As sea levels rise, so too will cost of damage caused by flooding
In the UK annual flooding losses set to reach £1 billion with many property owners not realising the dangers they could face, it is claimed.
In the next decade, the cost of a once in a century flood event is set to increase 30% to £5.4 billion and home owners may be unable to obtain flood insurance.
Research by property search firm SearchFlow shows underinvestment in defences and climate change means the annual cost of flooding in England and Wales has reached £1 billion and the cost of individual major flooding events is also rising.
According to the Environment Agency a major coastal flooding event in the Humber estuary, for example, could cause damage worth £266 million. As sea levels rise, this could rise to £1.4 billion by 2040.
The Environment Agency predicts in the next thirty years sea levels will rise by approximately 40 centimetres. Without improvement in flood defences, this would increase the number of properties at significant risk of flooding in Eastern England by 48%. By 2040 the cost of a major coastal flooding event could reach £16 billion.
Such high potential losses would place heavy strain on the insurance market. The Association of British Insurers calculates an increase in the cost of a single flooding event to £12 billion would require 10% of the capacity of the global reinsurance market.
‘The twin impacts of climate change and ongoing property development mean the danger of flood liability is growing rapidly. So great is the potential risk from rising sea levels and construction on the floodplain to accommodate a rising population, the UK’s flood liability could come to dominate the global reinsurance market,’ said Richard Hinton, business development director of SearchFlow.
‘In practice, that would mean many in high risk areas would be unable to obtain insurance at all, which would significantly reduce the value of their properties and potentially could put home owners in breach of their mortgage agreements,’ he explained.
‘Many property owners don’t realise the extent of the danger they face. It’s no longer safe to assume that historically low flood risk is an indicator of what to expect in the future. In coastal areas and parts of the UK which face significant risks of flood damage, it’s essential those purchasing property are fully aware not just of the risks they face today, but of those that will develop in the coming years,’ he added.
Currently the UK spends £570 million per year on flood defences to protect the one in six properties that suffer flood risk. At the present level of spending, SearchFlow’s research indicates the annual cost of flooding could rise to £13.5 billion per year. To mitigate the growing risk from flooding, the Environment Agency calculates spending on flood defence must be increased by £20 million each year to at least £1.04 billion annually by 2035.
According to the Association of British Insurers, the present level of spending on flood defences is insufficient to prevent 43% of flood defences being in a ‘moderate, poor or very poor’ condition.
The Environment Agency calculates that spending on flood defence represents good value for money, as every £1 spent on flood defence reduces the damage from flooding and coastal erosion by £8.
‘The UK is reliant on flood defences to protect the properties at risk of flooding. Although hundreds of millions per year sounds like big spending, it’s a drop in the ocean compared to the cost of the damage the UK faces from flooding,’ explained Hinton.
‘Every year the government fails to increase spending on protection from flooding condemns property owners to potentially catastrophic losses down the line. In the meantime, all property owners can do is ensure they have a full understanding of the risks they face,’ he added.