Catherine Wright, Laura Hughes, Professor David Balmforth and Andy Bord.

Q53 The Chair: Good morning. Welcome to the Lords Select Committee on Risk Assessment and Risk Planning. This morning, we will be taking evidence, first, on flooding and insurance and, secondly, on natural hazards. A transcript of the meeting will be taken and published on the Committee website. You will have an opportunity to correct that transcript where necessary.

In this first session, we have four witnesses: Professor David Balmforth, former president of the Institution of Civil Engineers; Andy Bord, chief executive of Flood Re; Laura Hughes, general insurance policy manager and flood policy lead for the Association of British Insurers; and Catherine Wright, interim executive director of flood and coastal erosion at the Environment Agency. Welcome to each of you. Please do not feel that it is necessary for each of you to answer every question because we have a lot to get through. We hope to finish this session by 11.25 am, so please help us with that.

How resilient is the UK’s critical national infrastructure to the risks of flooding? How effective are we, in this country, at identifying and managing the risks associated with flooding?

Catherine Wright: I am really glad that the Committee is doing this inquiry because, although I know the country is very focused on Covid at the moment, of the future risks facing the country we think climate change is really significant for the economy, people and the environment. Your Lordships will be aware that we are in the midst of a significant river flooding event as this Committee is taking evidence.

The Environment Agency has responsibility for the strategic overview of flood risk in this country. We undertake a lot of work to understand flood risk and the impact it has, in both the shorter term and the longer term. That includes providing the forecasting and warning information on which much of the response that is under way at the moment is based. We have other roles around flood risk, which the Committee may wish to ask me more about: managing flood defence assets, providing advice on flooding, and flood warning and informing in emergency response.

I come back to our understanding of risk in England. Our estimates show that we have just over 5 million homes and businesses at risk of some sort of flooding in this country, be it from rivers, the sea or surface water. There are significant risks to infrastructure. Approximately 41% of transport and utilities are located in areas of flood risk; about 36% of that is in direct flood risk areas. There is quite a lot of dependency between types of infrastructure, and about 5% of that risk is down to the sheer interdependence of infrastructure, such as for electricity supply.

Farmland is also of concern: 12% of our farmland, about 1.4 million hectares, is at flood risk. Importantly, that includes about 57% of the grade 1 agricultural land in this country. Long-term flood risk is of concern to food security.

We hear a lot about the devastation caused to individuals when homes and communities flood, but it is worth noting that, for every property that is flooded, we have estimated that 16 other homes and families will suffer disruption because of the knock-on consequences to infrastructure. For example, in 2014 we saw the Dawlish rail line to Cornwall damaged by sea storms. During Storm Desmond in 2015 in Cumbria, we saw major disruption to local people trying to travel around because of bridges taken out during that flooding. Climate change flood risk is a challenge for all aspects of our infrastructure.

The Chair: You specifically said England. Does what you say similarly cover Scotland, Northern Ireland and Wales?

Catherine Wright: No, the Environment Agency has responsibility just for England.

The Chair: Yes, but presumably similar effects are being felt.

Catherine Wright: Yes. Natural Resources Wales carries out assessments of flood risk there. The picture will be different in the different countries.

The Chair: Have there been any recent developments in flood risk management from, perhaps, new technologies?

Catherine Wright: There have been significant developments. I mentioned our four roles in this. Modelling and that sort of information is a really important part of our strategic overview. We work very closely with a number of key partners, notably the Met Office, on our understanding of climate change and flood warning. The Met Office has the responsibility, and I am sure Ian Lisk will be telling you about that later. It looks at the long-term impacts of climate change and produces long-term predictions. We work very closely with the Met Office on that to ensure that we can provide local information to people across the country about future impacts. We also work with the Met Office on some really long-term predictions, beyond the end of this century.

We are always looking to develop our own flood modelling capability, because the level of detail and information is critical. Whether it is the Government’s long-term flood investment planning, understanding and planning flood defences, or the warnings and immediate information that we provide, it is important that we are working on the latest technology.

Professor David Balmforth: You mentioned critical infrastructure in your question. We have made progress in the UK both to understand the risk to critical infrastructure and to improve the resilience to flooding. Where the real challenge lies is with the not-so-critical infrastructure. These are your local electricity stations and transport links, as Catherine mentioned. It becomes enormously complex when you get down to that level of detail.

We have good flood models. The different infrastructure operation systems also have their own modelling. It would be good to get some integration between those models so we can better understand the interdependencies Catherine referred to, in particular, the cascading failures that can have so much impact. This has been a real problem in many of our floods in the UK. It extends the impacts of the floods way beyond the flooded area.

Andy Bord: To echo Professor Balmforth’s point, the models from commercial flood model vendors cover the risk to property and commercial installations very well. Some of the second-tier infrastructure is covered less well. To amplify Professor Balmforth’s point about interdependency, it is not the flooding itself; it is the consequence of flooding that is of risk to the country.

The Chair: Cascade is particularly relevant to floods, I suppose, but it is a key issue for our Committee.

Laura Hughes: The Defra flood risk management strategy and the Environment Agency national strategy are welcomed by the insurance industry. They outline a number of commitments to manage and reduce flood risk across England, and look at the need for investment in flood defences, the importance of property-level resilience and the planning framework for developing new properties. I am sure we will get on to those issues later today.

Q54 Lord O'Shaughnessy: Good morning to our guests. During the course of the inquiry so far, we have heard that consideration of longer-term risks, including climate change, does not form a significant part of the national risk assessment process. How is the management of flood risk projected to change in the coming decade, in line with progress in climate change? How adequately prepared are we to mitigate and respond to those risks?

Catherine Wright: To build on Laura’s answer, as the Committee recognises, there is a growing risk from climate change. During last year, two very important documents were published: the Government’s flood policy statement and the Environment Agency’s flood strategy. We have recognised that we cannot protect everybody from flooding, everywhere, all the time. We now need to shift our approach in this country from thinking simply about how we build defences to a much more rounded approach to flood risk management that takes into account all the various contributions that help make the country more resilient to flood risk and climate change.

As Laura indicated, there are three key parts to that. The first is about how you plan and build future climate impacts into our thinking, as an adaptive approach to planning. The second is about how we build resilience into infrastructure. That is about not just flood defences, but infrastructure as a whole. The third is about how we work with people so that we can better respond and, importantly, recover from flooding when it happens.

Lord O'Shaughnessy: I wonder if I could bring you to a blunt question. Do you feel that, as a consequence of the risk planning processes that the UK goes through, we are adequately prepared at this time? A simple answer would be appreciated from all participants.

Catherine Wright: There is more to do in that space. That is why we have the strategy, because it is about how we take a long-term approach and embed that much more broadly. This is an issue for all of society.

Laura Hughes: I would echo that. Touching on the points I raised earlier, I appreciate that you cannot build flood defences everywhere. The Government’s commitment to invest £5.2 billion over the next six years is a welcome step. There is probably more to do in this area. An area that the ABI is looking into and has commissioned research on is the importance of ensuring that there is adequate maintenance of flood defences. It is not appropriate to keep building them bigger and better if you cannot maintain the ones that already exist and protect properties. We would be willing to share that report with the Committee once we have it later this year.

We are not quite there yet with the development in flood risk areas. A delicate balance is needed between the Government’s housebuilding agenda and the consideration of climate change and flooding across the UK.

Andy Bord: Continuing the theme, I also think there is more to do. Being slightly more specific, by the 2050s the number of household properties at risk of flooding will grow by between 30% and 80%, depending on whether we are on a two degree or four degree climate growth trajectory by the end of the century. It is important to level up the discussion, not just talking about mitigating the future impacts of climate change but the very important, equal approach of adapting to the fact that flooding will take place in the future and making sure that properties are built and maintained in a more resilient way, and, particularly in high-risk areas, retrofitted with resilience measures that make them more able to resist flooding when it happens, because it will.

Professor David Balmforth: I would like to share with you some work that I was engaged with, some years ago, for a government Foresight project. My area of work for many years has been urban flooding, relating more to drainage systems than coastal or river defences. In that study, we estimated a growth of 40% in intense rainfall that affects flooding in urban areas over a 75-year period. The consequence of that 40% increase would be a 100% increase in flood volume, a 130% increase in the number of properties flooded and a 200% increase—that is threefold—in flood damage.

We also looked at the potential cost of preventing that using traditional methods at the time, new drainage systems and so forth. We estimated it to be between four and eight times the cost at that time. This is a massive change, not just a small amount of change. This is why I was pleased when Catherine mentioned looking at a wider range of measures. We clearly have to move out of traditional areas to look at new areas such as source control, where the flooding originates, and improving the resilience of the receptors of the flooding, the properties, our homes and our businesses. We have to have that wider approach.

How well are we progressing this? It was a very direct question. You asked for a yes or no as to whether we are on top of this. I am prepared to give you a straightforward answer. Purely from my own perspective, in the context of the urban flooding that I have been talking about, my answer would be no. We are making progress but, as Catherine said, we need to make a lot more progress on this very challenging issue.

Lord O'Shaughnessy: As a highly urbanised country, I suppose that is all the more important. Typically, one thinks of a flood happening in a village or a rural setting, but that is not where most people live.

Professor David Balmforth: That is a really important point. The concept of having space in our communities to accommodate flooding is a really important challenge for the future design of our urban communities.

Lord O'Shaughnessy: Thank you. It makes me glad I live on a hill.

Q55 Lord Rees of Ludlow: Good morning, everybody. Flooding, of course, is a familiar hazard, so it is reassuring, and perhaps not surprising, that there has been quite a lot of preparation for it, as we have heard. I would like to ask about other possible concerns. What about droughts, heatwaves and things like that, which might become more common? Some people even worry about space weather. I wonder whether you feel there is enough concern about these less familiar hazards, some of which may be a consequence of technology making us more vulnerable, but others may be consequences of climate change.

Catherine Wright: One of the other key concerns, again relating to water, is water scarcity. The forecasts are that we will see much hotter, drier summers associated with climate change. It is really important that we plan now for having clean, plentiful water if we want a thriving society, because we all depend on it. With population growth and climate change, we estimate there could be a 25% increase in the demand for water as early as the middle of the century. We need to start planning the infrastructure now to prepare for that.

The National Infrastructure Commission, which we worked with, has helpfully produced a report on the impact of climate change on water resources. We can point the Committee to that report. It has recommended some resilience standards to adopt for drought of one in 100 years, so you plan and prepare for that level of drought, but there is a very important link to the flood risk, because it is all water. Part of the response to the challenges has to be about how we look at our catchments, and flood and water infrastructure generally, to make sure that we can deal with both too little water and too much water.

Laura Hughes: From an insurance industry perspective, we see these changes through changes in the level of claims that we receive. We are seeing that impact from the more severe weather that we are seeing. We have seen an increase of claims in windstorm damage. We have seen extreme weather events such as the heatwaves in 2018, which caused a 350% increase in the number of subsidence claims. We also saw a significant increase in claims from the impact of the “beast from the east” causing problems with cold, from a property perspective but also for motor insurance and other elements.

Lord Rees of Ludlow: Could I ask about extreme cascading effects, such as flooding of the London Underground? Is that included in the catalogue of risks looking up to 50 years ahead?

Professor David Balmforth: That is an excellent example of potential cascading effects. We know that even modest flooding events in urban areas can extend into underground facilities quite easily. Our London Underground is an excellent system, but it unfortunately has fairly low thresholds at the entrances to the underground stations, which means that you need only a modest depth of flood water in the surrounding area for water to start to get into those systems. It is not just through the entrances; it is through all the air vents, access shafts and so forth.

I have been doing quite a lot of work over the past 15 years with the Singapore Government on flood risk management. Their approach of using raised thresholds for property and infrastructure is interesting. It is a really effective way of reducing these risks. On all the modern underground stations on the metro system in Singapore, you have to go up to go down. They have artificial thresholds raising the entrance above the surrounding area, which means that they can have quite substantial flooding occurring and the metro system still functioning.

Catherine Wright: We manage flood infrastructure for the country, as other witnesses mentioned earlier, in terms of maintaining and building new defences. The wetting and drying that occurs with these extreme weathers also puts our infrastructure at risk. There are two things. As we look forward, it is really important that we build the thinking about climate resilience into new infrastructure, and not just flood infrastructure. We also need to be aware that, as a country, we have a huge legacy of existing infrastructure that also needs to be more resilient in future. That is one of the big challenges facing the country.

Q56 Lord Mair: Professor Balmforth, can you give us an overview of your recent report into the Toddbrook Reservoir incident and its implications for flooding risk management in the UK?

Professor David Balmforth: This was a very serious incident. The dam itself was very close to failure. A lot of people live below the dam, and 1,500 people were evacuated at the time. Had that structure failed at night, without warning, which was possible, it undoubtedly would have led to a significant loss of life.

The reservoir was completely compliant with legislation and always had been. It had had a recent inspection. The inspecting engineer had made recommendations. One of his requirements was to investigate the spillway in more detail. Unfortunately, that investigation had not commenced at the time that the incident occurred. Maintenance of the spillway had not been completed. That spillway should have been capable of handling a one-in-10,000-year flood. It failed during what was a little under a one-in-100-year flood event. It failed at a much lesser event than what it should have been designed for.

My conclusion was that the failure was due to both poor design and incomplete maintenance, but perhaps the most important lesson from that was that compliance with current legislation does not necessarily assure the safety of a reservoir. In my view, that is a really important conclusion. I am now conducting a wider review of the reservoir sector as a whole, to try to answer questions. Are the issues at Toddbrook reflected across the wider sector? Do owners fully understand their responsibilities? How do we assure the competence of the engineers who look after and inspect our reservoirs? How does our management of reservoir safety compare with that which happens in other countries or how other infrastructure is kept safe?

Lord Mair: It is a great concern that the reservoir was compliant with legislation and, as you have clearly described, had a recent inspection, but nevertheless the incident was a surprise.

Professor David Balmforth: Yes, it was.

Lord Mair: The fact that it was a surprise is, of course, worrying.

Professor David Balmforth: It is. This is why it is really important for me to determine whether this was a one-off that we were plain unlucky with, or whether there is something much more systemic in there that poses a threat to the wider reservoir community.

Lord Mair: You are under way with your reporting on the way in which reservoirs are handled and managed. Without prejudging, do you think there may have to be a tightening up of the methodology?

Professor David Balmforth: The key objectives, in the terms of reference for the second part of my review, are to test the effectiveness of the current legislation more widely and to answer the questions, first, “Is it fit for purpose?”, and, secondly—which presumes a certain answer to that question—“What changes in legislation and regulation should we be looking for in the future?” I will be reporting strongly in both of those areas in my report, which is due to be published towards the end of February or the beginning of March. This is what we are currently aiming for. I hope to be able to get my report to the Secretary of State before the end of February, with publication as soon as it can be organised after that.

Lord Mair: Can you say something about the localisation issue? The national risk assessment process specifically excludes risks that are seen to be or thought to be too geographically localised, and therefore do not constitute a national emergency. What is your view on that? It would be pretty close to a national emergency if Toddbrook Reservoir had threatened 1,500 people in the middle of the night, without warning.

Professor David Balmforth: One advance we have made since the Pitt review is the mapping of the potential consequences from dam failure into the downstream areas. Flood inundation maps for all the major reservoirs are now available on the Environmental Agency’s website. That has been an enormous step forward in helping individuals and communities understand the risks they face from reservoirs, but also helping the Government take a wider view of that risk. It is an important question. We do not have as many large, raised reservoirs as other countries do but, nevertheless, they pose a very significant threat.

To my earlier point, it is much more important to answer the question: “Was this a one-off or is it a wider problem?” If we look back over the last 20 years or so, we had the failure of a reservoir spillway at Ulley in Sheffield during the 2007 floods, which was reported on in the Pitt review; and more recently, there was the failure of a spillway on a reservoir at Oroville in the United States—both not dissimilar to the incident at Toddbrook.

Lord Mair: I was just going to ask you about international experience. Have there been cases of near misses like Toddbrook?

Professor David Balmforth: There are plenty of examples of near misses, particularly with spillway failures, which seem to be a problem with reservoirs. To put it in perspective, only about 20% of our reservoirs would meet the international classification of a large reservoir. There is an international commission on large dams, which brings together the responsible bodies from around the world to work on improving dam safety and produce guidelines and recommendations. That keeps track of incidents and publish lessons learned from them. It is really important that we learn lessons from the failures, be alert to those lessons and make sure that we take the appropriate action from the lessons we learn.

Q57 Baroness McGregor-Smith: Andy, I guess this is quite a complicated question, and we do not have very much time, but could you in summary explain to us how Flood Re operates, then tell us whether you think the reinsurance model could be used to insure against other natural hazards?

Andy Bord: Let me try to give you the very brief version. Flood Re is a joint initiative between the UK insurance industry and the Government. It is designed deliberately to make home insurance available and affordable to those who live at the highest risk of flooding. The way that we do that is to collect a levy from all insurers that write household business in the UK. That is £180 million annually. We use that to cross-subsidise the price of insurance for those at the highest risk of flooding. An insurer can choose to pass the flood element of any household policy to Flood Re, and they pay a premium that depends only on the council tax of that property; that is, it is independent of flood risk. As a consequence, the levy that we collect is cross-subsidising the cost.

What does that mean in practice? All of a sudden, home insurance becomes available. To put that in numbers, as of now, 95% of people with a prior flood claim or at high risk of flooding can get 15 [1] or more competitive quotes. Before Flood Re launched in 2016, no one could get that number of quotes and 9% of people could get only two quotes. It has been transformational. Equally, on the affordability side, four out of five people have saved 50% or more on their home insurance if they live at a high risk of flooding. It has made home insurance available and affordable where it was not before.

Turning to the second part of the question: can that be applied elsewhere? Flood Re was a very specific solution to a specific market failure; that is, that home insurance was not available and not affordable. Flood Re was designed with very clear goals in mind to achieve that and, as I say, it is working. If I take a step back from how Flood Re operates and look at insurance or reinsurance more generally, there are successful models globally that protect against other natural hazards: volcanic eruptions, earthquakes and wildfires, as well as floods. Yes, there is a significant role for the insurance and reinsurance industry to play in seeking to take some of that risk.

Flood Re is deliberately designed so that there is no government risk at all. The entire risk is covered by the insurance industry. It is not like some other pool solutions where there is a government insurer of last resort. It is all covered by the industry.

Baroness McGregor-Smith: That is really interesting, Andy, but roll forward 20 years, when there is more and more flooding. How does Flood Re operate then?

Andy Bord: That is a really good question. The second part of our purpose, as well as affordability and availability, is to seek to manage a transition in the marketplace by 2039, such that we are no longer required to administer that cross subsidy. We are involved in making sure that the flood risk is mitigated wherever possible, but are also championing initiatives that further adapt properties. That is why I spoke so strongly earlier about the importance of adaptation.

We strongly advocate the use of flood performance certificates. They would operate in a similar way to energy performance certificates and make awareness of flood very straightforward and easy to understand, such that at the point of property transaction—buying, selling or renting—the people involved know the risk of flooding. They know the inherent characteristics that have been assessed at that property as to how resilient it now is. Importantly, they know what further steps can be taken to make it more resilient in the future. If you address those three things, you are taking a significant step forward to making properties more resilient, which, in turn, reduces the insurance obligation into the future and the need for that cross subsidy.

Baroness McGregor-Smith: Thank you. That is really helpful. Laura, moving forward, what are the challenges in providing insurance against flood risk in the UK? We have heard what Andy has said. I am interested in your perspective as well. Could you outline to us how insurance industry pricing quantifies the risks associated with flooding?

Laura Hughes: I will take the question about challenges first. Andy has clearly set out the challenge that we had previously with flood insurance and the solution that the industry worked with government to create. It is quite clear from Andy’s figures that that solution is working really, really well for those who previously could not access affordable insurance. Part of the challenges that we see from flood risk, relating to insurance, is the fact that every flood event is different. The industry learns every time it floods. Unfortunately, that is happening more and more. We often look at what the key issues are and how we can provide solutions.

For example, we know from the flooding last year in Doncaster that there were concerns about vulnerable people understanding how they should manage their flood claims, should they wish to take a cash settlement instead of letting the insurer manage the claim and repairs. There are always lessons for us to learn. The ABI spends a lot of time and energy on making sure that we understand those challenges and how we can help overcome them.

Awareness of flood risk, as Andy was noting, and people understanding that Flood Re exists is a very important challenge. We are working very closely with the British Insurance Brokers’ Association, Flood Re and government to make sure that people are aware that the market is different now. Pre 2016, they may not have been able to access flood insurance. Some people—a minority, we understand—gave up and have not tried again since. We need to get the message out there that the market operates very differently now and they will be able to access that insurance.

It is always a challenge. We know that every flood claim does not go 100% perfectly, but we try to ensure from an ABI perspective that we are managing people’s expectations, by explaining the claims process and the fact that it can take a very long time to get home. That is not insurers dragging their feet; that is them making sure that those properties are dried out properly and repaired, so people can get home as quickly as possible.

Baroness McGregor-Smith: How can we raise the understanding of the UK public about flood risk in the future for their properties? As I sit here today, I think, “It is not something I think about too much because I do not think I am in an area that is currently affected”. What can the insurance industry do to start making us think a bit more about this?

Laura Hughes: It is an area that the insurance industry could play a part in, but it needs to come in partnership with others. We work very closely with Flood Re, Defra, the Environment Agency and other trusted stakeholders to make sure that that awareness of flooding is there across the UK. You are totally right: there is more that people can do. In England, very few people understand that one in six properties are at risk of some sort of flooding.

Catherine Wright: Laura makes an important point about risk. I talked about the work that we do. We make a huge amount of information readily available on GOV.UK for people to use. You can search for your postcode and find your risk. Around that, we are doing a lot of work to try to present that information in a way people can understand. We are very keen to work with the insurance industry because, as Andy and Laura have alluded to, the incentives that it provides to build more resilience into homes that are in flood risk areas and need to recover from flooding, so property-level resilience, are important things to look at for the future.

Another challenging area for insurance is the coast. Coastal change is a real concern for the country. Communities that live around the coast, particularly those vulnerable to erosion risk, will be a growing issue in future.

Q58 Baroness Symons of Vernham Dean: As you may know, I was not able to join the earlier part of the meeting because of very bad technical difficulties, some of which may indeed be because my house is currently surrounded by sandbags. The area I live in is at risk of flooding. This is nothing to do with a river overflowing or a reservoir having broken its banks; it is to do with the water table rising. I have owned this house for over 30 years, and it was in 2014 that, for the first time, there was appalling flooding everywhere.

The insurers refused to pay for my neighbours who had been flooded because it was not river level damage; it was merely that the water table had risen. Actually, it was within six feet of the top of my well. At the time, we had a terrible fight with the insurers to get insurance. I just wondered about the current attitude of those speaking for the insurance industry to something that is not clearly a disaster—no riverbanks have broken—it is simply that the underground water is rising.

Laura Hughes: Groundwater flooding is covered by standard home or business insurance. However, the gradual increase of the water table is not covered as standard by insurance. That is the difference there. From an insurance perspective, it is essentially to do with the fact that flooding is an inundation happening quickly as opposed to the rising of the water table. Damp issues are not covered by insurance either.

If people are unsure about what is and is not covered, they should speak to their insurer. If they are unhappy with that process, there are various complaints routes and the Financial Ombudsman Service will provide an independent decision on a claim being accepted or not.

Baroness Symons of Vernham Dean: Does that happen often? I had lived in the house for 29 years. Before, the drop down to the well was 60 feet and, within a couple of months, it was six feet. Is this usual? Why was it that so many insurers refused point blank to pay up?

Laura Hughes: Perhaps Catherine can come in on the Environment Agency’s understanding of groundwater flooding, but insurers make those commercial decisions on what they will and will not cover. From my understanding, as Catherine was alluding to on coastal erosion, there are certain elements that the insurance industry does not provide insurance cover for. For coastal erosion, it is largely because, if your property is at the edge of a cliff, it is an inevitability that it will fall off as opposed to there being a risk. Insurers are looking at pricing and understanding risk.

In certain areas where there is the risk of groundwater flooding, I know that the flooding element of it is covered, but that risk of rising damp is not something that the industry will make a commercial decision that it wants to cover. That is likely because in certain areas there will be that inevitability.

Q59 Lord Browne of Ladyton: Thank you to our witnesses. This follows on neatly from the last series of questions. It is for Laura Hughes and Andy Bord. To what extent could government risk assessors and planners make more or better use of the insurance and reinsurance industries’ pool of expertise in risk modelling, pricing, knowledge of preventive measures and incentivisation of behaviours that could build resilience?

Laura Hughes: This is an important piece of work and something we have worked on very closely with various parts of government, to help them understand how insurers and reinsurers evaluate risk. They are experts in understanding how that works and, as you mentioned, the associated risk reduction in behaviours. The key focus from a flooding perspective at the moment is the behavioural change needed for individuals at risk of flooding to understand that they may need to put property-level resilience measures into their home. We would certainly echo and support Andy’s comments about the flood performance certificates.

More widely than that, property insurers specifically invest significant levels of resources in modelling and understanding risk associated with those properties, be that flooding or other named perils. Clearly, there is a commercial element, where they are trying to ensure that they are as competitive as possible. Therefore, there will be certain information that they cannot share more broadly with government and other stakeholders. Generally speaking, the ABI and our members have worked very closely with Defra, the Environment Agency, the Committee on Climate Change and other government departments to contribute insurer expertise. We are more than willing to do so at every opportunity, to make sure that we can help understand risk, share good practice and inform and incentivise good behaviours.

Lord Browne of Ladyton: Andy, maybe you could broaden this slightly. You have already mentioned market failure. We are living in a market failure at the moment in relation to pandemic insurance, aspects of which have gone all the way to the Supreme Court. Perhaps you could address the skillset that is there and how we could recommend it is made better use of, more broadly than just flooding.

Andy Bord: There has been much discussion about so-called pandemic re and what sort of insurance solutions might be possible in the future. It is a hugely complex solution. With regard to flooding, it was very specific market failure affecting a discrete number of people, with a pool that could be defined, which could then operate to subsidise a beneficial outcome for them. In terms of the pandemic, it is not easy to see how it affects the country and, in fact, the world, or how parallels could be drawn that operate in the same way.

The insurance and reinsurance industries are working hard at the moment. There has been quite a lot of engagement with the Treasury on specific interventions to take some of that risk in the future, separating the challenge of handling the current incidents from looking at how that risk could be managed going forward and how that protection gap could be picked up by the insurance and reinsurance industry.

Q60 Viscount Thurso: What one policy recommendation would you suggest this Committee make to government?

Professor David Balmforth: My answer to this question relates to the fact that flood risk management is enormously complex in the UK. It has many different responsible bodies. It has the insurers involved and, indeed, the public themselves. It is not the most complex in the world. The Dutch system is more complex than ours, but they have a much more effective way of managing that complexity, which includes a commissioner who reports directly to government. As was mentioned in the EFRA Select Committee’s report on the future of flooding some years ago, we could learn more from the way the Dutch manage that complexity.

Andy Bord: Going from a complex answer to a simple one, I have not kept my powder dry, because I mentioned flood performance certificates earlier. I will not make the case again but, mandated by government, they could make a significant difference to drive up awareness, to initiate further action that makes the housing stock more sustainable but also removes some of the blight attached to properties that are at risk of flooding and therefore cannot sell. I would advocate flood performance certificates.

Laura Hughes: It should be looking at inappropriate development in flood risk areas and tightening up the loopholes around the planning framework to make sure that we are not increasing the problem for the future in the impact of climate change.

Catherine Wright: As the provider of the major flood risk infrastructure in this country, I recommend investing in it in the long term, both in new measures of flood protection and in maintaining the ones we have.

The Chair: I said I wanted to finish this session at 11.25 am and, hey presto, it is 11.25 am. I thank you very much indeed for your discipline, both witnesses and questioners, and for your very helpful and interesting answers. The meeting is now suspended.

[1] Note by witness: Independent research has found that since the introduction of Flood Re 95% of people with a prior claim or at high risk of flooding can receive 10 or more competitive quotes for flood insurance; and 93% of those with a prior claim can receive 15 or more quotes.