By Maximilian Clarke
Urgent action is needed to safeguard the 200,000 homes across UK regarded as high flood risk, PwC have said.
Currently, flood risk householders exist in a limbo; unable to mortgage or insure their properties due to a lack of strategy by insurers and by government.
“It is vital an agreement is reached between the insurance industry and the Government on flood risk otherwise as many as 200,000 high-risk households could be left suddenly having to foot the bill for any flood damage and repairs, which can often run into tens of thousands of pounds,” commented Mohammad Khan, partner in PwC’s actuarial team.
“In some cases these flood losses can be mitigated, through careful planning of new homes and protecting contents. However existing properties and those where flood risk has increased might not have those options and will be unable to reduce the financial impact of a flood event.”
Jon Williams, PwC’s climate change partner added: "This is an ongoing issue for the insurance industry - who are getting frustrated at the current position of negotiations with the UK Government. Urgent action is needed to adapt to the rising risks posed by climate change and that means expanding our flood defences and developing more resilient buildings. Both of these require government intervention, both from an infrastructure investment and planning perspective.
“One solution could be for certain infrastructure to earn a regulated rent from the government - in effect paying for flood defences to be there over their lifetime rather than upfront. This could be an attractive, utility style and long-term asset with a regulated return. In the current climate of fiscal austerity, this might be an innovative and affordable way to adapt to climate change that is acceptable to the government, insurance industry and homeowners.
“The insurance industry also has a part to play by investing more in infrastructure that reduces losses to homeowners and ultimately, their own risks.”
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