UK insurers are calling for increased investment in flood protection as the industry faces mounting costs from extreme weather, with Q1 seeing a record £226 million paid out in weather-related claims.
New figures from the Association of British Insurers (ABI) showed that weather-linked claims for homes and possessions reached £585 million in 2024, more than triple the amount recorded in 2022. The spike in payouts was driven by a rise in flood events and other climate-related impacts, placing growing pressure on insurers and the government-backed reinsurance scheme Flood Re.
“The increasing frequency and severity of flooding events driven by climate change is placing unprecedented pressure on UK insurers, making Flood Re’s mission more important than ever,” said Kelly Ostler-Coyle, director of Corporate Affairs at Flood Re, as quoted in a CityAM report. “However, we are entering a challenging new era, facing both rising claims costs and a significantly more constrained global reinsurance market.”
Flood Re, which was set up to ensure access to affordable cover for households in flood-prone areas, said 99% of properties at high risk can now obtain quotes from at least 15 insurers, up from just 8% before the scheme launched in 2016.
The government has pledged £4.2 billion for flood defence over the next three years as part of its June Spending Review. The insurance sector welcomed the move, but warned that climate resilience could be undermined if new homes are built on flood-prone land.
“As the drive to build 1.5 million new homes gets underway, location and design must be carefully considered,” an ABI spokesperson said, as quoted by CityAM. “Every house needs to be able to withstand flooding, extreme heat, stronger winds and subsidence, and must not be built in flood-risk areas.”
The ABI also highlighted the limits of insurance cover, reminding homeowners that insurers do not cover existing property maintenance issues, CityAM reported.
“Only through sustained investment and proactive planning can we mitigate future risks and safeguard our communities against escalating climate threats,” the spokesperson added.
While Flood Re continues to offer support for legacy homes, properties built after 2009 are not eligible for the scheme. Homeowners in new developments on flood-risk land may therefore face higher premiums or reduced access to cover.
A report from AXA, which participates in Flood Re’s Build Back Better scheme, warned that the financial impact of adverse weather could reach £818 million a year by 2055 for the most exposed homes and businesses. Despite the projected risks, AXA found that more than half of UK homeowners feel unprepared for the effects of flooding and extreme heat.
“Flood damage repairs cost an average of £36,000 and storm damage costs over £1,000 to repair,” said Adam Holland, head of product at AXA Retail. “Improving a property’s flood resilience will help keep the expense of flood-related damage to a minimum and make the drying out and cleaning process much simpler.”
He added that protecting high-risk communities must remain a priority as climate pressures intensify.
