The ABI’s assistant director and head of statistics, Shaun Flanagan, warns against complacency when it comes to property claims
It is important to take a long term view when considering property insurance claims. The latest ABI figures show domestic flood claims were £13m during the first half of 2015. Taken at face value, that might imply that flooding is not an issue in the UK. However, when taken in context, the 2015H1 data are the lowest since the first half of 2006 and a fraction of claims in many other years.
From the £13m paid in the first half of this year and that of 2006, to the £208m and £109m paid out in the first half of years 2014 and 2012 respectively, the range of flood claim costs reflect the sheer unpredictability of the UK’s flood risk. Of course the way insurers collect and record data has changed over the years as well. With flooding becoming an increasingly common occurrence and in recent years an increasingly political issue: when flooding strikes any figures on its financial impact are eagerly awaited.
The low value of flood claims in the first half of this year must not lead to complacency; quite the reverse, given our unpredictable weather and all the predictions that more severe flooding will become more commonplace in the future. Bear in mind that the £35m paid in flood claims in the first half of 2011 was followed by £109m paid out in the same period in 2012; and that the £23m paid in the first half of 2013 was followed by a £208m paid in the same period last year. While I am not predicting a wet winter, this does underline the fact that a benign flood claims period is absolutely no guide to the future.
It is this unpredictability that of course reinforces the industry’s message that the UK’s rising flood threat must be better managed – especially as flood risk remains the UK’s greatest natural threat. The government’s current six-year spending programme of £2.3bn of capital Flood Defence Grant, which aims to protect an additional 300,000 homes through 1,400 new flood defences, needs to be protected amidst the threat of spending cuts. Additionally, there is the need for greater investment in maintenance for existing defences, where expenditure has fallen by 40% in recent years.
And we need a zero-tolerance approach to building in areas of high flood risk. Building in high flood risk areas should not be acceptable: not least because anyone moving into one of these homes may face problems obtaining affordable flood insurance – especially as Flood Re will rightly not cover properties built after January 2009. Only by local and regional planning authorities properly applying planning rules and halting inappropriate development in high risk areas can we help ensure that much needed housing development in the UK doesn’t lead to an awful legacy of flooding problems for the next generation of homeowners.
ABI’s long-term data clearly highlights what we all know: flood risk is unpredictable, but when it does happen the consequences can be devastating, expensive and create huge distress for the people affected. All the more reason that we have consensus across the political parties agreeing major action and adequate investment to reduce it.