14 April 2022

UK flood insurers introduce "Build Back Better" scheme

By Christopher Cundy

Five UK insurers are participating in a scheme to enable homes hit by floods to be rebuilt in a way that improves their resilience to future flooding.

The “Build Back Better” programme will offer policyholders up to £10,000 ($13,000) for improvement works, above the loss and damage caused by a flood.  

Examples of flood resilience measures include raising electrical sockets and white goods away from floor level; installing self-closing air bricks and flood resistant doors; and replacing flooring with waterproof tiling and grout.

Funding is provided by Flood Re, the UK’s flood reinsurance pool that is coordinating the scheme, and the participating insurers. 

"For cases ceded to Flood Re, Flood Re will reimburse insurers from its funds. However, given that Flood Re expects insurers to apply equal treatment to equivalent cases which are not ceded to Flood Re, insurers will fund those cases," a spokesperson told InsuranceERM.

Flood Re is funded by a levy on insurers that brings in £180m a year.

Ageas, Aviva, NFU Mutual, Lloyds Banking Group and LV= General Insurance (the latter is a division of Allianz) will join the scheme this year and next. More insurers are expected to participate in due course.

The concept of “build back better” has been touted as one of the ways insurers can help society adapt to the impacts of climate change, which scientists warn is very likely to worsen flood risk.

Andy Bord, chief executive of Flood Re, said the insurance industry “must throw the traditional principles of insurance to one side. This means thinking of future resilience and building back better after a flood, rather than simply returning a property to how it was before”.

He added: “In the UK, since 1998 we have seen six of the wettest years on record, with 5.2m homes and businesses at risk of flooding. The trajectory will only continue to worsen without urgent, collective action – there is no time to waste. It is vital we encourage and incentivise adaptation among homeowners.”

Jon Bird, property claims manager at NFU Mutual, said: “Four years ago, NFU Mutual was one of the first insurers to adopt flood resilience repairs, so Build Back Better is something we wholeheartedly believe in.”

Bronwyn Claire, leader of the ClimateWise initiative at the University of Cambridge Institute for Sustainability Leadership, told InsuranceERM she was excited by today's announcement.

"ClimateWise has continually championed for proactive risk management through the claims process. As a result, over the past few years we've seen insurers aligning their procurement and claims reinstatement processes for climate mitigation and adaptation, and collaborating across the insurance supply chain to embolden actions to address climate change. Today's announcement is another positive step in this journey," she said.