The UK government’s plans to build 1.5 million homes by the next parliament have raised concerns in the insurance industry, especially regarding flood risks. As climate change drives increasingly severe weather events, insurers worry about the balance between meeting housing demand and ensuring flood resilience in new developments.
One of the primary concerns is the type of land where new homes will be built. Brownfield sites, land previously used for industrial or commercial purposes, are often more vulnerable to flooding. These sites typically have a high proportion of impermeable surfaces such as concrete or asphalt, which prevent water from being absorbed into the ground. This leads to surface water runoff during heavy rainfall, exacerbating the risk of flooding. Urban areas, particularly those with outdated drainage systems, are especially prone to this issue. The UK’s Victorian-era drainage systems, for example, were not designed to handle the volume of properties and the increased frequency of extreme weather events.
Peter Wassell, director for technical field services at Sedgwick, highlights the inadequacy of existing drainage systems in dealing with new buildings, especially in flood-prone areas. These systems were not built with the modern urban landscape in mind and the rise in surface water flooding is a direct consequence.
In addition to the challenge of surface water flooding, another issue the insurance industry is focusing on is the increasing difficulty of providing affordable flood insurance for homes in high-risk areas. According to research cited by BIBA, 8% of the new homes built in England over the past decade have been located in flood zones. This is a growing concern as insurers worry that many of the proposed new homes in the 1.5 million target will be similarly situated. If these homes are built in flood-prone areas without proper flood mitigation strategies, the cost of insuring them could rise significantly.
Furthermore, homes built after January 1, 2009, are excluded from the government’s Flood Re scheme, which is designed to make flood insurance more affordable. Flood Re helps homeowners in flood-prone areas by covering the flood portion of household insurance policies, but this only applies to homes built before the cutoff date. This presents a challenge for the government’s housing expansion plans, as many of the new homes will not be eligible for affordable flood insurance under Flood Re. This could result in higher premiums for homeowners in these new developments, making it harder for people to secure affordable coverage.
The Flood Re Scheme
The government’s Flood Re scheme is intended to be a temporary solution to the affordability issue, running until 2039. However, Flood Re’s guidelines are clear: it was never designed to encourage construction in flood-prone areas. Kelly Ostler-Coyle, head of communications at Flood Re, noted that new building regulations introduced in 2009 were designed to reduce flood risks in new developments. These regulations promote the use of sustainable urban drainage systems and require stricter flood risk assessments before planning permission is granted.
Despite the exclusion of newer homes from the Flood Re scheme, BIBA’s manifesto for 2025 stresses the importance of taking proactive steps to mitigate flood risks in new housing projects. This includes implementing measures such as SUDs, flood barriers and improved drainage systems to ensure that new homes are resilient to future flooding. The manifesto also advocates for better collaboration between the government, local planning authorities and the insurance industry to ensure that new developments do not exacerbate flood risks.
Another key issue is the government’s strategy for managing flood defences. The insurance industry is calling for a long-term, sustainable flood defence strategy to protect homes from future flood risks. BIBA and other industry bodies urge the government to allocate more funding to flood defence projects and to ensure that flood resilience measures are integrated into the planning and construction of new homes. Dermot Kehoe, director of communications at Flood Re, emphasised that new homes should not be built in known flood zones without the appropriate flood resilience measures in place.
The insurance industry’s concern over flood risks is not just about protecting homes; it’s about protecting the long-term affordability and sustainability of flood insurance. Without proper flood risk management in place, premiums will continue to rise and insurers may become less willing to offer coverage in flood-prone areas. This could create a protection gap, leaving homeowners exposed to the financial burden of flood damage.
How are these issues being addressed?
To address these challenges, BIBA is working closely with Flood Re to promote initiatives like the Build Back Better program. This program provides homeowners with financial support to implement flood resilience measures during repairs after a flood claim. The goal is to make homes more resilient to future flooding and reduce the overall cost of flood damage. BIBA is also encouraging insurers to include these resilience measures as a standard element in home insurance policies within the next five years.
The insurance industry’s focus on flood risk management highlights the need for a collaborative approach to building new homes. The government, insurers and developers must work together to ensure that new housing projects are designed to withstand the increasing threat of flooding. By incorporating flood resilience measures into the design and planning stages, the risk to both homeowners and insurers can be minimised, ensuring a more sustainable and affordable housing market in the long term.
