Review of affordability and availability of flood insurance to help evaluate the effectiveness of FloodRe

This research explored the affordability and availability of flood insurance for households, and small and medium sized enterprises (SMEs), including agricultural businesses.

From:
Flood and Coastal Erosion Risk Management Research and Development Programme and Department for Environment, Food & Rural Affairs
Published
21 September 2023
Category:
Increasing resilience to flooding
Topics:
Insurance, Resilience planning
Project status:
Completed
Project code:
FD2721
Date of start:
8 April 2021
Date of completion:
19 December 2022

Documents

Three reports, 2 annexes and a summary report can be downloaded from Defra Science Search.

Details

Ongoing monitoring of the insurance market is necessary to ensure those at high flood risk can access insurance. The research forms part of Defra’s response to the Blanc review and explores people’s perceptions of flood insurance, including the affordability and availability of flood insurance for households, and small and medium sized enterprises (SMEs), including agricultural businesses.

The research aims to:

  • assess the current affordability and availability of flood insurance for households and SMEs (including Agri-SMEs) at risk of flooding compared to those at low/no risk
  • analyse trends in affordability and availability of flood insurance following the introduction of Flood Re (a joint scheme between the Government and insurers)
  • assess the availability of contents and buildings flood insurance including number of policies with flood exclusions and how a policy is purchased
  • provide an update to the baseline studies of the affordability and availability of flood insurance premiums and excesses for households and SMEs (including Agri-SMEs)
  • identify barriers and enablers to the take up of flood insurance for specific groups

Conclusions

The research found that for households, most owners agree that their insurance premiums are affordable; and that most households have both buildings and contents insurance. However, a significantly lower proportion of households in the rental sector have contents insurance. Buildings insurance was found to be held by only 13% of all SMEs, with business property insurance held by around half of all SMEs. 23% of all SMEs hold business interruption insurance. Less than half with business property or business interruption cover reported that it included flood cover. The research also found that agricultural SMEs are much more likely than other SMEs to have all types of insurance.

This project started in 2021 and was completed in 2022 at a cost of £128,550.

Published 21 September 2023