Entec and FRM > Insuring against the flood A review of Entec’s work with the ABI Over the past decade Entec has been working with the Association of British Insurers (ABI) to evaluate current and future flood risk, providing evidence to aid discussions with Government on areas at risk and locations requiring improved flood defences. This is an overview of the projects we have undertaken together. Inland Flooding Risk – issues facing the insurance industry In the late 90s the insurance industry became increasingly concerned about a possible increase in flood-related claims in the UK due to the potential impacts of global warming and increased development in the floodplain. Entec was commissioned by ABI to carry out a national research project to inform future policy on flood risk. The objectives of the research were to: |
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- inform members on the background and key issues affecting flood risk;
- provide an initial estimate of the maximum probable exposure to claims from inland flood damage in mainland Britain;
- identify where further research on inland and coastal flooding might be needed;
- inform discussions with Government regarding development of inland flood management strategies.
The study comprised a review of data and methodologies for prediction of flood losses allowing for potential climate change. Data on financial loss, property and floodplain mapping was examined.
Research concluded that around 1 million properties were at risk with an insured value of £35bn. Further scenario building suggested losses of between £1bn and £2bn in future. The report was published in October 2000 as ABI’s General Insurance Research Report No. 10 ‘Inland Flood Risk - Issues Facing the Insurance Industry’.
Just one week after the report’s publication, the UK was battered by storms which caused widespread flooding resulting in losses of over £1bn.
Evaluation of weak links in flood defences
Following on from the initial study Entec began a project with HR Wallingford and Halcrow to carry out more detailed research identifying areas in England, Wales and Scotland where insurers have incurred significant losses over the last five years. This research was used to inform discussions with Government on locations requiring improved flood defences.
Making Communities Sustainable – Managing flood risks in the government’s growth areas
In August 2004, Entec began work to evaluate the current and future flood risk exposure within the government’s housing growth areas of Ashford, South Midlands, M11 Corridor and Thames Gateway.
The final report, Making Communities Sustainable (www.abi.org.uk/housing) highlighted that around a third of new developments across growth areas are located in the floodplain, with estimates suggesting that these new homes could increase annual costs of flooding in these areas by 74%. This would add £55 million to the annual flood bill unless steps are taken to manage the risk.
Furthermore a strong planning policy implemented by local authorities and developers, could reduce flood risks to negligible levels in Ashford, the M11 corridor and the South Midlands, and by half in Thames Gateway. Further reductions could be achieved through effective urban design; flood resilient measures and enhanced flood defences.
A number of key recommendations for local authorities, government and developers were proposed, including:
- stronger planning guidance to ensure that new developments are built on the lowest-risk sites first;
- local authorities and developers should use appropriate flood risk assessments to examine options for reducing flood risk associated with proposed developments;
- flood defence spending should be targeted towards vulnerable sites; and
- more use should be made of flood-resilient measures for properties built in the floodplain, including raising living space and services above flood levels.
Coastal Flood Risk: Thinking for tomorrow, Acting Today - Current and future risks of coastal flooding along the East Coast of England
In May 2006 Entec (in association with Risk Management Solutions and Risk & Policy Analysts) was commissioned by ABI to assess current and future risks posed by extreme storm surge events along the East Coast of England.
The study focussed on assessing levels of flood risk using a number of indicators including residential and commercial property losses and vulnerable sites (e.g. schools, essential services, hospitals). Analysis indicated that the financial damages from a major coastal flood affecting Eastern England are likely to increase fourfold up to £16 billion, following a sea level rise of just 0.4m. This could happen as early as 2040 depending on climate change and is relatively certain by 2080.
The damage values reported are considered to be lower than total costs, as only physical damage and immediate response costs are included. The aftermath of Hurricane Katrina in 2005 demonstrates how slowly communities recover when whole regions suffer widespread damage. Financial and social costs escalate quickly as a consequence – for example, up to 12% of health services in coastal communities of Eastern England could be affected in a future major storm surge event.
More detailed analysis was also conducted within a series of case studies to evaluate the likely consequences of coastal flooding upon property, business, transport and the environment. Socio-economic effects including population movements, increased development and rising asset values could add substantially to future damage costs.
The final study report highlighted the likely requirement of future management policies, such as investment requirements for coastal and flood management spending, regional planning policy and local planning system (PPS25) which will be necessary to limit the impacts of future coastal flooding.
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