Flood defence plans welcomed as insurance industry grapples with rising cost pressures

Commenting on the government’s UK Infrastructure Strategy, and planned investment in flood defences, Erin Sims, financial services senior analyst, RSM UK said: “More investment in flood defences is long overdue, as the industry grapples with increasing cost pressures, and weather-related claims payouts hit a record of over £200 million earlier this year (source: ABI). Flooding causes untold misery for impacted homeowners and businesses, and puts enormous pressure on insurers, so any preventative measures are welcome.

“The rapid rise in claims costs looks set to continue, given the increase in the cost of construction labour, combined with goods inflation. This is squeezing insurers profit margins, often leaving them no choice but to pass these rising costs on to consumers through premiums. It’s hoped this strategy will not only bring much needed investment in flood defences, but will also be a catalyst for greater collaboration between insurers, policymakers and businesses to help tackle climate change. The question is, will these measures be enough, given the rapid rise in extreme weather events the UK has experienced in recent years?”