Written evidence from Association of British Insurers (ABI) (DPP0043)

House of Lords Environment and Climate Change Committee drought preparedness submission

November 2025

Introduction

• The ABI is the definitive voice of the UK's insurance and long-term savings industry. We welcome the House of Lords Environment and Climate Change Committee’s inquiry into drought preparedness.
• Insurers are playing their part in supporting households affected by climate change, particularly on subsidence. Our subsidence claims data for the first half of this year shows that subsidence related insurance claims totalled £153 million as households across the UK felt the impact of an exceptionally warm and sunny spring. Insurers have supported almost 9,000 households in recovering from subsidence damage, with the average payout per claim standing at £17,263.
• Our latest property claims and premiums tracker also shows that adverse weather continues to heavily impact claims, with damage caused by weather claims totalled £933 million, £140 million more than in the same period last year In 2024, insurers paid out a record total of £1 billion in claims for weather related damage and interruption to homes, possessions, and businesses.
• We welcome the Planning and Infrastructure Bill and the focus on delivering growth through stability, investment and planning reform. We look forward to working with the government and Parliament to deliver reforms that help give certainty and unlock private investment, while ensuring that new homes are built to a high standard with resilience to climate change and flood risk as a key consideration built into a reformed planning system.
• We support the government’s ambitions to build 1.5 million homes by the end of this Parliament through reforming the planning system to unlock investment and deliver growth. However, this must be done with an adequate consideration of the risks, so that homeowners and business owners are not left with buildings that are difficult to insure, given the increasing prevalence of climate change, and all insured perils such as subsidence and floods.
• Our submission sets out our advice for homeowners on subsidence, and our key asks for government on planning reform.

Subsidence

• Subsidence occurs when the ground beneath a building sinks, pulling the property’s foundations down with it. It typically happens when soil loses moisture and contracts – often due to prolonged dry spells or the presence of trees and shrubs that draw water from the ground. 
• Our subsidence claims data for the first half of this year shows that subsidence related insurance claims totalled £153 million as households across the UK felt the impact of an exceptionally warm and sunny spring. Insurers have supported almost 9,000 households in recovering from subsidence damage, with the average payout per claim standing at £17,263.
• Our figures follow unusually high spring temperatures, with the Met Office confirming the UK experienced its warmest spring on record this year – with above-average temperatures across all four nations.
• Climate change is significantly increasing the risk of subsidence in the UK, particularly in areas with clay-rich soils that sink and swell in response to changing moisture levels caused by hot temperatures. While not all cases can be prevented, homeowners can reduce the risk by managing nearby trees and shrubs that they own, and by ensuring that gutters, pipes and plumbing are well maintained to avoid leaks. If you suspect your property has suffered from subsidence damage, contact your insurer as soon as possible.
• The ABI and our members are committed to working with policyholders to manage ongoing subsidence risk and maintain cover, however there may be circumstances where continuation of cover is not possible. If your property is at risk of subsidence you may have to pay a higher premium than other homeowners and your policy may be subject to different terms and conditions.  This reflects the greater risk of claims cost that a property at risk of subsidence brings.
• Our Protecting Your Home From Subsidence Guide provides information and advice on how to identify subsidence, the causes of subsidence, sensible precautions to help to prevent the problem, the first steps to take if damage still occurs and accessing insurance after a subsidence claim. Our guide focuses on domestic properties but can also apply to generally smaller commercial buildings if they have shallow foundations. Our Subsidence Q&A’s also outlines how home insurance cover can help deal with subsidence, the impact on property explains what causes it, what to look out for, and what to do if you suspect the worst.
• To find the best possible cover, we always recommend that those looking for home insurance shop around. If constituents are having difficulty finding cover through price comparison websites or direct with insurers, we recommend that your constituents contact an insurance broker through the British Insurance Brokers' Association (BIBA), using their ‘find insurance’ service, which can be accessed here or on 0370 950 1790. However, we urge customers not to base their decision on price alone and to ensure the cover is suitable for their needs. 

Planning reform

• We support the government’s ambitions to build 1.5 million homes by the end of this Parliament through reforming the planning system to unlock investment and deliver growth and construct high-quality and resilient homes.

• The Climate Change Committee’s latest report shows the increased levels of harm posed by extreme weather across the UK. Taking steps to increase the UK’s climate resilience to prevent flood is essential.
• The Environment Agency’s National Assessment of Flood and Coastal Erosion Risk in England (NAFRA 2) makes for sobering reading, showing that 6.3 million homes in England are at risk of flooding, with 4.6 million at risk from surface water flooding. The figure is up from 5.5 million homes in the last assessment carried out in 2018 and there are now more homes at risk from flooding than when Flood Re was first established.
• Large scale planning reform must be done with an adequate consideration of the risks, including potential risks associated with any new or innovative materials and techniques, so that homeowners and business owners are not left with buildings that are difficult to insure, given the increasing prevalence of flood and other climate-related risks.  
• We have provided a detailed response to the government’s updated National Planning Policy Framework (NPPF). We want to see the government commit to sustainable reform of the planning system and building regulatory framework so that it prioritises the delivery of buildings that are resilient to climate risk, subsidence, flooding, fire risk, windstorm and extreme heat. Unfortunately, the updated NPPF published in December 2024 did not make any substantial changes in this area and means housebuilding can continue in areas at risk of flooding.
• We would like to see the Bill further strengthened by:
• Prioritising the delivery of homes that are resilient to climate risk, including flooding by requiring the mandatory installation of Property Flood Resilience (PFR) measures for all homes being developed in flood plans to allow for continued access to affordable insurance. 
• Increasing focus on managing surface water flooding and implement the Sustainable Urban Drainage Systems (SuDS) policy under the Floods and Water Management Act ensuring its mandatory installation in all new build developments.
• Increasing investment and resources for planning authorities and Local Planning Associations (LPAs) to ensure compliance and enforcement and the use of the latest flood risk maps provided by the Environment Agency.

25/11/2025