The second in the series on the role of the insurance market in the climate debate, our insurance and risk management specialist Mark Tetley shares his view of what more could be done by governments, insurers and emergency services to prevent further damage and loss in the face of extreme flooding.

The Environment Agency’s Flood Action Week started in the UK on 22nd November with a campaign catchily named Prepare. Act. Survive. The campaign aimed to advise those of us living in flood prone areas how to create a flood plan to help protect our own homes. Floods undoubtedly make good copy – much more so than harder-to-film wildfires or seemingly random windstorm destruction. Judging by the dramatic footage so often a feature of news reports these days, it appears that we find it ghoulishly fascinating to see the soup-brown water gushing amongst man-made infrastructure. We have had plenty to feast our eyes on in the past few months, as poor souls from Germany to India to China (and now Canada) have suffered significant economic disruption, and often severe loss of life, thanks to extreme flooding events.

Can more be done to prevent extreme flooding?

In Germany’s North Rhine Westphalia province up to 241 mm (nearly 10 inches) of rain fell within a 24 hour period on 14th July 2021 causing damaging floods in what was described as a ‘1 in 500 year event’. Looking at the news footage it was undoubtedly a severe event, but could more have been done to prevent loss of life, if not loss of property? Perhaps so, as the European Flood Awareness System’s (EFAS) strident warnings seem to have gone unheeded in many areas.

This should matter to insurers, who will foot a significant bill for damage following these floods. Yet this is not the first time such ‘1 in 500 year’ floods have occurred; in 2013 and 2002 significant flooding occurred elsewhere in Europe. All three events were the result of relatively similar weather patterns where a slow-moving system rapidly deposits significant rainfall over a small area with, perhaps fairly predictable, outcomes.

Could government, insurers and emergency services have done more? Maybe, but how?

1. Ensure we design and build with real resilience

It is well known that urbanisation (a.k.a. human development) increases flood risk (see example). The world’s urban population has increased from 750 million in 1950 to over 4 billion in 2018; it is predicted to rise to 6.7 billion by 2050. This 5-fold increase means materially more buildings and infrastructure, creating more impervious ground and quicker run-off when rainfall does occur – which increases the likelihood of flooding. Out in rural areas too, infrastructure often proves to be inadequate.

Earlier in November floods in British Columbia have generated some horrific images and reports again of a ‘1 in 500 year’ event after more than 250mm of rain fell over 48 hours; yet this is not unprecedented for British Columbia as 24 hour rainfall of over 300mm has been recorded twice north of Vancouver in the last 40 years of the 20th century (and elsewhere too).

Today financial regulators expect insurers to have capital for a 1 in 200 year event but are our infrastructure designers working to a similar brief? There are too many anti-flood design improvements out there to mention in this short article, but many insurers know what they are from bitter experience; equally local authorities and emergency responders probably know much too. From greater usage of natural flood prevention techniques, and better drainage schemes (see examples) to bigger dikes, much has and more could be done to mitigate flood risk. Surely with the resources available, more cooperation amongst all stakeholders at the design and planning stages – including the insurance sector – could go even further towards merging these fields of knowledge in order to improve flood resilience by design?

2. Ensure we use more of the historical, scientific and insurance data available

A study produced a decade after the devastating floods which took place in eastern Germany in 2002 highlighted how we underestimate flood risk; similarly, an insurance study after Europe’s 2013 floods indicated that people forget bad events, even after as little as 10 years. With apocalyptic headlines proclaiming a 1 in 500-year event, perhaps we convince ourselves that, despite the availability of factual data, something really won’t happen again on that scale, so we forget to incorporate the lessons learned.

A study which came out in the UK to coincide with Flood Action Week 2021 from insurer LV= and Localis suggests that we are still regularly building new developments on floodplains, despite the National Planning Policy Framework guidance stating “inappropriate development in areas at risk of flooding should be avoided”; moreover, a founding stipulation for the insurance entity established to provide insurance for difficult flood risks (Flood Re) was that only properties built before 2009 would be covered so as to discourage developers from building on floodplains. Yet this stipulation has failed to deter developers and planners from continued building in flood risk areas, with the inevitable consequence of inadequate (or non-existent) insurance for many properties. Thus, today in England alone, according to the Government, 5 million homes are at risk of flooding. Clearly the appropriate lessons have not been learned, yet the information to help us avoid this situation is seemingly readily available. One recommendation from the Localis/LV= report is that: ‘The insurance industry should work with the government, local authorities, developers and other key stakeholders to help inform what measures might be needed in the future to help mitigate against climate change and ensure that homes are and remain insurable.’ This advice seems completely obvious on the face of things, and yet the evidence above suggests it is not being heeded.

Joined-up Thinking

In summary, combining insurers’ extensive claims archives with accurate mapping, location and historical weather and flood data should help us develop better flood resilience. Therefore, as some insurers and most journalists rush to blame the climate emergency for increased flooding, it is my hope that others will take the necessary time to pause, consider the facts and information at humankind’s disposal, and actually join some dots between insurers’ information banks, building engineers and planning authorities. This more joined-up approach should help mitigate the inevitable increase in future flooding that population and prosperity growth, and yes, climate change too, will inevitably trigger.


About the Author

Mark Tetley has wide experience gained from senior positions across the London insurance market as both an underwriter and a broker, in a variety of sectors. He provides advice and assistance on a wide range of insurance and risk issues, including comprehensive nuclear liability and property insurance assistance, complex infrastructure project programme design and review, claims and policy reviews, assistance with project insurance design and implementation in developing countries, and many other aspects of risk mitigation.

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

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