The impact of the 2007 floods is still being felt. There are six key issues for the industry ...


Poor communication was a big problem in 2007. The government, local authorities, water companies and insurance industry struggled to determine their respective responsibilities. The Environment Agency has since become responsible for managing overall flood risk and local authorities will look after surface water. Councils are now producing co-ordinated plans to deal with local flooding. These still need to be tested.

The role of loss adjusters and disaster restoration and recovery companies needs to be clarified to stop any duplication of services. Better communication means claims can be settled more quickly and cheaply, so all lines of response need to run seamlessly.

Pricing flood risk

After a series of tense discussions with the government, in July the ABI renegotiated the statement of principles on flood cover. The agreement, which ends in 2013, guarantees that cover will remain widely available for existing homes and small businesses at risk – but only if certain conditions are met. Where insurers do provide cover, they must think carefully about how high they should set premiums, given the risk of customer backlash.

Mapping and flood data

The Environment Agency, insurers, water and sewerage companies and consultants must share relevant data more. At present, there is no one big picture of drainage, sewerage, reservoir, river and surface water risk. Some parties, such as water companies, have been accused of failing to share information.

New-build property

Planners are still approving buildings in high-risk areas – despite the government stressing that high-risk developments should be built only if necessary. Sixteen developments containing a total of 240 homes were given planning permission in 2007 and 2008.


Homes must be made more flood resilient – and therefore insurable. In January the ABI launched a consultation aimed at developers to make sure new homes are flood resilient. But it remains to be seen whether the proposals will be followed. Insurers should also consider going beyond rebuilding “like-for-like” because it could save them money in the long run. Homeowners also need to take more responsibility.


Twenty-two per cent of people affected by the 2007 floods said they were either dissatisfied or very dissatisfied with their insurers. Insurers need to strengthen customer relations. The government has said insurance companies should help educate the public on flood awareness and several have launched initiatives. This must continue.

Key points

• Communication between government, the insurance industry and other stakeholders must improve, with greater clarity over respective responsibilities

• Insurers must give careful consideration to how to price flood-risk properties once the statement of principles agreement ends

• Information on flood risk should be shared between stakeholders

• There must be a greater focus on making properties flood-resilient

• High-quality customer service is vital for insurers