Our Call to Action
Delivering a vision of affordable flood insurance
This section explains Flood Re’s approach to transition. It sets out Flood Re’s operating model and explains how its success to date has been achieved through partnership with the insurance industry and Government. It explains the importance of a fixed end date and how climate change may mean the model becomes harder to sustain as we approach this date. Finally, it sets out Flood Re’s Theory of Change, and how Flood Re uses its position to act as a wider catalyst of change in order to achieve its transition vision.
Flood Re will cease to operate in 2039 and has a statutory objective to manage the insurance market transition to risk reflective pricing. Flood Re has a vision for insurance to remain affordable and available after its exit.
The Transition Plan sets out how Flood Re works to create the conditions for insurance to remain available and affordable upon our exit from the market. This is underpinned by Flood Re’s Theory of Change: understanding, engaging and leading.
Section 1 of the Transition Plan sets out the evolution of Flood Re over the past eight years, including the total number of households who have benefited from the Scheme; the partnership model with the insurance industry and how this shapes the approach to transition.
Flood Re has been successful in reducing the cost of the Scheme over its lifetime but continuing to do so will be challenging in light of inflation and climate change.
Flood Re’s vision is for a market where householders at risk of flooding can obtain affordable home insurance without the existence of Flood Re from 2039. Realising this vision is dependent on a wide range of factors, mostly outside of Flood Re’s direct control. Since 2020, to track progress across the issues impacting on flood insurance availability, Flood Re has created a set of indicators for each of the three transition ‘buckets’ outlined below. Flood Re’s Annual Report includes a dashboard to assess progress for each bucket, as part of our wider commitment to be transparent about the inherent challenges involved in Flood Re’s exit from the market.
This section explains progress against each of these indicators in greater detail, as well as the work Flood Re has undertaken to support progress in each area.
The availability and affordability of flood insurance is dependent on the overall risk of flooding. The first bucket represents macro-level factors contributing to overall flood risk, which include public policy on investment in flood defences, environmental management and planning, as well as evolving risks arising from climate change.
The Government has been active in its spending and policy development to address flood risk. However, risks are growing, and despite UK leadership in reducing emissions, there is much more to do. Action to reduce greenhouse gas emissions remains urgent, and a similar focus is now needed on adapting to climate change.
To prevent risks rising further, action is also needed to ensure new housing development does not increase the overall flood risk assessment profile of the UK.
Bucket 1 covers progress towards reducing floods occurring. Bucket 2 covers progress to reduce the costs and disruption caused by flooding. There are a range of measures that can be taken by individual households and communities to reduce the impact of flooding, from signing up to flood alerts to installing property flood resilience measures.
There is a significant challenge to engage householders and communities with the risks, adaptations and resilience measures necessary to better protect their homes from flooding. As climate change increases, a concerted effort across the public and private sector in partnership with local communities is needed to mainstream these approaches.
Flood Re’s entry into the market has had a substantial impact in promoting availability and affordability of insurance for households at risk of flooding.
The industry has been actively engaged in finding market-led solutions to risks, although more will need to be done on a broader range of issues as 2039 approaches, with a lack of householder awareness or acceptance of flood risk remaining a barrier to an effective market.
As outlined in the previous section, achieving a flood insurance market which is both risk-reflective and widely affordable is a significant challenge requiring action on a number of fronts. This section outlines the action needed to achieve Flood Re’s vision.
The core challenge is to reduce the overall risk of flooding despite climate change. This will require a step-change in approach. Currently most flood defence spending is focused on reducing long-standing flood risk in the UK. But climate change will increase the overall level of flood risk and give rise to increased unpredictability in weather patterns. So current action is not enough.
The two priorities remain investment in large-scale flood defences and a focus on drainage systems (which require both investment and maintenance). However, there is growing recognition that not every area can be protected and with climate change increasing the unpredictability of weather patterns, the UK will need greater overall flood resilience and adaptability. This means PFR and NFM will both have important roles to play. Flood Re wants to see innovation in managing floods and a system wide approach encompassing government at all levels, the private sector and individual households. All these parties have a role to play in reducing flood risk, and all benefit from reduced flood risk. There are also wider benefits to the UK economy of being at the forefront of climate change adaptation. This section outlines the challenge, how we meet it, and the benefits of doing so.
Flood Re is clear that flooding is much more than an insurance issue, particularly in the context of rising risk because of climate change. Understanding the wider harm flooding causes provides a powerful imperative to act.
There are clear, well-evidenced and economically viable routes to reducing flood risk, and Section 3 sets these out, including what individual households can do. The public sector, private sector and individual households all have a role to play in addressing flood risk.
Flood Re is clear that ‘flooding is everyone’s business’, and that is because there are clear benefits for the public and private sector, as well as individual householders if flooding is well managed.
Achieving consistent action across a system with so many actors is difficult. Section 3 sets out Flood Re’s pathway to a system-wide response and the key priorities for the next five years across each of Flood Re’s three transition buckets.
As set out in Section 1, Flood Re will cease to exist in 2039, and household flood insurance will transition to risk-reflective pricing. How many households face increased premiums, and by how much they increase, will depend on the overall level of flood risk facing UK domestic properties in 2039.
Flood Re is a small organisation but has shown through initiatives introduced under the auspices of the previous Transition Plan, it has the potential to catalyse bigger changes across Government and industry. This section outlines Flood Re’s plans for the next period. The ambitions are high. The challenge is considerable and urgent, but it is also being recognised by a growing number of partners. Flood Re is committed to using its expertise, experience and resources to act as a catalyst for change at the national, local and household level.
This section explains what Flood Re will do, and why.
Section 4 outlines the commitments Flood Re is making to support its vision for transition
The first set of commitments are around ‘Understanding’ of flood risk and how to mitigate it. This includes Flood Re’s commitment to develop a comprehensive scoring methodology for the efficacy of property level flood resilience (PFR) adaptations.
The second major commitment in this area is around the creation of a Centre of Excellence, to fill gaps in UK knowledge infrastructure. The final commitment in this section are around Flood Re’s support for the development of Natural Flood Management (NFM) techniques.
The second set of commitments are about ‘Engaging’ with partners in order to galvanise a system-wide response to flooding. This includes Flood Re’s commitments to increase awareness of flood risk amongst householders and communities, as well as commitments to increase capacity to manage flood risk within the planning system.
The final set of commitments are areas where Flood Re will be ‘Leading’ in delivering innovation in responding to flooding. These include commitments to bring to the market a ‘Flood Performance Certificate’ which will enable assessments to be undertaken of property-level resilience to flooding.
The final commitment is to continue to support Flood Re’s already successful Build Back Better scheme into maturity.
Read the full Transition Plan to learn more about the actions that Flood Re and others will need to take, to make the transition to an affordable and risk-reflective market for household insurance, more achievable.