Briefing: Continued flood risk brings possible property protection gap to the forefront

By Kelly Ogley

Anyone with grown-up children knows how difficult it is for generation Z to get on the housing ladder. As a mum of a 22-year-old who is dreaming of buying a place of her own, the housing challenge is certainly on my mind a lot.

I’m definitely not alone in this situation. One in 10 adults still live with their parents.

It is all a lot more complicated than it was when I was looking at properties back in the day. And as it becomes harder for first time buyers to stump up the cash to get on the housing ladder, mortgage terms are becoming progressively longer.

I was staggered when I realised that, even if my daughter bought a property this year, she’d still be repaying her mortgage in 2065.

Yet a lengthy mortgage term is far from the only challenge she’ll face.

What climate perils might the British Isles be weathering in the latter half of the 2060s? How insurable will my daughter’s home be by then?

According to February 2025 statistics published by the ABI, insurers reportedly paid out £585m for weather related claims in 2024, with the number of named storms increasing to 12 during the 2023 to 2024 storm season.

With the devastating impacts of Storm Eowyn – which hit Ireland, the Isle of Man and the UK in late January 2025 – reported as the worst in recent history, it’s hard to believe this years’ claims payout will be any lower.

By 2065, will the sector simply have pulled the plug on certain property insurance offerings?

Flood defence question marks

So, what are we doing to ensure our properties are insurable and that we are not instead creating a new protection gap – the gap between insured and uninsured losses?

At first glance, the answer to this question appears to be not nearly enough.

Last year, the Environment Agency stated it had a £34m budget shortfall which is hampering its ability to maintain flood defences – let alone invest in more.

This is why it was great to hear the government’s announcement in early February 2025 that it has committed a further £250m towards flood defences, taking the total investment in this infrastructure to £2.65bn over the next few years.

While this is to be welcomed, many experts have said it is still not enough to keep up with this peril. The Environment Agency has predicted that one in four properties will be at risk of flooding by 2050.

I have never considered the risk of flooding where I live in a village in the north west. But following the thawing of snow in early January 2025, our local drainage system could not cope and we experienced surface water flooding like I’ve never seen before.

Surrounded by fields, these natural flood defences used to absorb the excess water. Not any more.

So, the government’s plans to invest more in natural flood defences make a lot of sense. It’s a win-win – preventing floods, supporting wildlife and making our environment a little bit greener.

Protection gap consequences

Yet there’s more we can do.

It can’t be right that houses can still be built on flood plains without compulsory flood defences and damage mitigation measures.

Of course, the UK’s housing shortage is acute and needs fixing for the sake of all our young people. But we also have to put controls in place to ensure we aren’t storing up a future problem for those like my daughter.

We need no reminding of the terrible real world consequences of the insurance protection gap.

The horror of the Eaton and Palisades fires in California in January 2025 – which devastated homes, communities and lives – is still fresh in the memory.

According to a report my company issued in February 2025, only 50% of economic losses associated with these events are predicted to be insured compared to around 75% for previous large scale wildfires in California.

This is why Howden Re chief executive Tim Ronda has called for “adoption of regulatory reforms and strategic investments in risk mitigation to stabilise the state’s insurance sector and ensure homeowners and businesses remain financially protected”.

In the UK, it is floods rather than wildfires that keep us up at night – but the solution remains the same. We have to work with the government to ensure that investment in flood defences accelerates and that future homes are built with safety and sustainability features at the heart of their design.

And that’s not to let our industry off the hook.

We also have a responsibility to make sure that our clients are taking pre-emptive action now, while we continue planning and innovating new products and propositions.

Hopefully, by the time my daughter and her contemporaries come to own their own homes, they can do so safely, knowing there are no storm clouds looming on the near horizon.