The firm said the insurance market will see profit from Flood Re’s BBB scheme in seven years if just 3% of suitable properties were invested in

Adopting property flood resilience (PFR) measures could have a “major impact in mitigating future increases in flood losses caused by climate change”, according to JBA Risk Management’s latest research, published today (5 October 2022).

The Flood People’s review was conducted during the launch of Flood Re’s Build Back Better (BBB) initiative (April 2022).

BBB enables insureds to claim up to £10k for PFR measures on top of the cost of repair work caused by flood damage. 

The research compared the impact of flooding on typical residential houses without any property-level adaptions to typical residential houses with both flood risk resistance and resilience measures implemented.

Resistance measures include the use of barriers, flood doors, auto-closing air brick and non-return valves and pumps.

Resilience measures, on the other hand, include the use of waterproof plaster, solid concrete floors, titled floor coverings, raised electric sockets and moving valuables to higher levels in the event of a flood.

The review highlighted that if just 3% of UK properties situated in present at-risk locations implmented PFR measures this year – assuming that each property used the maximum BBB sum of £10,000 – the invested sum of £2.4bn would deliver a return with a loss reduction of £350m a year for insurers.

It would take a total of just over seven years to turn a £2.4bn investment into profit for insurers in this case, added the research.

Furthermore, if 4.1% of current at-risk properties in the UK adopted PFR measures this year, JBA Risk Management said that the overall investment of £3.2bn would deliver a return with a loss reduction of £453m a year.

Calm during the storm

Flood Re chief executive Andy Bord said: “We welcome JBA Risk Management’s findings, which clearly demonstrate just how impactful and affordable the investment in property level flood resilience and resistance measures under our [BBB] scheme can be.

“Not only will installation of flood resilience measures reduce the impact of future flooding on high-risk properties, but it will also help the UK to become more resilient to the changing climate – enabling householders to return to their homes sooner following a flood providing vital peace of mind.

“With more and more insurers looking to join the [BBB] scheme, the insurance market will truly be able to make a difference to customers. Of course, the insurance market’s efforts must be combined with continued government investment in the flood and coastal defences, despite ongoing economic pressures.”

While the study was based on present day levels, JBA Risk Management said that it was clear that both rebuild and replacement costs would increase, as well as the number of properties at-risk due to the changing climate.