The UK insurance industry faces growing pressure to assess climate-driven flood risk across multi-decade timeframes as the sector grapples with accelerating losses and expanding risk exposure, according to data from LexisNexis.
Data shows that 60% of flood-damaged vehicles are written off, with motor flood claims representing almost a fifth (19%) of all flood-related claims in October 2024.
Property portfolios face challenges from changing climate patterns. Projections indicate that over 600,000 additional properties could be categorised as high risk from flood by 2100, with 60% of the flood risk increase by 2040 occurring in defended areas where infrastructure failure could affect thousands of properties simultaneously.
Current flood defence infrastructure across the UK prevents £1.15 billion in damage annually to residential properties, though the country requires at least £1 billion annually in long-term investment to strengthen these systems and prevent cascading failures in vulnerable regions.
Responding to industry demand for enhanced risk assessment capabilities, LexisNexis Risk Solutions has launched climate change flood datasets designed to support insurers' pricing, underwriting, and strategic planning functions.
The datasets allow property and motor insurance providers to model future flood risk for individual addresses, vehicle locations, or entire portfolios across intervals extending to 2100. The projections are based on four climate scenarios developed by the Intergovernmental Panel on Climate Change, providing a range of possible futures rather than a single forecast.
Caroline Elliott-Grey (pictured above), senior product manager at LexisNexis Risk Solutions, said that "the demand for granular, forward-looking climate change data has never been greater."
She noted that insurers are seeking methods to model future risk scenarios and reduce Annual Average Loss through portfolio management and climate stress testing activities.
Beyond UK borders, recent catastrophic events have demonstrated the critical need for sophisticated flood modelling. In Central Europe and Italy, floods in September 2024 produced €2.153 billion in insured losses against total economic losses of €7.6 billion, exposing a substantial protection gap particularly acute across Central and Eastern Europe where insurance penetration remains significantly lower than Western European markets.
Across the broader insurance market, claims severity has increased 9% between 2023 and 2024 to mark the highest level in seven years, with home insurance premiums projected to rise by an average of 29.4% over the next 30 years due to climate risks, intensifying insurers' need for predictive tools and accurate long-term risk assessment.
