ABI: Investment in flood defences must be a Government priority

Thursday, 29 July 2010 12:00 AM

The ABI warned today that as climate change increases flood risk, the coalition Government must make investment in flood defences a priority despite the squeeze on spending.

Speaking at the Local Government Flood Forum, Nick Starling, ABI Director of General Insurance and Health, said that a long-term strategy backed by the right level of investment is crucial if people are to have their homes, services and businesses properly protected in the future.

Nick Starling said:

"We know that public spending is squeezed but cutting back on investment in flood defences would be a false economy in these tough times. Damage done to schools and hospitals, not to mention homes and businesses can cost billions to repair. For every £1 spent on protecting communities from the devastating impact of floods, £8 is saved to the economy.

It is right that insurers bear some of the cost of flood damage and, as part of our formal agreement with Government, we have pledged to make flood insurance as widely available as possible until 2013. We all want flood insurance to continue to be widely available and competitively priced into the future. But for this to happen we need the Government to keep to its pledge, under our agreement, to deliver a long-term flood management strategy backed by the right level of investment. This must include robust planning decisions, so that new homes are not built in areas at high risk of flooding."

Climate change is set to increase flood risk, and therefore flood cost. The ABI's forecast modeling shows that if temperatures rise by 2 degrees, average annual insurance losses would go up by £47m and the risk of a once in a century event would increase by £769m, which could push up the price of insurance by 16%. A temperature rise of 4 degrees is estimated to increase annual losses by £80m and premiums could go up by 27%, while an increase of 6 degrees would lead to additional annual insurance losses of £138m, pushing up prices by 47%.

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Notes for Editors
1. Enquiries to:
Liz Forster 020 7216 7444 (Mobile: 07717 578 586)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)

2. The ABI published Assessing the Risks of Climate Change: Financial Implications in November 2009: www.abi.org.uk

3. The ABI is the voice of the insurance and investment industry. Its members constitute over 90 per cent of the insurance market in the UK and 20 per cent across the EU. They control assets equivalent to a quarter of the UK's capital. They are the risk managers of the UK's economy and society. Through the ABI their voice is heard in Government and in public debate on insurance, savings and investment matters.

4. An ISDN line is available for broadcasts.

5. More news and information from the ABI is available on our web site, www.abi.org.uk.

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