What can we learn from the floods of 2007

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					What can
we learn
from the
floods of
   - And what can
     insurers and
     brokers do?

David Crichton
David Crichton

What can we learn from the floods of 2007?

By David Crichton

Much has been written about the floods of summer 2007 in England and Wales. The Pitt Review,
carried out independently of Government, is due to report in summer 2008 and has examined the
questions thoroughly. Their interim report alone , published in December 2007 contains some 160
pages and some very interesting case studies.

What does it all boil down to?

Flood risk is increasing. Any risk is a function of hazard, exposure and vulnerability. If you want to
manage flood risk, you should look at each of these three factors to see where action will be most
cost effective.

Hazard can be reduced by flood defences, such as concrete walls or reservoirs. However the three
countries in the world which have traditionally spent the most on these, namely USA, Japan and
Holland, have now decided to cut back on hard engineering defences because they are not cost
effective in a time of climate change. Research in the USA has particularly condemned the approach
in California where there has been massive building of homes behind flood defences which it is now
recognised will not cope with climate change. These countries are switching to flood plain restoration
policies. The new Scottish Flood Bill due to be published in June 2008, will also emphasise the
change to floodplain restoration.

Even the ABI appears to be distancing itself from its former preoccupation with concrete. Its
representative has recently said “It is a myth that insurers are just interested in concrete flood

Insurers and brokers need to develop their knowledge and understanding of issues like
sustainable drainage systems, natural flood management, and climate change.

Exposure can be reduced by avoiding building in flood risk areas. The record of local authority
planners is not good (see table). For ten years, some areas such as London, Yorkshire, and the East
Midlands, have consistently been building a high proportion of new housing in flood risk areas.
England and Turkey are the only countries in Europe which still allow building in the floodplain.

Insurers and brokers need to take firmer action to discourage flood plain development using
the pricing mechanism, and educating planners and councillors in those areas which are the
worst culprits.

 Galloway et al 2008. A California Challenge—Flooding in the Central Valley. A Report to the Department of
Water Resources, State of California. Released for public access on 10 January 2008.
3                                                                                            th
    Alan Leaman, ABI, in oral evidence to the RAE Committee, Scottish Parliament, Edinburgh, 19 March 2008.

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David Crichton

Percentage of all new dwellings built in flood risk areas, by region, 1996 to 2005 (Source: Land
         Use Change Statistics, Dept of Communities and Local Government, 2007)

Region                        1996   1997    1998    1999    2000    2001   2002   2003   2004   2005*

North East                      6      5       2       3       1       2      2     3      2      2

North West                      5      5       7       5       6       9      6     8      5      4

Yorkshire and the
                               11      12      7      10      13      12      11   15     10      13

East Midlands                  10      12      6       7       9      11      13   13     11      9

West Mids.                      7      4       6       6       2       4      5     4      5      3

East of England                 6      7       8       7       7       6      7     8      7      13

London                         27      25      26     24      23      20      21   28     26      18

South East                      6      8       9      10       9      10      8    10      7      7

South West                      5      6       6       8       7       8      10    7      8      7

England                         9      9       9       9       9       9      10   11     10      9

* Provisional figures


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David Crichton

Vulnerability of buildings can be reduced to some extent by making properties more resilient. The
Zuider Zee museum in Holland shows how this used to be done in the days before concrete
defences. It is not rocket science, it just needs some small changes to Building Regulations and the
way we train architects. At present the only significant reference to flood in English building standards
is in Approved Document H which deals with the mitigation of flood risk associated with the surcharge
of drains and sewers. (Scottish Building Standards do deal with mitigating flood damage to buildings
and removing the threat to the health and safety of occupants as a result of flooding.)

Insurers and brokers could use the pricing mechanism to recognise measures taken to
improve resilience or the installation of temporary local flood defence systems.

Vulnerability of people can be reduced by insurance. In the UK, more than 90% of owner occupier
households have insurance because this is a requirement to obtain a mortgage. However the
majority of tenants in rented property do not have contents insurance. (Except in Scotland where the
government has spent £500,000 promoting insurance with rent schemes .) The concern must be that
as insurance becomes harder to find in flood risk areas these areas will increasingly be used for
social rented housing, schools, hospitals and small businesses.

Insurers and brokers could do more to encourage the promotion of insurance with rent


Brokers and the insurance and mortgage lending industry could do much more to manage flood risks.
For a start, they could talk directly to local authority planners as they already do in Scotland’s Flood
Liaison and Advice Groups. These have been incredibly successful in persuading local authorities to
stop building in flood plains and to use natural flood plain restoration techniques rather than concrete.
Many insurers now recognise this and have reduced their rates in Scotland.

Meanwhile it looks like flood insurance in England is going to become more and more expensive for
some years yet. It is also clear that more of our flood hazard areas will be used for social or sheltered
housing units not dependent on mortgages. That means that the old, the poor, and the disabled will
increasingly be forced to live in “sink estates”, - perhaps literally. If this is allowed to happen, social
cohesion may break down and everyone will suffer.

If you would like to know more, see

       Crichton, D. 2007. “The Future of Flood Management in the UK” Insurance Research and
        Practice No 1, December 2007. Journal of the Chartered Insurance Institute, London.
        Available for free downloading from

 Paolo Vestri, 2007, “Exploring The Take-Up Of Home Contents Insurance” , Hexagon Research and
Consulting, Scottish Executive Social Research. (web only publication available at

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