Money Box Live: Flooding and Insurance

BBC Sounds. Music, radio, podcasts. Hello. In this Moneybox Live podcast, we're talking about flooding and insurance. Because there are almost 6 million homes at risk of flooding just in England alone. watching the weather forecasts in the hopes the next storm will spare them. But some are still cleaning up. It's just a couple of weeks after the eighth named storm of the season hit the country.

Storm Henk sweeps in across the south of the UK, bringing wind gusts of more than 80 miles an hour, flooding and yet more travel problems. Storm Henk. batters parts of england and wales leaving flooding power outages and transport disruption in its wake have we ever had as much rain as we've had this last few weeks it's unbelievable more than 260 flood warnings remain in place for england after the impact of storm

You just go into panic mode. We were trying to save everything we could. It's psychologically destroyed. It's just, you know, it's like, I don't want to be here no more, but you think, well, what can we do? While flooding damages property, damages lives and can be... incredibly financially damaging as well. And as the climate changes, insurers expect even more of this kind of weather. Yet despite that, new homes are being built on floodplains in England without defences to protect them.

to a parliamentary report out today. And that is despite there being plenty of warnings about the risk. So today on this Moneybox Live podcast, we're taking a look at the financial impact of the floods. Now, before we meet today's experts, speak to Jacob in Loughborough who was finishing off renovations to merge two houses when they both got flooded. Jacob, good afternoon.

Hi there, are you OK? Well, I mean, this must have been an absolute disaster. You were in the house at the time. Describe what happened. Yeah, so my father-in-law... He works in a restaurant, so he got back from work late, about midnight, just as it had turned from Tuesday the 2nd to Wednesday the 3rd of January. And he noticed water pooling on the drive, not adding...

Having had absolutely torrential rain, but, you know, reasonable amounts, we thought it would just sort of stay at that. Anyway, about an hour or so later, more have come running into my room. Jacob, Jacob, you need to get up. You need to get up. It's flooding.

and you know half awake sort of went downstairs and uh there was water sort of fairly slowly but obviously still far from ideal coming in under the doors the side of the doors front door back door side door um so we quickly got as many towels as possible together you know trying to mop it up and sort of barricade it and block it and after about

45 minutes of that it was sort of up to our ankle heights and we're trying to bucket it down the sink and then come about 3am it was then up to our knees so we just all had to sort of evacuate upstairs I mean, you paint a real picture. How's it looking now? Are you back together? Not yet, but yeah, fingers crossed.

we we will be uh downstairs at the moment it's just floorboards everywhere and we've got uh four dehumidifiers that we're sort of moving around into different positions in the house um that have just got us running sort of round the clock and we're still getting a good few buckets a day out of those. So it's a big job. It's going to take you, what, weeks more to fix it?

Yeah, I mean, fortunate to have not experienced this before. Obviously, unfortunate to have ever experienced it, which obviously we are now. So we're flying a little bit blind in terms of... how long it will take, you know, the dehumidifiers, et cetera, to get rid of the water. And then we can look to, you know, getting carpets replaced, et cetera. Now, you had home insurance before, but...

It wasn't valid now because of all the building work you were having done. And you decided you would wait until the building work was finished before you got a new policy for your new merged property. And then, of course, you were flooded. What does that mean for the costs? How much has this cost you? That remains to be seen until everything dries out, but we're talking a good amount of money, not just hundreds. disappointing and devastating.

I mean, yes, you can only imagine the stress and the pressure of that. Jacob, thank you. Stay with us because listening to Jacob are today's flooding experts. I'm joined by Laura Hughes, Manager of General Insurance at the Association of British Insurers, which represents... And Laurie, you also used to work for the Environment Agency, so you are probably all too familiar with flooding.

I am indeed, yes, and the devastation it can cause to everybody that experiences it. To people like Jacob. And also joining us today is Heather Shepard from the charity National Flood Forum. Heather, you're a kind of unwilling flood expert, aren't you? You're regularly... by floods yourself and now you help other people.

Yes, I've never been called that before, but yes, I suppose so, yes. Okay, let's talk about Jacob's case. Heather, obviously he had the intention to get insurance once all the work was done. This does show the risk of being without cover at any time, doesn't it? It certainly does. And one of the main advice that we give to people through our helpline is please, please make sure you're insured.

Even if it wasn't floods, something else could have happened to the property. So it's really important that we make sure that we're covered for these sort of emergencies. And if people don't have insurance, and some people won't or don't... disaster strikes, is there anything else they can do? Are there other sources of financial help?

I mean, again, if you're having trouble with insurance or gaining insurance, then really to find the help that you need to get it, because it's that important that you've got cover. So, again, you can ring the National Flood Forum helpline to do that.

Other than that, through the grant system at the moment that's been announced by DEFRA, there is some support for people. £500 that will be given very quickly to give people... cash quickly and immediately to cope with costs, but also therefore giving a £5,000 grant to flood-hit properties.

owners to make their homes and businesses more resilient and small and medium businesses will get 2,500 towards recovery grant as well. Now I should say that that further financial support is for areas in England and so only for eligible property. owners so it's called the property flood resilience repair grant scheme and councils decide the criteria so it's worth checking what they offer jacob thank you so much for starting our program with a pretty cautionary tale and best

Laura, it's too late for poor Jacob in terms of his insurance. For other people, there are specialist policies, aren't there, he could have taken out that would have covered the property during that building work. Absolutely. So we always advise people to get insurance as soon as they can. If you're buying a new home, that should be for buildings insurance from the moment you exchange when you've got that financial investment in that property.

are doing significant renovation or construction works to your property even if you've got a current policy we always suggest that you should give your insurer a call have a chat with them and just let them know that you're doing these works and they'll make sure that you're covered for any

issues that could happen during that construction or renovation phase as well. I just also wanted to touch on Jacob's comment about getting those carpets replaced. Really good idea not to put carpets back in, Jacob, but get some more resilient... floor that would not be as such a problem if it was to flood again.

Something that doesn't soak up the water quite so easily. Last year, £352 million was paid out by insurers for damage caused to homes just by storms Babette, Kieran and Debbie at the end of last year. full cost of Storm Henk. What other reasons might somebody's insurance be invalid other than what Jacob saw? What should people watch out for?

I think generally speaking, your insurance, as long as you've been very clear with your insurer and honest when you've purchased your policy, you should be covered for everything that... you're covered for now. Flood and storm is very standardly included within that policy. So it's always a good idea when you're buying to make sure you understand what you're covered for and the insurer will be really clear or the broker if you're buying.

a broker will be extremely clear with you at the beginning on what is not included. We do say it every time we talk about insurance, don't we? Read the small print. It does really matter in cases like this.

If your car was repeatedly stolen, then your insurance would quite quickly become unaffordable. But when someone like Jacob comes to insure his property again, he is likely to be able to find affordable premiums, and that's despite the flood risk. That is thanks to a UK-wide reinsurance scheme called Flood Re. Heather, there'll be many people listening who are blessed with not having to think about reinsurance.

Can you briefly explain what floodry is and what difference it makes to people like Jacob? So in a nutshell, Flood Re is an initiative between the insurance industry and the government and basically it is the Flood Reinsurance, as you've said, scheme which promotes and provides affordability and availability of insurance for the UK. household is a high flood risk it makes a huge difference but the but it's not easy to know whether the insurance policy you are taking out

has a connection with floodry. So again, it's always a good idea to ask whatever policy you're taking out that it is connected with floodry. So the idea is that... Everybody whose insurers are part of floodry, they pay a bit more, it funds the scheme, and then flood risk homes can get more affordable cover. They won't find themselves priced out of insurance. Are their premiums still affected by their flood risk, though?

Yes, I mean, if you happen to be insured by someone that's not connected to flood re, then your premiums and excesses are high. However, we are finding from our helpline at the National Flood Forum that people are seeing, even with a flood re... connection that they seem to be quoting higher. Thank you. Laura, we should make it really clear, shouldn't we? Not everyone is protected by flood re, only older homes.

So generally speaking, an insurer will determine whether... a property goes into flood re or not but if they're not putting it into flood re then they'll still continue to provide that flood cover unless they're clear that they're not it's not included but you're right that properties there are some properties out of scope of flood re and that was

agreement between government and insurers that buildings built after 2009 are not included and that's really to disencourage the development of properties in high flood risk areas being built where they shouldn't be and then that's not

causing the problem of flood risk in the UK to get even worse than it already is. Although that parliamentary report we might look at again in a moment suggests it's not necessarily working. Right, businesses are also not part of the scheme. And I went to meet Bev Turner, who has several rental... properties on the banks of the River Severn in Beaudley. One side of the town has flood defences and on Bev's side they haven't yet been built. Right, here we go.

So yeah, this is the property that was flooded, or has been flooded every year. And obviously since then we haven't been able to rent it out. So it's been empty now since 2018. 2019, sorry. All of the flats now are empty because of the extensive dump. So how many flats? Three. We've got three. And then there are 11. the other side of the courtyard. I can't rent it out with the fear of it flooding because I don't get insurance either. We don't qualify for flood re because we're a business.

households do but we don't so the insurance company this time did try to gain some flood insurance for us but as soon as I said how many times we've been flooded it was a no-go So, no, we have nothing, unfortunately. So we just have to do what we can. But what will you do? What will it mean for your finances, for your business, if those properties flood and you don't have that protection in place? Good question.

a lot of money to put them right you know it's drying them out it's loss of rent it costs us an awful lot of money you know with the electricity the way it is and the utility bills obviously You have to have the drying equipment going for something like three or four weeks at a time. So the utility bills are colossal. It's just everything. It's a knock-on effect with everything.

That was Bev there. Laura, businesses aren't protected by flood-ree like homes are. Why is that? That's largely because businesses are, or many of them, are profit-making. So why is it fair? for a very profitable cafe by the riverside and they've chosen that site because that's where they're going to get most footfall and making a lot of money there to be then subsidised by a struggling hairdresser at the top of the hill. So that's how it works for.

Home insurances, everybody that buys insurance is helping to subsidise the people that are at flood risk. And it was determined with government and the insurance industry that that's not fair to do so with businesses. We have created some things that can help businesses.

So Flood Re, the British Insurance Brokers Association and ABI have created a signposting service that should help people that are not in scope of Flood Re be able to determine how they can speak to the right brokers, the right insurers to see. what sort of policies they can obtain that's not within floodry.

Thank you. And Margaret had emailed to ask exactly that question, so I hope it's answered it for you, Margaret. Laura, the Public Accounts Committee has published a report today expressing that concern about new homes being built on floodplains, calling it unforgivable. And MPs also said more than 200,000 properties are at risk because flood defences have not been maintained. How worried are insurers about the flood risks rising?

Yeah, insurers are really worried. As we've seen, eight storms in the last three months is really ramping up the significant impact that climate change is having. And we know that's only going to get worse. Building new homes for people is an important agenda across the UK, but doing that in a resilient and resistant way to not causing further devastation for people down the line is a really, really important part of what needs to happen.

government house building objective and then on the flood defence side of things clearly Investment in new flood defences is really important, but that should not be at the risk of not maintaining defences that are already built and already protecting people. And we as the ABI and the insurance industry...

really encourages government to look at those levels of investment for both maintenance and capital expenditure. Well, the government told us that between 2021 and 2027, it's making record investment in flood defences of 5.2%. I've actually been talking to insurers about this in the UK, Australia and the US. And you can find my documentary Uninsurable Planet on BBC Sounds right now. We look at that issue of becoming high.

So do check that out. Right. We know flood re means everyone pays a bit more and that covers the flooding fund. Let's just go back. to the cost of home insurance. We've had this voice note. Hi Moneybox Live, this is Jenny from Hertfordshire. My renewal quote for home insurance has gone up from £437.18. to £1,435.02 this year The letter stated Following changes to weather patterns we have reviewed the risk associated with your property and your renewal reflects this. I have never made a claim

I have lived in my house since it was built in 1999 and the road has never had an issue with flooding. How can this increase be justified? Laura, that is a massive hike for Jenny, up by a grand. We've also had a message from Ian who says, we've had the opposite issue to that faced by many of your listeners. Our house has never flooded or been at risk of flood, but our house has been flagged as a flood.

risk and our premiums have rocketed. Now I know you don't know the details of either of their insurance applications but why might someone's renewal quote go up by so much?

So I think on the flood specific point or the weather related point, clearly we're seeing a lot more storms, we're seeing a lot more flood risk. And as we all know, climate change isn't getting any better. So although an individual might have never... flooded before or never thought that they were in a flood risk area it might well be that they are now at risk of flooding where they previously weren't so that's going to be a factor to it but

What we're also seeing across the board for everybody's home insurance premiums and indeed car insurance premiums are an increase in those premiums and that's... for homes really related to changes in construction materials. We know that building materials have increased. by 18% over the last year and have been increasing for a long period of time. We've also got difficulties in access to labour following Brexit, impacts on the global reinsurance market having an impact on individual insurance.

as in the UK increasing costs of energy you know all those struggles that We're seeing across the UK, insurance companies are seeing that too. So we are, unfortunately, at the moment, seeing an increase more generally across the board for home and car insurance premiums. I mean, you've described what we would usually use the phrase a perfect storm for.

Right, no household, no insurer wants to keep bailing out a flooded home. Floodry also offers a scheme called Build Back Better. This gives householders the chance to install flood defences and other resilience measures worth up to £10,000 while they're repairing their property after a flood. But Adrian's been in touch with us. He applied for that money through his insurance company, AXA, which is listed as having signed up to the Build Back Better scheme. We had a flood.

on the 4th of December and then we contacted our insurance company to start the insurance process and as part of that we had a meeting with our our loss adjuster, who mentioned the Build Back Better scheme in order to build back some resilience into the property. And that sounded a fantastic idea. The scheme was up to £10,000 and we've priced that. about that amount to put in a floodgate and a resilient fence around the property. So we did go to our insurance company's website and...

And we did find a press release saying that they had signed up back in, I think it was January 2023. We tried to approach our insurer. They sent me an email. They actually said our insurance company itself have signed up to it, but only in principle at this stage. I wonder what that principle was or whether they gained the recognition for signing up, but without actually having to. implement it.

You can really hear the disbelief in his voice. We asked an actor about this and it told us that it signed up to Floodry's Build Back Better scheme in 2023, but the scheme has not yet been implemented and we are putting in place various standards. and processes to launch this for our customers as soon as possible. It's worth pointing out AXA are not the only insurance company who've signed up but not actually gone live with the scheme yet. Moneybox has identified three other

Laura, you represent the British insurance industry. There are four insurers whose customers might easily be convinced they've got this cover and they don't. Is that fair? So the first thing I'd say is it's really clear on the Flood Re website who's signed up. Who checks the Flood Re website when they've looked at their insurers? I appreciate that, but I'm just saying for those listening today, it might be worth them having a look. Build Back Better is a really positive...

step in the right direction. Home insurance has never been about betterment, about making people's homes even better than they were before. And this is a concept that is doing exactly that for those that are struggling. Totally appreciate it. I really feel for Adrian thinking that he's about to get an extra £10,000 and then finding out he's not. So...

I think, you know, it's just it's a really positive step forward in the industry signing up to this. There are a number of insurers that are doing it. It's only been available for 18 months and it's it's in the process of getting used more and more. So I think I appreciate. that.

It might not be helping Adrian. I'd encourage him to have a look at the potential grants that are available from government, as Heather mentioned earlier. And, you know, it's a step in the right direction from the insurance industry's perspective and will get better and better once insurers have managed.

to implement the next steps. But in the meantime, if you're taking out a home insurance policy, a building insurance policy, and you are hoping you have that cover, you need to not just check your insurer's website, but go and have a look at Flood Rees' website. Yeah, it's a really good idea. Floodry's got loads of really useful information on it available for individuals. So have a look there.

OK, well, we mentioned flood defences there. We've talked a bit about what communities get over in Beaudley. Let's hear from Nick in Worcester, who lives in a fairly remote location, and he was never going to be a priority for any kind of state-funded flood. fences so he's done it himself. He has built a massive flood wall around his home and his garden.

Living by the river was part of the attraction. It's a beautiful part of Worcestershire that we live in, but just occasionally we do get the water from the River Severn surrounding our house. In the last four, four and a half years...

we've had 10 floods. The wall is made of hollow concrete blocks which are then filled with concrete. It's got a reinforced bar in it to make it extremely strong it's about 110 meters long it cost around about 80 000 pounds it's definitely a remortgage uh type of undertaking it's like building an extension on your house it will make the house resellable when we do eventually come to resale so it's in my book it's worth it

For Nick, it absolutely is worth it. I've seen pictures of his house when it's flooded and it is literally an island, just his walled-off property standing alone in the water. Heather, are we seeing more people taking these types of really extreme defence measures?

Yes, we are. We're seeing a lot of people invest in this, but also we're extremely aware and know of people that... you know, would never have that kind of choice of being able to make that kind of decision and that, you know, for them it's, you know, getting through the week and ensuring that something is there to eat at the end of the week. So I think that, you know, we have that real worry of people that cannot possibly afford some of these resilient things, and they are expensive.

And those people who decide to invest in it who are able to financially do that. Yeah, I mean, you're absolutely right. A lot of people will struggle to fund an £80,000 wall. I did see a lot of smaller scale flood protections in Budely. Run me through the kinds of action people can take. People in Beaudley have got what's called PFR, property level resilience. So this is special doors and air brick covers and pumps. Pumps are usually very important and size pump is very important.

And they can use these to try and keep the water out or keep it at a level that's more manageable within the property. Sometimes they can also keep... the flood out if you're lucky, but they're there to resist the water and give you more time to prepare for flooding. However, there are people in Budely that have suffered with this flood.

Still. Absolutely. Absolutely. What about if, I mean, obviously not for Nick, almost on his own building a wall, but if you're in a community that's regularly flooded, can you request defences? Can you proactively go and ask for them? to be put up?

Lots of communities who form flood action groups are actually working with flood risk management teams to see what there is that they can do to mitigate their flood risk, working in partnership with those teams. Unfortunately, most schemes or any opportunities... are hit against the government's cost criteria. And this is called the FDGIA.

criteria for funding where a business case has to be made up yeah and if they don't reach that business case they can't make that business case then there isn't the funds available Laura, we heard a message from Pat who says, I would like to ask why insurance companies don't reduce premiums for customers like myself who spent time and money putting flood resilient measures into their homes.

Well, I'd suggest having a conversation with your insurer, but Flood Re and insurers are working on being able to create some form of certification about the resilience measures you've put in your home. So it would really easily...

to determine how resilient a property would be and ensure it would be much more easier to take that into account. So maybe one for the future. Heather, very briefly, if people are taking really drastic measures like Nick, are we just getting to the point where some parts of the UK... shouldn't have homes on them anymore.

Well, it is a worry, isn't it? You know, are we at flood risk to run to the hills and abandon the rest of the country? You know, it is an expense and how long with climate change and the impacts it's having on us, will they be sustainable? We need a far...

bigger, bolder approach to flooding in this country. Thank you. Well, that is all we have time for in today's podcast. Thank you to everybody who got in touch, who took part. And thank you, of course, to our panel. We've been hearing from Laura Hughes from the Association of British Insurers.

and Heather Shepard from the National Flood Forum. If you'd like to get in touch with us about what we've been talking about today or any financial story you want us to take a look at, then please do email. It's moneybox at bbc.co.uk. and include a phone number if you can. In this podcast, the producer was Sarah Rogers, the studio manager, Kelly Young. Our editor is Sarah Wadeson. I'm Felicity Hanna, and this was a BBC News Money & Work production for BBC Sounds.

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