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Last week Insurance Business took a closer look at the Environment Agency’s proposed flood and coastal erosion risk management strategy for England, particularly at the role of the insurance industry in the long-term nationwide plan.
Among those who participated in the agency’s consultation was AXA UK, and here we bring you part of the insurer’s responses, as well as Flood Re’s separate recommendations for the Secretary of State for Environment, Food & Rural Affairs Michael Gove which are aimed at incentivising policyholders.
AXA UK, in its seven-page consultation response, wrote: “AXA believes there are additional actions which will enable better uptake of flood resistance and resilience measures. First, building regulations need to be adapted to incorporate requirements for flood resistance and resilience in certain scenarios.
“Second, the scope of Flood Re could be extended (which would need to be factored into Flood Re pricing) to include additional expenditure beyond cost-neutral flood resilient repairs that facilitates improved standards. A limit could be put in place per claim for this additional expenditure.”
The company added that further analysis should be taken to determine whether there is a suitable mechanism that could encourage the insurance industry to pay for additional expenditure beyond cost-neutral repairs.
AXA UK also highlighted: “It is often argued that insurers should consider providing a resilient option whenever ground floor repairs are carried out regardless of peril. AXA would like the government to consider whether the current post-flood event grant scheme could be modified to provide proactive funding of cost-plus resilient repairs before a flood event occurs.”
“The benefits of doing so before a flood event occurs are three-fold,” explained the insurer. “Firstly, these works can then often be done without the occupant needing to vacate the property, lessening the impact on the individual, and secondly can be staggered to avoid strains on local authorities, which often occurs after a flood event due to the volume of work needed to be done.
“Finally, it would also mean that insurance reinstatement repairs post-flood would not be held up waiting for the flood grant to be accepted.”
In its responses, the enterprise – whose Research Fund has provided £3.9 million to support 27 UK-based research projects into climate change – also agreed with the intentions of the draft national strategy but expressed misgivings when it comes to the timeframe of certain objectives, which AXA UK believes should be shortened.
Meanwhile Flood Re is proposing changes to Gove, as part of the reinsurance scheme’s five-year review. According to the Financial Times, Flood Re – which does not deal with homeowners but provides reinsurance to those who provide coverage – wants policyholders to be paid extra on their insurance claims, with the additional compensation to go towards mitigation.
“It could be as simple as low-cost items like non-return valves in toilets or raising [electricity] sockets, all the way through to replacing kitchens to make them more resilient to water,” the publication quoted Flood Re chief executive Andy Bord as saying.
“We are in the early stages of developing this. Insurers would work with loss adjusters to decide what is suitable for a particular property.”
Flood Re’s proposals also include changes to how it invests its reserves as well as allowing the scheme to adjust the levy amount every three years instead of every half decade.
The Mail On Sunday, meanwhile, cited Bord as stating: “The measures we are proposing would allow us to go further in providing peace of mind to householders and make the UK more resilient to future flooding.”
