01 Flood Risk & Insurance in England and Wales
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Technical Paper Flood Risk & Insurance in England and Wales: Are there lessons to be learned from Scotland? 01 David Crichton Flood Risk and Insurance in England and Wales: Are there lessons to be learned from Scotland? 11 March 2005 CONTENTS Chapter Page Executive Summary.......................................................................................................5 Introduction....................................................................................................................7 The Problems: ............................................................................................................. 11 The Planning Problem.............................................................................................. 11 The Social Justice Problem...................................................................................... 14 The Flood Hazard Problem ...................................................................................... 15 The Flooding disasters of 1928 and 1953. Are we ready for another? .................... 16 Future outlook.......................................................................................................... 21 The Regulatory Authority Problem ........................................................................... 21 The London Problem ............................................................................................... 22 The Sewage and Drainage Problem ........................................................................ 24 The Health Problem ................................................................................................. 30 The Flood Mapping Problem.................................................................................... 31 The Small Business Problem ................................................................................... 35 The Climate Change Problem.................................................................................. 36 The Flood Defence Problem .................................................................................... 42 The Flood Warning and Dissemination Problem ...................................................... 49 Benfield Hazard Research Centre The Lack of Preparation Problem............................................................................. 53 Department of Earth Sciences University College London The Flash Flood Problem......................................................................................... 55 Gower Street London, WC1E 6BT 1 t: +44 (0)20 7679 3637 w: www.benfieldhrc.org The Landslide Problem ............................................................................................ 58 The Rising Groundwater Problem ............................................................................ 60 The Insurance Claims Handling Problem ................................................................. 62 The Flood Claims Excess Problem .......................................................................... 65 The Buildings Regulations Problem ......................................................................... 66 The Dams and Reservoirs Problem ......................................................................... 68 The Canals and Waterways Problem....................................................................... 74 The Water Framework Directive Problem ................................................................ 75 The ODPM versus Defra Problem............................................................................ 79 The Priority Problem ................................................................................................ 79 The Participation Problem........................................................................................ 83 The Consequences….................................................................................................. 84 Availability and Affordability of Insurance................................................................. 84 The ABI Statement of Principles .............................................................................. 88 Impact on property values........................................................................................ 94 Why is Scotland Different? .......................................................................................... 95 Flood defences ........................................................................................................ 97 Coastal Zone Management.................................................................................... 103 Planning and the “Insurance Template” ................................................................. 104 Legislation.............................................................................................................. 111 Surface water drainage and sewer overflows......................................................... 112 Sustainable Drainage Systems (SUDS)................................................................. 114 Flood Resilience .................................................................................................... 115 Emergency Planning.............................................................................................. 117 Benfield Hazard Research Centre Information for insurers .......................................................................................... 118 Department of Earth Sciences University College London Gower Street London, WC1E 6BT 2 t: +44 (0)20 7679 3637 w: www.benfieldhrc.org Is Scotland ahead? - The response from the Department of Environment, Food and Rural Affairs (DEFRA)............................................................................................ 118 Flood Risk and Insurance Modelling.......................................................................... 122 Modelling ............................................................................................................... 122 Reinsurance........................................................................................................... 124 A more positive role for the insurance industry? .................................................... 124 The Pooling Solution.............................................................................................. 125 Future Outlook and Recommendations ..................................................................... 126 Hazard ................................................................................................................... 129 Vulnerability ........................................................................................................... 133 Exposure................................................................................................................ 137 Special advice for insurance underwriting managers................................................. 142 Conclusions ........................................................................................................... 143 Useful Web sites........................................................................................................ 144 GLOSSARY and ACRONYMS for Flood and Insurance........................................ 145 Appendices................................................................................................................ 152 Appendix 1: The Insurance Template ................................................................... 152 Appendix 2: The Foresight Flood and Coastal Defence Project ............................ 156 Appendix 3: The FASTER Form © Crichton 2001................................................. 159 Appendix 4: Advice for those in flooded areas. ...................................................... 179 Appendix 5: Resilient Reinstatement ..................................................................... 183 Appendix 6: The “Crichton Formula”: A new “Insurance Guarantee”?.................... 191 Appendix 7: Insurability Issues for flood: a global view. ......................................... 196 Appendix 8: Private Flood Insurance Solutions around the World.......................... 201 Benfield Hazard Research Centre Department of Earth Sciences University College London Gower Street London, WC1E 6BT 3 t: +44 (0)20 7679 3637 w: www.benfieldhrc.org The Author David Crichton is a Fellow of the Chartered Insurance Institute and a Chartered Insurance Practitioner. He has some 30 years experience in insurance underwriting, latterly as a senior manager in claims and underwriting for a major insurer, but is now an independent research consultant. He is a Visiting Professor at Middlesex University Flood Hazard Research Centre as well as Visiting Professor at the Benfield Hazard Research Centre. He is also a Research Fellow at the University of Dundee. He initiated the National Flood Insurance Claims Database held at the University of Dundee, and was a member of the national steering committee which produced the technical manuals on “Sustainable Urban Drainage Systems” (SUDS). He has advised all local authority flood appraisal groups (currently being renamed Flood Liaison and Advice Groups”) in Scotland on flood insurance and other issues since 1995. He is the author of a recent book on the implications of climate change for the insurance industry, and was a co-author of the Chartered Insurance Institute Book on Climate Change published in 2001. He was also the co-author of a Scottish Executive Research Report on