Insurers have seen flood claims triple during the past decade following a rise in severe weather, a trade body has said.
Payouts to customers whose homes or businesses have been hit by flooding have totalled £4.5bn since 2000 – a 200% increase on the £1.5bn paid out during the previous decade in real terms, according to the Association of British Insurers.
The increase has been driven by a rise in both the frequency and severity of flooding in the UK, as well as the growing problem of surface water.
Major floods during the past decade have included the flooding during the summer of 2007, which cost the insurance industry £3bn, as well as the 2005 floods in Carlisle and the last year’s problems in Cumbria, which cost £272M and £174M respectively.
Around 5.2 million homes in England are currently at risk of flooding, £2.8M of which are at risk from flooding due to surface water, according to the Environment Agency.
Nearly 500,000 people face a significant flood risk, and the ABI warned this figure could rise to 840,000 by 2035 without adequate investment in flood defences.
Overall, it is estimated that the total value of assets under flood risk is more than £200bn.
The group is calling on the Government to ensure that spending on flood defences is targeted at the most vulnerable communities.
Speaking at the ABI’s Fighting Flood Risk Together conference, ABI chairman Tim Breedon said: “Flooding devastates lives and communities.
“Insurers play a key role in helping those affected recover, but prevention must be better than cure.
“The recent announcement of a cut in government investment in flood defences was disappointing, and it is now vital that government spends its money wisely to bring real improvements where they are most needed.”
The insurance industry reached an agreement with the previous government under which it would continue to offer flood cover to existing customers in areas that were at risk, as long as the flood risk was being adequately managed.
Chairman of ABI’s property committee Barry Smith said: “The insurance industry’s flood insurance agreement with the Government, under which insurers commit to offering flood cover to existing customers, expires at the end of 2012.
“To ensure flood insurance continues to remain widely available and competitively priced, further investment in flood management is needed when the public purse is in better shape.”
Environment secretary Caroline Spelman said: “Dealing with floods is a priority for Defra and we will be spending more than £2.1bn over the next four years to bring better protection to those at risk.
“We have already started positive discussions with the ABI and other partners on how we can ensure that flood insurance continues to be widely available beyond 2013.
“At the ABI conference today I will be outlining new proposals on how to manage flood risk and a fairer way of allocating money for flood defences to provide better protection to as many homes as possible.”