Funding for flood defences needs to increase to £1bn a year in the long term to cope with climate change, the Government has been warned.
A report published by the Environment, Food and Rural Affairs Committee urges ministers to act immediately amid fears flood risk could increase 20 fold in the future.
To minimise flood risk it said the Government needed to give the Environment Agency statutory consultee status for planning applications for developments in those areas where there is a danger of flooding.
This would mean significant housing development builds proposed in flood plains against the Agency's advice would be referred to Ministers - a move currently being considered by the Government.
In 2004 at least 693 houses in 2004 were built in flood risk areas against Agency advice - with less than 60% of applications consulted about the possible risks.
Property underwriting manager at Royal & SunAlliance Alan Gairns, the only insurer to give oral evidence to the committee, said the report was good news for homeowners and insurers alike - as claims show flooding incidents are increasing.
He said: "Flooding is affecting more and more homes and businesses each year and the Government and insurance industry need to work together to ensure people in high risk flood areas can get continue to get insurance cover in the future."
Mr Gairns said 2000 was the costliest year for insurance, and whereas flooding used to happen in the winter, it now occurs all year.
The Agency estimates in England and Wales more than five million people and two million homes and businesses are currently at risk of flooding - with assets valued at £250bn.
