Sharing the burden of increasing flood risk: who pays for flood insurance and flood risk management in the United Kingdom

Abstract

Many countries are exploring alternative strategies to counter rising flood risk as there is concern at the extra burden that such increasing risk will bring. The aim of this paper is to explore the nature of these burdens and outline responses in the United Kingdom (UK) where both the government and the private flood insurers have new policies and proposals. Our method is to collate the extensive existing authoritative data and information—from government and the insurance industry—about the risks that are being experienced and the related policy responses. The results show that these seek to concentrate somewhat more the financial burden of, respectively, flood risk management costs and insurance provisions on to those who are at risk and away from the general taxpayer and those who pay insurance premiums. Other countries may well learn from these developments. The pre-existing cross-subsidies are being reduced, and in this way, it is hoped that extra resources for risk management investment will be forthcoming (from local contributions from at-risk communities) and flood insurance will remain affordable, available and commercially viable. A key conclusion here is that it appears that any increase in flood frequency and severity in the UK appears likely to affect the financially deprived communities to a greater extent than others, not least because they are less likely to insure. Government arrangements to prioritise their contribution to risk reduction towards these financially deprived communities are signs that this regressive effect of floods is real and serious and those arrangements are to be welcomed.