilience measures, Flood Re proposes the introduction of Flood Performance Certificates (FPCs). An FPC would lay out the flood risk of a property, suggest appropriate mitigation measures and record which measures or adaptations are currently installed on the property.

“Introducing FPCs would help to provide relevant and actionable information that creates a roadmap for household flood resilience, helping to fill in the ‘information gaps’ many households have.” - Flood Re

Potentially arising out of this proposition are lower premiums for households who have implemented property resilience measures, but insurers would have to show interest in getting onboard.

Flood models

When it comes to flood modelling, there are two types of models. The first type provides a risk score so that the peril can be insured. JBA, for example, provides hazard data at a five metre resolution which is translated into flood scores to make it consumable for underwriting. Bristol-based Fathom also provides flood models for portfolio modelling and underwriting.

The other type is models that forecast flood events. Forecasts can be long term, such as up to 50 years in the future as used for the Bank of England stress tests, or much shorter term.

Previsico uses real-time flood modelling to provide street-level flood predictions for the next few hours. Focusing on surface water flooding, the company provides alerts for insurers which can warn their customers, allowing them to mitigate losses and damages. Previsico will be speaking at InsTech London’s live event on 11 October.

Early warning systems

Early warning systems can help save lives, but they can also help to mitigate insured losses. The fragmented response of the early warning system in Europe, the European Flood Awareness System (EFAS), has been cited as one of the shortfalls in mitigating losses that occurred in the July 2021 European floods. With effective warning, home and business owners could move valuables, stock and equipment out of reach from flood water, reducing insurance claims.

To learn more about companies offering flood data and models, InsTech London’s Location Intelligence report profiles over 20 companies operating in this space. This includes companies that provide short-term forecasts such as Previsico, as well as models for underwriting such as Fathom and JBA.

To receive the latest news and developments in flood insurance, modelling and technology, sign up to InsTech London’s monthly newsletter Flood Focus.