Supplementary memorandum submitted by
Norwich Union Insurance (FL 06a)
ABOUT NORWICH
UNION
1. Norwich Union is the UK's largest general
insurer with a market share of around 14 per cent. With a focus
on insurance for individuals and small businesses, Norwich Union
insures one in seven motor vehicles, 15 per cent of UK households,
and around 800,000 businesses. Norwich Union is part of Aviva,
the world's fifth-largest insurance group.
2. The recent floods had a significant impact
on many of our customers. In total, Norwich Union received approximately
30,000 claims from the floods in June and July, with the overall
claims cost to Aviva estimated to be around £340 million.
3. Norwich Union has long played a pro-active
role in raising the profile of flooding and its impact on insurance;
we have developed a digital flood map to help accurately assess
levels of risk at an individual property level, as well as working
on the development of the UK's first flood-resilient house in
Lowestoft, Suffolk.
THE 2007 FLOODS
4. The UK experienced above average rainfall
for June and July 2007, leading to significantly higher than average
river capacity and subsequent flooding. In addition, the ground
became saturated in many areas, creating floods as a result of
surface water run off, such as the flooding in Sheffield. This
was exacerbated by foul flooding, with drainage in towns and cities
unable to cope with the huge increase in water.
5. This summer's unseasonal weather has
been well documented; however it is important to emphasise that
this rain was not unexpected. Rain was forecast with plenty of
advance warning from the Meteorological Office and severe flood
warnings were put in place by the Environment Agency (EA).
6. A key question which needs to be addressed
is whether the response by the authorities to the floods could
have been better handled. Moreover, the prospect of ever increasing
development, particularly on flood plains, means it is a racing
certainty that ever more communities will experience widespread
disruption from flooding, with its associated emotional and financial
costs. It is therefore essential that these certainties inform
our future planning and response to floods.
ISSUES ARISING
7. While many of the floods occurred in
recognised high risk areas (such as Hull, Worcester and Gloucester),
some areas that suffered the most damage were not marked as high
flood risk. In cities such as Sheffield and Leeds, rivers do not
run through the city, nor are they close to a coastline. In these
situations, the floods were caused by a combination of a huge
level of surface water run off, and the failure of the local drainage
system to cope with the impact of extraordinary high levels of
rainfall.
8. It is essential that storm water drains
and treatment stations, particularly in areas of high population
density are able to cope with sudden downpours. Drains need to
be maintained to a high standard and checked on a regular basis,
and new housing developments need to have adequate drainage systems
in place. Norwich Union urges Government to encourage a review
of the drainage system, and the capacity of our drains to cope
with weather conditions such as those experienced this summer.
9. This summer's floods once again illustrated
the importance attached to the creation and maintenance of flood
defences. Flood defences can, in many circumstances, provide a
barrier against rain/river water influx, and can protect people's
homes, businesses and possessions.
10. However, a failure to react quickly
to changing weather conditions resulted in two instances in which
moveable flood defences were not in place. In June, a decision
by the EA not to erect temporary flood defences in Worcester resulted
in severe flooding in the area. Furthermore, there were problems
in Upton-upon-Severn where flood defences were unable to reach
the area in need, as they were delayed whilst being transported
to the region. This undoubtedly led to some residents being flooded
and losing some of their personal possessions. Norwich Union acknowledges
that in some areas, flood defences would simply not have kept
the water out.
11. The recent floods also highlighted that
while the EA has overall responsibility for flooding, no single
body has responsibility for urban flooding. The UK also lacks
a single body to provide impartial consumer advice for those affected
by flooding, and whilst the National Flood Forum provides a marvellous
support mechanism for victims of flooding, recent cuts to their
budget meant that following the recent floods they were extremely
overworked and unable to help as much as they would have ideally
liked.
12. From the perspective of Norwich Union,
we are confused by the number of different Whitehall bodies with
a stake in flooding. The Department for Environment, Food and
Rural Affairs (Defra), the Department for Communities and Local
Government (DCLG), the Department for Transport (DfT), and the
Cabinet Office all share responsibilities, in some part, for flooding
and the response to flooding.
13. The floods also highlighted the problems
that can occur when essential infrastructure is affected by the
floods. The general public and businesses need assurances that
amenities such as power stations and pumping stations will be
adequately maintained and are protected to enable them to cope
with significant increases in rainfall. Utilities need to be defended
appropriately, with comprehensive emergency plans in place to
deal with the threat of flooding. The potential for social breakdown
and further damage to life and property should power supplies
fail cannot be overestimated.
14. Concerns have been raised around the
sustainability of UK dams. Research by David Crichton of the Benfield
hazard research centre revealed that 69% of the 5,000 dams in
the UK are unsafe[11].
Norwich Union urges Government to look into this claim as a matter
of priority. It would be helpful to see information relating to
the quality of UK dams in the public domain. We would also like
to see maps published, outlining the risk of each area and which
geographical locations would be affected if the dam was breached,
to enable us to accurately understand the levels of risk that
UK dams pose.
GOVERNMENT SPENDING
ON FLOOD
PREVENTION
15. It is essential that the Government
has a clear strategy for flood defence spending, and that these
plans are publicly available. At present, Defra's budget for flood
management is not accompanied by any clear rationale to justify
allocation of flood defence resources in one area as opposed to
another. i.e. how many properties will be defended, and to what
extent. The UK's flood defence budget must be spent appropriately
and directly relate to the flood risk posed. A clear assessment
of flood defences is a key element in understanding underwriting
flood risk for insurers.
16. Norwich Union welcomes the announcement
that the Government will increase annual spending on flood management
up to £800 million by 2010-2011. However, specific details
of this annual spend have not been released, and we would call
on Government to provide further details as soon as possible.
We would also like to see detail of the annual spend leading up
to 2010, The flood defence budget needs to be increased year-on-year,
in order to deal with the ever increasing threat posed by climate
change.
17. We would like to understand what part
of the flood defence budget is spent on new defences and what
is spent on maintenance of existing defences. As noted by the
National Audit Office (NAO) Report, "Building and Maintaining
River and Coastal Flood Defences in England" (published
15th June 2007), an average of 10 percent of time spent maintaining
flood defences is spent on grass cutting. Resource allocated to
flood defences, both in terms of time and money, needs to be spent
appropriately.
18. Norwich Union is also concerned that,
in many instances, planned flood defences are either subject to
delay or not being built at all. Earlier this year, the Environment
Minister was forced to concede that many flood defence projects
planned for construction in 2006-07 had not even begun. In light
of recent events, it is essential that the Government stands by
its commitment to build flood defences. The Committee will be
aware that, under the terms of an agreement between the insurance
industry and the Government, our willingness to continue to price
for flood risk is determined by a proactive flood defence spending
programme and transparency from Government and its agencies over
the whereabouts and scale of individual defence projects.
19. The UK faces a considerable challenge
in terms of deciding where to allocate flood defences. Under the
terms of the points system that currently exists within the UK,
some communities, such as Upton upon Severn and Lewes which are
regularly flooded, do not have flood defences in place, and it
is unlikely that they will receive them in the future. Whilst
Norwich Union appreciates that the flood defence budget is limited
and it is impossible to cover everywhere in the UK that requires
flood defences, we would urge a review of the system, to ensure
that the allocation of flood defence spending is transparently
fair, if it is not already.
20. Government needs to take a holistic
approach to future planning for flood defences—there will
be a natural reaction to this year's floods but defending properties
in areas affected in June and July should not be undertaken at
the expense of other high risk areas.
AVAILABILITY OF
INFORMATION
21. The recent NAO Report also points out
huge weaknesses relating to the availability of data over the
UK flood risk held by the EA. "The Agency has substantially
increased the number of assets recorded on its database, but records
are not yet complete and other operating authorities are reluctant
to use the system due to cost and technical difficulties. The
database . . . cannot hold data on the maintenance history of
each flood defence or clearly link the inspection results to records
of maintenance carried out."
22. The EA has granted insurers access to
its information on the UK flood risk; however, this data is often
delivered to insurers late, is difficult to interpret, and is
inconsistent with the data provided in previous years. Norwich
Union believes that the EA data set urgently needs improving,
and should be made more widely available to both insurers and
consumers.
23. While Norwich Union welcomes the introduction
of Home Information Packs we strongly believe that a flood search
in respect of river and coastal flooding should be a required
document in the Pack. The inclusion of flood risk at present,
through Home Condition Reports, is only voluntary, which we argue
discourages transparency between buyers and sellers. We believe
that there should be an urgent review of this situation.
PLANNING FOR
THE FUTURE
24. Norwich Union's flood mapping data helps
us accurately assess the risk for individual properties across
the UK. It is different from the EA map in that we assess the
height of an individual property; however, we would like to stress
that both serve different purposes.
25. We do, however, need a better way of
modelling flood risk in the UK. This should take into account
a number of factors which are not yet considered in terms of flood
risk management, such as the history of a region, local knowledge,
planned flood defences, risk at an individual level, surface water
run off and the quality of local drainage systems.
26. As climate change becomes an ever-increasing
threat to the UK, it is likely that flooding will occur on a more
frequent basis. It is essential that our future plans take this
into account.
27. The Government has stated its intention
to build on flood plains in the Housing Green Paper, published
in July 2007. Norwich Union accepts the high demand for affordable
housing in the UK and acknowledges that building on flood plains
may be necessary in some areas. However, these properties need
adequate protection, either through defences, or through an innovative
approached to design, such as Norwich Union's flood resilient
house.
28. We welcomed the introduction of Planning
Policy Statement 25 (Development and Flood Risk) and the decision
to make the EA a statutory consultee as part of the planning process.
However, the insurance industry needs assurances that the EA are
being listened to and that inappropriate developments will not
be built contrary to EA advice.
29. Norwich Union believes that householders
need to be aware of the increased risk from flooding from surface
water run off that is associated from block paving gardens, outside
decking, and building conservatories. The high cost of parking
in some urban areas has led to more and more front gardens being
paved over to supply off-road parking spaces.
30. As Norwich Union's Flood Resilient Home[12]
has proved, flood resilient measures are an extremely effective
tool in helping to combat the trauma, distress and uncertainty
that being flooded can bring. Simple measures such as installing
plug sockets mid-way up the wall, and/or replacing carpets with
tiles, can make a huge difference in the clean up operation after
a flood and significantly reduce the cost of home and contents
insurance.
31. However it is important to stress that
these measures are used to mitigate the effects of flooding and
are not provided as an alternative to local flood defence schemes.
32. DEFRA is currently exploring how the
take-up of flood resilient measures can be increased, and Norwich
Union welcomes this initiative. There needs to be a greater awareness
of the benefits of these measures, especially in areas where flood
defences are not in place. Government should consider providing
grants for those at risk.
LOOKING AHEAD
33. The recent floods have illustrated the
importance of effective communication and working together. Central
government, local authorities, the emergency services, insurance
companies, water companies, and relief agencies have a vital role
to play in the relief efforts associated with flooding.
34. Norwich Union recommends that there
needs to be a full review of the responsibilities allocated to
each organisation and Government departments, to ensure that each
body involved is fully prepared if, and when, such floods happen
again. Those affected by flooding need to be safe in the knowledge
that essential services will still be available when it is most
needed.
35. The Government should consider the long
term threat and how it aims to deal with an increased incidence
of flooding, (including flooding in areas not necessarily marked
as high risk) in the context of flood relief efforts.
36. Long term spending plans, post 2011,
need to be considered early and carefully. The focus on the 2007
floods will soon have disappeared from the public consciousness
(apart from those householders who have yet to move back into
their homes) but it is essential that the severity of the issue
is not forgotten. Carefully thought out plans for dealing with
the long term threat need to be produced, with appropriate budget
allocated, will reassure the public that flooding remains high
on the Government's agenda, and reassure the insurance industry
that flood risk is being managed in a satisfactory manner.
Norwich Union Insurance
September 2007
11 Insurance Times, 28th June 2007: "Flooding
makes case for more defence cash". Back
12
In November 2005, Norwich Union launched the UK's first flood
resilient demonstration house to show the steps people can take
to limit the impact of a flood. As part of Norwich Union and Norfolk
County Council's FLOWS project, a Cotman House Association-owned
house in Lowestoft, Suffolk, was installed with various flood
resilient alterations. Measures installed included replacing vinyl
flooring with ceramic tiles, replastering the walls with Limelite
Renovating Plaster (to limit the dampness seeping into the walls),
and new internal doors, frames and linings to make them easier
to remove in the event of a flood. For more information, please
visit www.floodresilienthome.com. Back
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