Re/insurers need to adapt climate risk mitigation measures faster: Guy Carpenter-Flood Re

Re/insurers must accelerate their climate risk mitigation and adaptation efforts through improved planning and proactive collaboration across multiple stakeholders to help enhance resilience, according to Charles Whitmore, international public sector lead at Guy Carpenter.

The industry has a critical role to play in bolstering resilience to rising flood risks and the impacts of climate change, Whitmore said at a recent flood resilience event, highlighting the need for greater collaboration between public and private entities to address these risks.

Whitmore believes it is important for all stakeholders to understand the benefits of improved risk mitigation measures to move towards risk-based pricing.

"The (re)insurance market needs to move faster to embed risk mitigation and adaptation measures in the insurance product and thereby incentivise consumers to own more of this process,” he said.

Andy Bord, chief executive officer of Flood Re, the UK Government's scheme to pool flood risk, echoed the views calling for a more all-encompassing approach to risk management that extended beyond more effective flood defences and into the wider built environment.

Bord stated that the current measures are "not enough" as UK annual flood losses are projected to increase by up to 80 percent over the next 30 years.

"We need to learn to adapt," he said. "It is critical that flood considerations are prioritised when making planning decisions and developing new homes or retrofitting existing homes. Such considerations are also central for householders at high risk of flooding. By taking action now I believe we can adapt and ‘build back better’ – an approach we have been advocating for over four years. This is what must happen to ensure the built environment is more prepared for and resilient to future flooding.”

According to Emma Raven, head of R&D at flood modelling firm JBA, the ability to respond effectively to climate-related changes will be highly dependent on access to granular exposure data – in particular, for high-gradient perils such as flooding, which are greatly influenced by climatic shifts.

Raven said: “It is critical that we are able to access flood models that fully incorporate climate change science. Our recent modelling, for example, suggests that over 1 million more properties in Great Britain may be at risk to a 200-year flood event by 2040, under a realistic warming scenario. It’s a very interesting time for flood modellers, and the challenges are sparking some innovative approaches.”