The insurance sector has cautiously welcomed the government’s new UK Infrastructure Strategy, which pledges nearly £8 billion over the next decade to shore up flood defences across the country.
Unveiled as part of a sweeping £725 billion infrastructure blueprint, the government’s long-term commitment includes a £7.9 billion pipeline of flood defence capital investment aimed at protecting approximately 840,000 properties by 2035. The strategy, overseen by the newly established National Infrastructure and Service Transformation Authority (NISTA), signals a shift toward preventative resilience planning in the face of intensifying climate risks.
Commenting on the announcement, Erin Sims, financial services senior analyst at RSM UK, said the investment was overdue:
“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),” she said. “Flooding causes untold misery for impacted homeowners and businesses, and puts enormous pressure on insurers, so any preventative measures are welcome.”
The Association of British Insurers (ABI) has warned that flood-related claims have surged in recent years, underscoring the urgency of systemic upgrades. Sims noted that premiums are being pushed up not just by increased weather events but by economic inflation as well.
“The rapid rise in claims costs looks set to continue, given the increase in the cost of construction labour, combined with goods inflation,” she said. “This is squeezing insurers’ profit margins, often leaving them no choice but to pass these rising costs on to consumers through premiums.”
The strategy’s emphasis on forward-looking investment rather than reactive crisis response is seen as a step in the right direction. Sims suggested the government’s move could serve as a foundation for deeper cooperation across sectors.
“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,” she said. “The question is, will these measures be enough, given the rapid rise in extreme weather events the UK has experienced in recent years?”
The industry will now look to the upcoming Infrastructure Pipeline, due in July, for greater clarity on which regions will benefit first and how projects will be prioritised. For brokers and insurers, the key will be ensuring that this investment translates into measurable risk reduction on the ground — particularly in flood-prone postcodes where premium pressures are most acute. Without clear timelines and coordination with local authorities and private stakeholders, there’s a risk that the strategy’s ambition won’t keep pace with the reality of a rapidly changing climate.
