“Don’t cut flood defence spending” : ABI tells UK government

The ABI has warned that as climate change increases flood risk, the coalition government must make investment in flood defences a priority despite the squeeze on spending.

Speaking at the Local Government Flood Forum, Nick Starling, ABI Director of General Insurance and Health, said that a long-term strategy backed by the right level of investment is crucial if people are to have their homes, services and businesses properly protected in the future.

Nick Starling said:

“We know that public spending is squeezed but cutting back on investment in flood defences would be a false economy in these tough times. Damage done to schools and hospitals, not to mention homes and businesses can cost billions to repair. For every £1 spent on protecting communities from the devastating impact of floods, £8 is saved to the economy. It is right that insurers bear some of the cost of flood damage and, as part of our formal agreement with government, we have pledged to make flood insurance as widely available as possible until 2013.

"We all want flood insurance to continue to be widely available and competitively priced into the future. But for this to happen we need the government to keep to its pledge, under our agreement, to deliver a long-term flood management strategy backed by the right level of investment. This must include robust planning decisions, so that new homes are not built in areas at high risk of flooding.”

Climate change is set to increase flood risk, and therefore flood cost

The ABI's forecast modeling shows that if temperatures rise by 2 degrees, average annual insurance losses would go up by £47m and the risk of a once in a century event would increase by £769m, which could push up the price of insurance by 16 percent. A temperature rise of 4 degrees is estimated to increase annual losses by £80m and premiums could go up by 27 percent, while an increase of 6 degrees would lead to additional annual insurance losses of £138m, pushing up prices by 47 percent.

The ABI published Assessing the Risks of Climate Change: Financial Implications in November 2009: click here to read.

Reader comment

Whilst I agree entirely with the general sentiments presented by Nick Starling (“Don’t cut flood defence spending” article) I must take some issue with the forecasts of the ABI related to the potential for temperature change. The ABI confidently asserts that losses following a 6 degree temperature rise would result in “additional annual insurance losses of £138m, pushing up prices by 47 percent”

This view of the world contrasts quite sharply with the forecasts of a 6 degree increase presented in The Independent last November, which presented the credible scientific opinion that “a rise in temperatures of this magnitude "would catapult the planet into an extreme greenhouse state not seen for nearly 100 million years, when dinosaurs grazed on polar rainforests and deserts reached into the heart of Europe".

[He] said: "It would cause a mass extinction of almost all life and probably reduce humanity to a few struggling groups of embattled survivors clinging to life near the poles."

Very few species could adapt in time to the abruptness of the transition, he suggested. "With the tropics too hot to grow crops, and the sub-tropics too dry, billions of people would find themselves in areas of the planet which are essentially uninhabitable. This would probably even include southern Europe, as the Sahara desert crosses the Mediterranean.

"As the ice-caps melt, hundreds of millions will also be forced to move inland due to rapidly-rising seas. As world food supplies crash, the higher mid-latitude and sub-polar regions would become fiercely-contested refuges.

"The British Isles, indeed, might become one of the most desirable pieces of real estate on the planet. But, with a couple of billion people knocking on our door, things might quickly turn rather ugly."

At which point those of us in the BC profession may well have decided on a career change….. although for any remaining businesses a mere 47% increase in insurance premiums would probably look like an absolute bargain!

Jeremy Morris

•Date: 30th July 2010 • Region: UK •Type: Article •Topic: BC general
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UPDATED 3RD AUGUST 2010