Briefing: Time for the industry to sink or swim around flood risks

By Kelly Ogley

Summer is here and once again it’s time to engage in our favourite national pastime. Not watching great sporting spectacles like Wimbledon or the Euros, but talking about the weather.

Everyone knows it rains a lot in the UK. As a northerner, we experience it more than most. In fact, when I saw a recent headline saying we could expect 50 days of rain, I thought this was a good news story!

But there’s a serious point here. All over the world, extreme weather is making places a lot wetter. We’ve seen floods in Afghanistan, Pakistan and, most recently, heartbreaking scenes in Brazil where the statistics are truly eye-watering.

Since late April 2024, the Brazilian state of Rio Grande do Sul has been subjected to heavy rains impacting 469 cities and affecting in excess of two million people. More than 150 individuals have died and over half a million have been turfed out of their homes. These are the worst floods in Brazil in 80 years.

Home turf

Climate crises are no longer somebody else’s problem.

The waters are rising much closer to home too, with Met Office figures showing that UK rainfall in 2023 was 111% higher than across 1991 to 2020 – and, based on what we’ve seen so far, 2024 looks set to increase that number again.

At the start of the year, Howden’s Loughborough branch was hit by unprecedented flooding when the banks of the Grand Union Canal burst. Water swilled across the forecourt, seeped into the foyer and pooled under desks.

Fortunately, thanks to the incredible efforts of our team, we weren’t out of action for long. But it was a stark reminder to me that the cost of flooding doesn’t end when the rain stops.

It’s only after the water recedes that you get a true sense of the real damage flooding has caused to floors, stock, machinery and IT, as well as appreciate the emotional upheaval. And I couldn’t help thinking that this incident affected just one office branch – what if it had been my home?

Unfortunately, as insurance brokers, we are seeing an increasing number of our clients suffering with these devastating impacts.

Claims impact

Increasing numbers of people are finding themselves in the flood line and we are seeing an increasing number of our clients suffering with the devastating impact of these events.

The statistics are stark. According to Howden’s own data, there were almost three times as many flood claims in winter 2023/24 than in the previous year. The last time we had a winter like this with a high rate of flood claims was in 2019/20 – a year many remember because of the two great named storms, Dennis and Ciara.

According to the ABI, weather-related damage claims totalled £0.5bn in 2023/24. That’s 36% more than in 2022. But drill down into the detail and you notice some even more disturbing trends.

A high level of claims came over a number of months, indicating multiple flood events as opposed to one giant inrush like a flash flood. According to the Met Office, the forecast this year is for more rain. In fact, it could be “four times as frequent by 2080 compared to the 1980s”.

We are seeing the impact of this on our clients. Claims frequency and costs are increasing – and thanks to the aforementioned forecasts, things aren’t going to improve unless we help change the weather and its impact.

That means not just talking with the incoming government about investment in flood defence infrastructure, but thinking about how the country can meet its net zero commitments and climate-related promises.

Mitigating action

Secondly, we’ve got to have conversations with clients about risk management and flood mitigation.

With appropriate precautions and investments, clients can ensure they remain insurable at an appropriate cost and reduce the devastation left behind when the waters subside.

This process starts with a chat to gain an understanding of the client’s current and future risk exposure – whether that’s frequent storms or rising sea levels, flooding or heat stress.

We’ll then discuss how assets, operations and profitability will be likely affected by these risks.

Finally, we’ll bring to bear our comprehensive datasets of relevant business metrics and insights to improve decision-making and reduce detrimental impacts.

Ultimately, we assess risk in the round. Mix floods with sustained hot spells and it’s a recipe for subsidence.

As a colleague commented after the floods in Loughborough, no one thinks it will affect them until it affects them. Or as boxer Mike Tyson put it even more succinctly: “Everybody has a plan until they get punched in the face.”

I’m a firm believer in looking on the bright side of life. Speak to us early and you’ll find we’ve got it covered. And, as we help our clients get prepared and resilient, we’ll find the silver lining in those lingering clouds.

Then, we can get back to our national sport of laughing at the rain instead of finding ourselves on the wrong end of its most painful punchline.