Planning for the effects of climate change in the future should become a mainstream issue for the UK's insurance market. We need to deal with the consequences of climate change as well as its causes.
The predicted rise in the frequency of extreme weather events, such as increased coastal oding, strong winds and subsidence means that, increasingly, insurance companies will take account of the standards to which homes and businesses have been built in assessing risk.
The insurance industry is central to the UK's housing market because lenders will usually only offer a mortgage on a property with adequate buildings insurance. Insurers recognise this and want to ensure a thriving and sustainable housing market. But this requires good management.
Our coastal towns and urban areas need to be better protected against changing weather conditions through properly planned od defences, urban drainage, strong land use planning and risk-based building regulations.
We need to get the balance right between meeting the everincreasing demand for new housing with the need to make future homes more resistant to bad weather. If we do not, household insurance will inevitably become more expensive as the cost of claims rise. In some cases, it may not be available at all.
Currently the regional approach to damage threshold levels means that houses in the north of England and Scotland are able to withstand stronger peak wind speeds than those built in the south. This leaves the growing housing stock in the south east particularly vulnerable to climate change. Planners, building control and developers need to recognise that sustainable measures to protect developments should be incorporated into all stages of the process - from masterplanning to individual site development.
Insurers support the development of an independent certification scheme (LPS2020) for modern methods of construction in order to provide recognised reassurance on sustainable designs. This could provide a market mechanism for dealing with the new risks we are facing.
Climate change also provides new opportunities for investment in innovative technologies designed to make homes more resistant to ooding and other weather hazards.
The ABI wants to see building regulations expanded to take into account resilience and durability. There should be a minimum level of durability for all new homes to ensure that damage and repair costs do not escalate over time. The proposed Code for Sustainable Homes does not even begin to deliver this. Any move towards low-quality housing could, therefore, mean higher insurance costs that would not meet the needs of families on low incomes or key workers over the longer term.
The insurance industry has an important role in helping combat the effects of climate change. If long-term considerations, such as flooding, subsidence and storm damage are incorporated into the design and planning of new developments at an early stage, truly sustainable and insurable communities can be created.
Katy Cornish is a policy adviser, climate change, Association of British Insurers