Future flood risk for London (UK) is expected to increase due to urbanization and population increase, increasing household contents, climate change and detioration of the flood defence system. This case study will include a review of existing risk analyses on London flood, vulnerability to flood and on the impacts of historical flood events to develop a disaster risk profile for London flood. Next to that, it will evaluate existing and potential new risk management partnerships for London floods.
In the early 2014 the UK was affected by severe weather causing a widespread flooding across the country. The impact on individuals, businesses and infrastructure was substantial. Flooding is recognised as UK's most common and costliest natural hazard, and its potential impact should not be underestimated, particularly in low lying areas, such as the Thames, the Severn and the Humber. London itself is highly vulnerable. In fact, the future flood risk is expected to increase due to urbanisation and population growth, climate change, and the deterioration of the flood defence system.
ENHANCE investigates two very different existing partnerships: the UK flood insurance scheme, which is based on partnership between public and private sector; and the London Climate Change Partnership (LCCP). Under both these strands, the project aims to explore and understand the:
• Relative merits of household and community risk reduction measures;
• Optimal levels of risk and risk reduction from different stakeholders' perspectives;
• Interaction of stakeholders;
• Role of different MSPs and economic instruments in delivering risk reduction;
• Role of asymmetries in information and uncertainty in stakeholder decision-making.
Moving on from 'Gentleman's Agreement' to ‘Flood Re’
The UK is currently transitioning towards a new flood insurance arrangement between government and industry. ‘Flood Re’ was put in place following the end of a public private partnership arrangement between UK government and the insurance industry, known as a 'Gentleman's Agreement' or Statement of Principles. Unlike the initial agreement, where the insurance was entirely underwritten by the private market in exchange for government committing to flood risk management activities, the new approach is build around a not-for-profit pool termed ‘Flood Re’ for high risk households. ‘Flood Re’ will be run by the insurance industry, but government maintains some involvement. ENHANCE explores the two approaches to flood insurance in the context of the ability to incentivise risk reduction. We use an established analytical framework methodology to understand if and how the flood insurance partnerships respond to the challenge of rising risk levels, with a focus on risk reduction.
The LCCP - a climate partnership for London
London itself also benefits from local partnerships such as the London Climate Partnership (LCCP), a long-running initiative to address climate risks within an urban environment. We focus on this case study as a means to understand broader stakeholder engagement and specifically as a lens to explore a public-private partnership. The LCCP provides a counter-point to the insurance partnerships and helps us to assess if and how partnership structures can be used to address risk in London.
This work is undertaken in collaboration with the University of Oxford and combines qualitative as well as quantitative assessments. Under the qualitative strand of this study we develop a survey and conduct semi-structured interviews to investigate the role and understanding LCCP members have within the partnership in addressing both climate and flood risks in London. The quantitative assessment is being facilitated through the development and implementation of an Agent Based Model (ABM), to assess insurance-related instruments; the behaviour between, and motivations of, different stakeholders involved in the risk sharing arrangement; and mechanisms to enhance resilience.
Looking into the existing MSPs and the new insurance 'Flood Re' scheme, ENHANCE is able to explore their influence on London's resilience to major flood risks today and in the future.
State of play
• ENHANCE partners conducted analysis of the prevention/risk reductions elements in both existing and new schemes. It triggered stakeholder dialogue to feed the on-going debate.
• ENHANCE intervention led the Government amending the feasibility calculations (Impact Assessment) to reflect on climate change as a risk driver. • Informing current process of operationalising ‘Flood Re’ with the aim to incorporate risk reduction measures. LCCP:
• ENHANCE partners conducted survey of members and presented interim findings at LCCP-meeting;
• The findings led to a debate on how to measure‘impact’of a partnership – members have diverging perspectives on this.
• Our investigation revealed several key themes relating to barriers and opportunities facing the LCCP: the role of funding and regulations; the partnership longevity; range of partnership functions from rhetoric to reality; and partnership dynamism in responding to changing risks and needs. The ENHANCE project is now reflecting critically on each of the key themes.
This case study will include a review of existing risk analyses on London flood, vulnerability to flood and on the impacts of historical flood events to develop a disaster risk profile for London flood. Next to that, this case study will evaluate existing and potential new risk management partnerships for London floods, in terms of defined criteria, such as the potential to enhance London’s resilience to major flood risks today and in the future; efficiency, effectiveness, and equity; incentives for risk reduction among different partners. Examples will include flood defences, household level flood protection, spatial planning and zoning, insurance, and innovative financial instruments.
The total time period for the ENHANCE project encompasses 48 months (month 1: December 2012). The time frame necessary to complete the deliverables within the case study is:
D1. Report: Month 12
D2. Report: Month 17
D3. Report & Database: Month 27
D4. Report: Month 36
D5. Report: Month 39
Five deliverables are formulated by the case study:
D1. Report: Risk profile case study using conceptual framework
D2. Report: Stakeholders analyses and MSP
D3. Report & Database: Risk Assessment results
D4. Report: Description of MSPs and disaster resilience schemes
D5. Report: Case study synthesis and policy recommendations
Greater London Authority (GLA), Department for Communities and Local Government (DCLG), Department for Environment, Food & Rural Affairs (Defra), Environment Agency (EA), Hydrometeorology Testbed (HMT), Local authorities (London Boroughs), Association of British Insurers (ABI) and members, Reinsurers (such as Munich Re), Brokers (such as Willis)
Want to know more? Check out the links below for recent findings, policy impact and press coverage:
• ENHANCE Working Paper: Assessing surface water flood risk and management strategies under future climate change: An Agent-Based Model Approach
• University of Oxford Impact case study: Managing the risk of surface water flooding
• Economic and Social Research Council (ESRC) Impact case study: Preparing flood insurance for climate change
• Surface water flooding set to increase sharply, putting the success of Flood Re into question, Press release, 8 February, 2016
• Taking a risk on the weather, Financial World, Feb/March, 2016
• UK weather: Rising levels of surface water flooding put success of Flood Re insurance scheme at risk, wan academics, CITY A.M., 8 February 2016
• Flood Re publishes plan explaining how it will lower premiums for home insurance customers in high-risk areas beyond 2039, CITY A.M., 10 February 2016
• Flood Re will struggle to keep premiums low in the face of increased risk, Financial Times, 8 February 2016. Letter by ENHANCE partner Swenja Surminski, Senior Research Fellow, London School of Economics - Read the letter here.
• Flood Re sets out plan for its own demise, Financial Times, 10 February 2016
Can flood insurance schemes help prevent flooding and address the underlying risk of flooding?
Watch the interview with Dr Swenja Surminski from the London School of Economics on the research done within the case study on UK flood resilience and insurance partnerships.