Memorandum submitted by AXA Insurance
(DFWMB 13)
EXECUTIVE SUMMARY
1.1 The fragmented nature of managing the
UK's flood risk was highlighted by major flooding in 2007. Subsequent
reviews of the events of 2007 by Sir Michael Pitt have made the
case for legislative change and AXA Insurance supports the need
for fresh legislation.
1.2 The total cost of the UK's summer flooding
in 2007 exceeded £3 billion, and was more than three times
the usual annual cost of weather-related claims in the UK. AXA
Insurance received in excess of 12,000 claims from the two flood
incidents involving the Yorkshire/Humberside and the west of England/Severn
Valley regions. Over 75% of AXA Insurance's claims were as a result
of problems brought about by poor surface drainage.
1.3 The draft Flood and Water Management Bill
is a wide-ranging and welcome piece of intended legislation that
will improve the situation for many who are at increased risk
of flood. AXA Insurance agrees with the broad thrust of the vast
majority of its proposals. We are particularly keen to ensure
that the issue of surface water drainage is addressed seriously
through proper coordination as prescribed by the enhanced role
of the Environment Agency. It is also vitally important that resourcing
is sufficient for the issue of surface water drainage to be addressed
appropriately.
1.4 AXA Insurance would like the bill to
go further through the imposition of statutory obligations on
relevant authorities to not only monitor and assess the risk of
flooding but to have a legal requirement to take action to reduce
the risk of flooding. As the lead organisation, the Environment
Agency should have a statutory duty to reduce flooding risk and
relevant local authorities should be mandated with a statutory
responsibility to reduce the risk of surface water flooding.
1.5 From expert research commissioned by
AXA Insurance in the aftermath of the summer 2007 floods, we suggested
that insufficient investment was being made to overcome problems
brought about by inadequate surface drainage. While we recognise
that a number of proposals are being suggested to improve the
situation with surface drainage, AXA Insurance remains concerned
that more is not being contemplated in the draft bill.
1.6 As over 75% of AXA Insurance's claims
were due to surface water drainage issues, our submission focuses
on the surface water drainage provisions in the draft bill.
THE COMMITTEE'S
CONSIDERATION
2. Are the powers in the Draft Flood and
Water Management Bill sufficient to enable full implementation
of the Pitt Review recommendations?
2.1 AXA Insurance believes that the Environment
Agency's strategic overview role will greatly improve co-ordination
and planning in relation to the management of flood risks. A single
agency that is responsible for all flooding issues will become
a natural focal point, and will help with the implementation of
many of the recommendations made by Sir Michael Pitt. Clarity
around exactly who is responsible for what at both a national
and local level will help overcome some of the difficulties experienced
in 2007. Local authorities will clearly have a big involvement
in surface drainage issues so it will be important for the Environment
Agency to actively monitor and support local initiatives.
2.2 Accordingly, the bill must ensure that the
role of understanding and tackling surface water flooding is clearly
allocated among the relevant bodies and that channels of cooperation
between relevant bodies are strong enough to ensure a coordinated
response to surface drainage problems.
2.3 A considerable amount of data already exists
on flooding, spread across a number of disparate bodies although
its use is often constrained by commercial and licensing issues.
Consolidating this data should enable the Environment Agency to
develop national flood maps detailing all sources of flooding—including
flooding caused by surface drainage—which should be made
publicly available.
3. Does the draft bill achieve the right
balance between protecting the environment and protecting homes
and businesses from flooding?
3.1 Yes, we believe the draft Bill achieves
the right balance. One of the major problems brought about by
the "automatic right of connection" is to be ended which
has been an illogical burden on local authorities' infrastructure
for too many years. Coupled with the mandatory increased use of
Sustainable Drainage Systems for new developments should mean
that the right balance can be struck between protecting the environment
and protecting homes and businesses.
3.2 It will be important for the bill to enable
the Environment Agency and local authorities to proceed with projects
funded by the private sector for those homes and businesses who
want to implement flood solutions that cannot be funded publicly.
3.3 We would also like to see the Environment
Agency and relevant local authorities mandated to liaise with
businesses and homes that they are unable to protect to provide
advice on improving flood prevention and resilience measures.
Businesses and homes should at the very least be made aware of
the flooding risk they face and the options open to them to mitigate
the effects of flooding.
4. Are the proposals contained in the draft
bill necessary, workable, efficient and clear? Are there any important
omissions in the bill?
4.1 In the main, the proposals contained
in the draft bill all appear to be clear and necessary. With specific
regard to surface water drainage, AXA Insurance believes that
section 5 of the draft Bill should impose a requirement on local
authorities to submit surface water management plans to the Environment
Agency at periodic intervals to enable the Environment Agency
to undertake their oversight role properly. Over time, the Environment
Agency will compile a rich level of detail about the management
of surface water and can guide and direct local authorities accordingly.
4.2 AXA Insurance believes it vitally important
that sufficient funding sources need to be made available to fund
surface water management improvements. Following the UK's summer
floods of 2007, research with a leading firm of Chartered Environmental
Surveyors concluded that an additional investment of £720
million was needed to improve surface drainage in the 45 towns
and cities badly affected by the 2007 floods.
4.3 The investment to improve surface drainage
across the UK will be considerably higher and we believe the bill
should take steps to identify the total cost needed and the method
(involving national taxpayers, local taxpayers, water customers,
road users etc) by which this amount will be raised and over what
period.
4.4 In addition to sufficient funding, AXA
Insurance believes it is important that the roles of the Environment
Agency and relevant local authorities are clearly defined and
that clear channels of communication and cooperation exist between
the responsible organisations. Past experience has shown that
a lack of clearly defined responsibilities has hampered flood
management in high risk areas. AXA Insurance also calls on the
Environment Agency to be required to report annually to the Secretary
of State and Parliament about its flood risk assessments and the
action it and relevant local authorities are taking to mitigate
the risk of flooding. This would be similar to the way that DEFRA
is required to report annually under Section 2 of the Climate
Change and Sustainable Energy Act 2006 which shows that this type
of mandated reporting has been incorporated in recent relevant
legislation.
5. Is the proposed institutional framework
appropriate and sufficient for the enforcement of measures contained
in the draft bill?
5.1 Yes, AXA Insurance believes the proposed
institutional framework is appropriate and sufficient to enforce
the measures contained in the draft bill. With so many stakeholders
involved one of the factors that became apparent during the 2007
summer floods was a lack of clarity of responsibilities. We believe
this has largely been dealt with in the draft bill.
5.2 It will be important for the rights and obligations
of waterway owners to be considered by the bill so that appropriate
land management activities can be rewarded and stops can be placed
on inappropriate activities.
6. Is the balance struck between what has
been included on the face of the draft bill, and what goes into
Regulations and the Code of Practices right?
6.1 AXA Insurance recognises that the majority
of the proposals recommended by Sir Michael Pitt do not require
primary legislation; we believe that an appropriate balance has
been achieved between the legislative changes being introduced
in the draft bill and the other regulations and code of practices.
7. What are the likely financial resource
implications of the draft bill?
7.1 We have no reason to question the impact
assessments included in the draft bill other than to point out
that as part of its future flooding review (Foresight 2004) which
detailed the likely flood risk through to 2080, some 80,000 properties
in towns and cities were believed to be at risk of flooding due
to problems with surface water. Based on the events of 2007, AXA
Insurance believes this number to be a significant underestimate.
7.2 Without the additional elements recommended
elsewhere in this submission, there is a strong likelihood of
a further substantial event involving surface water flooding.
AXA Insurance's comments should not be seen as an insurer trying
to reduce its own outlay, since it should be remembered that the
basic concept of insurance simply spreads the cost of claims across
the wider community. A significant surface water event is likely
to cost substantially more than the investment required to remove
the risk and would be borne by UK businesses, communities and
the local population.
8. Has the Government analysed the effects
of the draft bill adequately, and has it taken sufficient account
of consultation?
8.1 Our initial view is that the Government
has undertaken an analysis of the effects of the draft bill, and
the period for consultation provides a sufficient opportunity
for proper consultation.
May 2009
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