Flood Re believes the role of insurance is changing as it urges insurers to offer property repair improvements to combat poor flood resilience

By Editor Katie Scott

As I settled into one of the plush orange armchairs in Charlotte Street Hotel’s private screening room on Tuesday, the excitement was palpable as insurance industry colleagues, as well as some insurance policyholders, took to their seats to watch a 15-minute documentary compiled by government and industry-backed scheme Flood Re.

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Katie Scott

The documentary was designed to highlight the importance and potential future impact of Flood Re’s ‘Build Back Better’ (BBB) initiative, which will be formally launching at the Houses of Parliament on 20 April 2022 (Insurance Times reporter Isobel Rafferty and news editor Yiannis Kotoulas will see you there).

The BBB scheme, which Flood Re started working on back in 2019, will see the cross-subsidy centred organisation team up with partner insurers to offer claimants £10,000 to repair flood damaged properties resiliently – this could include, for example, using concrete and tile flooring rather than carpets, moving plug sockets higher up walls and installing non-return valves on pipes or air brick covers.

Flood Re chairman Mark Hoban, wants these types of flood resilience measures to become as commonplace as burglar alarms.

He told attendees on Tuesday that the BBB scheme indicates a “step change” for insurers and gives Flood Re the opportunity to be “life changing” – especially as ongoing climate change will only make flood resilience a more necessary and relevant precaution.

With this in mind, he explained that BBB will not be a ‘one and done’ type scheme. Instead, the initiative will need to evolve in line with the flood threat, meaning that the £10,000 contribution to flood resilient repair measures is not set in stone, but will remain under review.

Changing attitudes

A key point raised within Flood Re’s documentary was the need for insurers to undergo a “cultural change” and embrace “radical collaboration” in order to improve flood resilience.

The film explained that currently, insurers focused on repairing flood-hit homes and businesses so that they were returned to the same state they were in prior to the flood damage. However, this attitude has to change if the UK is to learn how to live with water and the increased risk of flooding, the documentary urged.

Flood Re

Left to right: Mark Hoban, Andy Bord and Mary Dhonau, flood campaigner 

The role of insurance needs to change, the film stated.

This is particularly pertinent considering Flood Re’s expiration date of 2039 will probably be upon us faster than we think and that seeking to improve flood resilience across the UK is not a “quick fix”, added Andy Bord, Flood Re chief executive.

Bord noted that industry collaboration around BBB is vital – he explained that improving flood resilience in the current house stock was a job too large for any one insurer, but with Flood Re spearheading cross-industry change and bringing together relevant thought leaders, “momentum” could therefore build and “snowball” to benefit policyholders living in flood risk zones.

Bord was quick to add, however, that the BBB scheme is not the only initiative seeking to drive national improvements in flood resilience.

He said the programme is merely part of a country-wide “momentum for change” that aims to “normalise” flood resilience and give insurers a role beyond being “arithmetical beasts” – BBB strives to give policyholders peace of mind and offer them control of their own flood risks, Hoban added.

‘It’s now or never’

In terms of obstacles to BBB’s success, policyholders’ awareness of their own flood risk is probably one of the biggest stumbling blocks, as well as regulatory alignment – BBB as an approach should correlate to installation codes of practice, for example, for electricians and other tradespeople.

Some commentators in the room also felt there was a disconnect between BBB, flood risks and mortgage lenders – one individual described it as “the elephant in the room” because many lenders work from the assumption that flood insurance is always available, regardless of the property’s location.

The soon-to-be launched pilot around Flood Performance Certificates aims to combat some of these concerns, Bord said.

The overriding message from the evening screening though was one of positivity, with Emma Howard Boyd, chair of the Environment Agency, emphasising that “it’s now or never” when it comes to combating the UK’s growing flood risks. Hoban agreed that if Flood Re doesn’t get the ball rolling on BBB, then no other organisation is likely to pick up the mantle.

The documentary did a good job of bringing home the human element of flood claims as well. It cited that the average flood damage claim amounted to £30,000, however one claimant featured in the film explained that her first flood damage claim reached a total of £48,000. After implementing flood resilience measures, her second subsequent flood damage claim was £0.

Equally, other claimants recorded for the video stated that they were out of their homes for eight or nine months while repair work was underway following flood damage.

Insurers and brokers involvement in risk management is growing apace, especially post-pandemic, and Flood Re’s BBB initiative ties nicely into this remit.

At the launch event on 20 April, we’ll find out exactly which insurers have signed up to support BBB, however it was good to see Flood Re’s documentary getting the cogs turning and debate fired up as to what can be done to improve flood resilience.

The industry’s involvement in a scheme like BBB will do wonders to bolster customers’ trust in the insurance sector.