Proactive UK Flood Defence Spending to Shape a More Resilient Future

The UK government has announced plans to invest an additional £250 million in flood defences across England, supplementing the previously announced £2.4 billion to strengthen physical defences and reduce risk in targeted areas.

A Balanced Picture of Flood Risk

The last major flood events occurred in June and July 2007, each causing losses around £3 billion in today’s terms. Since then, the UK has experienced smaller events (in loss terms): June 2012 and December 2015 (in combination with storm) – evidence, albeit over a relatively short time-period, that the annual investment in flood defences and reduced building in flood plains appears to be helping to mitigate the risk. 

Case Studies in Resilience

Since 2001, Bavaria has invested €1.6 billion in flood protection measures, protecting approximately 400,000 people to the benefit of many communities during the flooding of May/June 2024 in southern Germany. In September 2024, Howden Re evidenced the effectiveness of the Raciborz Dolny flood control reservoir on the Oder river, at mitigating the down-stream river discharges and incidence of flooding in Poland. These examples demonstrate that when investment is maintained in real terms and targeted effectively, significant risk reduction can be achieved even in regions with a high exposure to flooding.

A telling historical comparison comes from the west coast of England. In 1953, a storm with coastal wave heights, similar to those observed in December 2013, claimed over 300 lives. Yet, thanks to decades of successful investment, the December 2013 event resulted in zero fatalities. Such outcomes underscore that robust and sustained investment in flood defences does pay dividends in protecting communities.

The additional, annual investment announced for England by March 2026 is expected to protect an additional 52,000 properties while an additional 14,500 properties will benefit from existing defences being upgraded. By drawing on experiences from both historical and international examples, the additionally £250 million is likely to be allocated where the maximum number of households may yield the benefit. This does mean that smaller, more rural communities may need to continue to rely on local schemes to maintain or improve protection.

The Important Role of Flood Re

Complementing these physical measures is the UK’s insurance framework. With over 95% of homeowners covered by flood insurance, the UK enjoys one of the most comprehensive insurance landscapes for flood risk coverage, globally. A recent cornerstone of this near-universal, yet affordable coverage is Flood Re, introduced in 2016 as an industry-led insurance initiative. Flood Re, which is not-for-profit, has:

• Enabled insurers to transfer higher-risk exposures to a central scheme,
• Ensured that nearly 99% of households at high risk can access competitive quotes,
• Delivered significant premium reductions (over 50% for many homes with previous claims).

Flood Re not only enhances affordability for consumers but also stabilises the market, ensuring that both insurers and reinsurers are well-positioned even in challenging risk environments.

Where Will the Extra Investment Reduce Risk?

The additional £250 million investment represents an opportunity to further de-risk vulnerable communities and, from a (re)insurance perspective, update portfolio views of risk ensuring that pricing and capital models are aligned to reflect these positive changes. 

Underpinned by detailed terrain and elevation data in the UK, that at its most granular goes down to a 25cm horizontal resolution, flood models are now able to predict with a high degree of accuracy areas susceptible to flood risk and the depths of flooding that may be experienced. In order to assess the relative likelihood of flooding, models accessible to Howden Re simulate river and over-land water discharges using synthetic simulations of rainfall that model seasonality, antecedent conditions, portfolio correlation and the effectiveness of flood defences. These models facilitate an understanding of the benefit of the effectiveness of current and future flood defence investments.