Response to Defra Consultation on the Future of Flood Insurance (by Katharine Knox with Martin O'Neill) (August 2013) (original) (raw)

2013, Defra Consultation - Securing the future availability and affordability of home insurance in areas of flood risk

This submission has been prepared by Katharine Knox, Programme Manager, Joseph Rowntree Foundation, with input from Martin O'Neill, University of York. We also acknowledge the work of John O'Neill, University of Manchester on this topic. The submission draws on O’Neill and O’Neill’s work for JRF, Social Justice and the Future of Flood Insurance (2012) and Sarah Lindley, John O’Neill et al, Climate Change Justice and Vulnerability (2011). The JRF has been conducting research on climate change and social justice since 2009. In this context we have been considering social vulnerability to flooding in the UK and examining the future of flood insurance as an important safety net for people who may be affected by flooding. Our overall view is that we need to ensure that future flood insurance is affordable and accessible, and that the policy approach that is followed takes proper account of issues of social justice (in particular to consider issues of social vulnerability, poverty and disadvantage and to develop equitable policy responses that take account of this). JRF's Viewpoint report, Social justice and the future of flood insurance (O'Neill and O'Neill 2012) highlights the limitations to allowing a market based approach to future flood insurance to be applied and the negative potential outcomes for social justice of moving towards fully risk-reflective pricing for flood insurance. As such, we are therefore concerned that the proposals suggest a Flood Re model as a short term solution, with the intention of moving to a market based risk reflective pricing model in the longer term. We are concerned that the options outlined have not considered the potential for a stronger state role, such as that applied in many other comparable countries (e.g. France, Spain, Iceland, etc.). In particular we would be interested in raising the issue of whether the chosen approach, which relies heavily on funding reinsurance, offers good value for money, when compared to other models, which are able to take advantages of the savings of scale and coordination that can be made possible by giving a larger role to the state. Inspite of these reservations, we recognise that the preferred model of Flood Re is an attempt to provide a collective response to support those households at highest flood risk. We welcome this development, as this supports our view that we need a solidaristic approach to dealing with vulnerability, in order to avoid potential housing blight in areas of highest risk, and resulting social problems, if flood insurance becomes unaffordable. We recognise that of the models proposed, this is likely to have the greatest buy-in and provide the best short term solution. However we have a number of reservations and would like to see certain issues below addressed if this model is to be followed.