Colm Holmes: Floods problem requires action from all quarters '“ Aviva CEO

FEW of us can forget the devastating images from recent years of roads submerged by the river Ouse in York, deluged towns and villages and homes under several feet of dirty, muddy water.
Mountain rescue teams in a flooded York street in December 2015.Mountain rescue teams in a flooded York street in December 2015.
Mountain rescue teams in a flooded York street in December 2015.

For many, these memories remain very real following the severe floods caused by Storms Desmond and Eva in winter 2015/6 which devastated many parts of Yorkshire.

Flooding is one of the most traumatic events that any homeowner or business can face. Families are forced out of their homes. Valuable and much-loved possessions are ruined. Businesses struggle to trade. It can be months before the drying is completed and subsequent repairs can commence.

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This trauma places huge responsibilities on us, the insurance industry. It requires us not just to honour fully and quickly our contractual commitments to our customers, but also to provide advice and emotional support to people when they are at their most vulnerable.

As the UK’s largest insurer, our number one priority is to get our customers back on their feet as soon as possible. That’s what we do and what we do best.

Yet many homeowners were left worried about the impact on their home insurance, particularly those whose homes have been flooded several times. The longer-term challenge was to define what steps we can take as a country to minimise flood damage and disruption.

In response, the Government and insurance industry came together to find a solution, developing Flood Re, a world-first scheme with a simple aim to improve the availability and affordability of flood insurance for those in the highest risk areas.

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Launched a year ago this week and built to be in place for 25 years, Flood Re has provided a much-needed boost for homeowners. Under Flood Re, the flood risk part of a home insurance policy is passed to the scheme, but any claim is handled in the usual way by the homeowner’s insurer.

At Aviva, we’ve already transferred 16,000 policies, for existing and new customers, across some of the highest risk areas in the UK, including Yorkshire, the Humber.

For the first time, many homeowners are now able to shop around for their insurance when previously they may have been tied to their existing insurer.

Others are benefiting from lower average premiums while most now have no or vastly reduced flood excesses. At Aviva, new customers in the highest risk areas are saving an average £500.

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The benefits are tangible; helping people whose homes have previously flooded or those in high risk areas who’ve found it difficult to find flood insurance from some insurers.

Whilst the scheme is a huge step forward for the industry and homeowners alike, protection is currently limited to households.

At Aviva, we want an independent study into the affordability and accessibility of flood insurance for SMEs to measure the scale of the problem, indicating if Government intervention is required to support the market, and if so, how. In the meantime, we continue to provide flood cover to our existing business customers.

However, no insurance product or scheme can prevent floods or the widespread devastation and destruction they cause. 
Improved flood protection schemes, such as the recently-announced £50m flood alleviation scheme in Leeds, are vital to protecting communities and a robust programme of investment and planning is needed.

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Flood resilience should also form a key part of Government flood protection policy. Resilient and resistant measures, such as fitting airbrick covers or wall-mounting appliances, help prevent flood water from entering and protect from widespread damage; crucially they can dramatically reduce the length of time needed for drying out and repair, allowing home and business owners to return to their properties much sooner. With an estimated 12 per cent of new builds thought to be built on flood plains, (according to the Committee on Climate Change), thousands of homes remain at risk. Urgent action is needed to ensure planning permissions for new homes consider flood risk.

The Flood Re scheme has proved that collaboration across the industry and Government can provide real benefits to those most affected by flooding. While in its infancy, so far the scheme is benefiting those it set out to help.

We also now need to look to the future. Flood prevention solutions, and protection through resilient measures, are key to ensuring a successful transition back to risk-based flood insurance after the 25 year Flood Re programme.

We need further action to develop and improve flood protection schemes so badly needed to protect against the rising threat of floods in all its forms. The public deserves and demands a sustainable and workable solution. That will only happen through a tangible commitment from everyone involved to play their part.

Colm Holmes is CEO of Aviva UK general insurance.

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