UK government’s housing expansion plans has industry nervous for flood risk impact

The UK general insurance sector has long sought to keep its finger on the pulse of flood risk management as global warming induced weather events continue to increase the frequency and severity of British storms – and resultant property claims.

Demonstrating the scale of this challenge, data published by satellite monitoring firm Iceye in January 2025 found that heavy rainfall at the start of this year across Greater Manchester, Cheshire, Merseyside, Lancashire and Yorkshire created a total flood zone of 1,153sq km, with at least 7,000 buildings affected and an average flood depth of 25cm.

Furthermore, December 2023 figures published by the ABI put insurance payouts associated with Storms Babet, Ciaran and Debi, which hit the UK that year, at a hefty £560m.

Industry urgency around mitigating flood risks has, therefore, become more prominent – for example, broking trade body Biba flagged this challenge within its 2025 manifesto, entitled Partnering to deliver value, which was published in January.

Launched during an afternoon event at the Houses of Parliament, the document underscored the need for business resilience and adaptation to evolving risks.

The manifesto stated: ”The frequency and severity of flooding, exacerbated by increasing urbanisation, inadequate drainage and flood defence management, plus climate change, demands a shift in approach to housebuilding so that the supply of affordable flood insurance is maintained.”

The challenge of staying afloat of flood risks is further complicated by the Labour government’s commitment of building 1.5 million new homes, leaving the insurance industry questioning where, exactly, these new homes will be built.

Speaking exclusively to Insurance Times, Biba chief executive Graeme Trudgill explained: “With the 1.5 million houses, let’s not overlook the fact that [the government does not] want to build just a few houses on the outskirts – [it is] actually going to build new towns as well. So, when you’re covering up that much land, where’s the water going to go?”

Mark Shepherd, assistant director and head of general insurance policy at the ABI, added: “Insurance continues to play a vital role in supporting customers to recover when the worst happens, but as the UK continues to experience severe and more frequent weather events, we need to make sure that homes across the country are better protected from climate change and that new homes are not built in areas prone to flooding.”

Surface water situations

A key area of discussion between stakeholders is the government’s intention to build some of its proposed new homes on brownfield sites – this is land that has previously been developed and used for industrial or commercial properties, but is now available for redevelopment.

Brownfield sites are typically more prone to flooding due to being located in urban areas that have a history of industrial use – where natural water drainage systems have been altered or removed.

Therefore, these sites often have a high proportion of impermeable surfaces – like concrete or asphalt – which prevent surface water from being absorbed into the ground, leading to a greater likelihood of surface runoff and flooding in the event of heavy rainfall.

Peter Wassell, director for technical field services at Sedgwick, said: “Floods can occur for a variety of reasons. One of the major problems we face now is surface flooding caused by drainage systems that cannot cope with new buildings.

“Many of our drains in the UK, especially the Victorian drainage systems, were not designed to handle the number of properties we have today.”

Waseem Malik, chief claims officer for UK general insurance at Aviva, agreed with Wassell. He commented that the government’s new builds must be “designed in such a way that they account for and manage the risk of surface water flooding – by appropriately increasing drainage capacity and using sustainable urban drainage (SUD) systems”.

SUDs mimic natural drainage processes and include green roofs, rain gardens, permeable pavings, swales, ponds and wetlands, for example.

Malik continued: ”We do not think the aim of building new homes – and the aim of putting them in the right places and ensuring they are resilient to future risks – are mutually exclusive and we very actively advocate for these aims to be considered together.”

January 2024 research from Aviva was cited in Biba’s 2025 manifesto – this confirmed that around 8%, or 110,000, of the new homes built in England over the last decade were situated in a flood zone.

Flood Re

A further issue Biba has raised around the government’s planned housebuilding is the fact that “zero of those homes will be eligible for Flood Re”, Trudgill continued.

Flood Re is a joint reinsurance scheme between the government and insurers that will operate until 2039. It aims to make the flood cover element of household insurance policies more affordable.

One way it does this is through its Build Back Better initiative, which launched in April 2022. As described in Biba’s manifesto, this ”offers householders the opportunity to install property flood resilience measures up to the value of £10,000 when undertaking repairs after a flood claim”.

Biba wants insurers to include Build Back Better as a standard element of all home insurance policies over the next five years.

Kelly Ostler-Coyle, head of communications and stakeholder relations at Flood Re, explained that the reinsurance scheme was designed “not to be a catalyst for more homes being created in high flood risk areas”, meaning that all properties built after 1 January 2009 are excluded from Flood Re’s provision, aligning with its ultimate goal of reducing flood risk.

She noted that this cutoff was set due to “new building regulations being introduced in 2009”. Flood Re therefore wanted to ensure that it did not “reward or incentivise new developments in flood risk areas, such as flood plains”.

These new regulations Ostler-Coyle is referring to included the promotion of SUDs and implementation of stricter flood risk assessments.

However, Ostler-Coyle noted that if affordable flood insurance was going to become the norm by 2039, there had to be a greater industry focus on flood risk management, reducing flood damage costs and the creation of a sustainable insurance market.

Collaboration to boost resilience

In its manifesto for 2025, Biba has committed to working closely with Flood Re, in particular to promote Build Back Better. It additionally wants to engage with SMEs on their flood risks and possible solutions, as well as continue to support householders that are seeking flood insurance through its Flood Insurance Directory.

Dermot Kehoe, director of communications and transition at Flood Re, said: ”New homes should not be built in known flood zones without suitable adaptations and we support Biba’s call for action for government to ensure local planning authorities enforce the regulations around building in flood risk areas.

”At the same time, we believe a combination of a long-term strategy for flood defence spending by the government and greater use of Build Back Better cover in insurance policies will help make homes more resilient.”