Climate change leading to flood risk could make over 200,000 homes in the UK uninsurable with more seeing huge premium rises, according to a CII report.
The study, written by Professor David Crichton of Benfield Hazard Research, suggests that current rates of spending on flood defence are inadequate.
Over 1,200 sea defences would fail in a one in 50 year storm, Crichton predicts.
The situation is compounded by new building materials being used that are unsuitable for water exposure and the number of planning applications (21%) being approved against the advice of the Environment Agency, says the report.
In 2007, the report states, 27% by value of all new homes were built on flood plains.
Crichton said: "Flooding risks present a major challenge to insurers. It is important they are fully aware of the latest developments, so they can make informed decisions."