Fears that homes in flood defence areas could become uninsurable escalated this week after Insurance Times discovered plans to cut a whopping £15m from flood defence maintenance spending.
The Department of Environment, Food and Rural Affairs has been ordered by the Treasury to make the cuts after a £200m overspend.
This follows the publication of the Stern Report which anticipated that global warming could cost the world £3.68 trillion if it is not tackled within the next decade.
Leading property underwriters warned of a "worst case scenario" which may see a significant rise in the number of uninsurable homes if spending on maintenance of flood defences does not rise in the next two years.
The spending cuts will mean less flood defence inspections, less channel clearing and maintenance, and reductions in flood warnings and awareness campaigns.
Insurers were particularly alarmed to learn that there could be fewer flood mapping and pre-feasibility studies which are a pre-requisite for future investment.
Alan Gairns, property develop-ment manager for Royal & Sun Alliance, warned of a "growing problem". He said: "If flood defence spending isn't kept up it will only get steadily worse. In the worst case scenario there will be a number of uninsurable homes in flood risk zones."
The ABI, which is set to release a report on coastal flood risks on Thursday, has also warned government that a commitment to sustainable investment in flood defences is necessary for insurers to continue to offer cover.
The trade association report, Coastal Flood Risk: Thinking for tomorrow, acting for today, will highlight that sea levels are expected to rise by 40cm by the end of the century.
According to the Stern Report an estimated £125bn of London's assets are currently situated within a coastal flood plain area.
Zurich said that less cash would inevitably make it more difficult to offer adequate cover and called for an urgent review of the budget.
Gregor Elrick, property underwriting manager, said: "We are concerned that a reduction in government spending on flood defences will inevitably mean serious delays in improving the flood risk in some areas and possibly our ability to provide flood cover to those affected."
Peter Hubbard, chief executive of AXA, said insurers also need to play a part in tackling climate change. He said: "Through our expertise in risk management, and the wealth of claims data that we hold, we must continue to contribute to policy developments and we remain committed to working in partnership with policy makers as the debate moves forward."