The Flood and Water Management Bill
The Flood and Water Management Bill for England and Wales follows the Government undertaking to act on all 92 recommendations of the Pitt Review (following the summer 2007 floods) and has been designed to:
- improve preparation and response to flood emergencies
- protect water supplies during drought
The proposals include measures to give local authorities a clear lead-responsibility in local flood risk management and a requirement for them to produce Surface Water Management Plans as well as Strategic Flood Risk Assessments.
It is important that local authorities and other organisations are aware of the implications of the proposals including:
- The need for local authorities to have adequate funds, resource and expertise in order to carry out the new proposed statutory duties
- New risks as a result of new statutory duties. For example, local authorities and county councils would be given the power to force riverbank landowners to set up a flood prevention scheme where required or to take the necessary action and bill the land owner. There is a potential risk that this statutory power may directly create a civil right of action against the authority for either doing something badly or not doing enough.
Flooding – who pays?
The recently published ‘Flooding in England’ report by the Environment Agency states that one in six homes in England is at risk of flooding and reveals the top 10 local authority areas in England with the most properties at risk.
According to the Environment Agency, flood damage already costs about £1 billion a year. These costs are often borne by homeowners, businesses and local authorities to pay for drying out, refurbishing homes and businesses and business interruption costs.
Affordable insurance
The Government commitment to ensure that flood risk is appropriately tackled with long-term strategic and funding commitments is important to the insurance industry. It enables them to ensure as many people, businesses and public sector service providers as possible are able to access affordable home and business insurance thereby going some way to protect themselves from the financial impact of flooding. For example, research suggests at least 50% of tenants in social housing do not have insurance cover.
Zurich’s specialists carry out extensive research on developments in flood risk protection and mitigation and use this insight to shape products that will help customers. One such product is Zurich Municipal Tenants’ home contents insurance scheme which gives tenants in social housing, the opportunity to purchase a simple, straightforward and inexpensive policy. It gives tenants, shared owners and leaseholders the cover they need to protect their belongings against flooding (amongst other things) with a range of payment options to suit them.
Sharing Expertise
As the UK’s leading provider of risk management and insurance to the public services, we share specialist expertise and recommendations with our customers by publishing flood guides that include risk management and mitigation content. We continue to review our underwriting philosophy and product offering as the level of risks change and new risks emerge. For example we are currently researching future underwriting policy amendments in respect of flood risks related to levels of resilience across different types of organisations and individuals including local government, community and commercial.
Zurich Municipal also shares its expertise to play a crucial role in managing the recovery from flooding, providing specialist post-loss services. After the summer 2007 floods for example, Zurich Municipal leveraged Zurich’s global strength to ensure priority service from overseas suppliers at a time when the UK’s resources were scarce due to very high demand.
Next Steps
It is important that organisations are aware of the proposals in the draft Bill and take the opportunity to review risk management policies, business continuity plans and insurance cover/services in place in the context of those proposals.
We will continue to work closely with our industry association (the Association of British Insurers) and directly with political policy makers on the risk management aspects of flood control and protection.
The Flood and Water Management Bill consultation can be read in full at http://archive.defra.gov.uk/environment/flooding/documents/policy/fwmb/fwmialocalfm.pdf The final Bill is expected to be announced in the Queen’s speech and introduced to Parliament in the coming 2009/2010 parliamentary year.
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