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Published online by Cambridge University Press: 02 January 2018
The UK, as elsewhere, faces new environmental uncertainties, especially from climate change. The sustainability of the UK's existing flood loss indemnity regime in respect of property harm is threatened by factors that include greater ecological awareness on the part of policy makers, pressures to limit public commitments to flood defence, and insurers' increasing technical capacities to differentiate risk exposure across particular locations. The basis of current reliance on the commercial insurance market is called into question, as general levels of insurance availability and affordability come under threat. In turn, differential impacts from more restricted availability or terms of cover are likely increasingly to affect vulnerable individuals and communities, which will further intensify pre-existing take-up problems among particular groups. Key themes relate to issues that arise from this changing law and policy environment, including challenges to the delicate public-private balance that has underpinned the current arrangements, implications both for civil society as well as the insurance industry, and the extent to which alternative approaches might offer solutions.
We would like to thank the journal's anonymous referees for their helpful comments. Due acknowledgement is also made to the RICS Education Trust for funding the empirical elements of our research into this topic. The usual responsibility for errors applies.
1 See, generally, Hulme, M Why We Disagree about Climate Change: Understanding Controversy, Inaction and Opportunity (Cambridge: Cambridge University Press, 2009 CrossRefGoogle Scholar) for a concise commentary on the counter-roots of climate scepticism and the advocacy of inaction on grounds of continuing uncertainties. Also Oreskes, N and Conway, E Merchants of Doubt (London: Bloomsbury, 2010 Google Scholar) ch 6.
2 UN International Panel on Climate Change Fourth Assessment Report, Climate Change 2007: The Physical Science Basis, Working Group I (Cambridge: Cambridge University Press, 2008).
3 Lynas, M High Tide (London: Harper Perennial, 2005 Google Scholar). Significantly, endemic vulnerabilities in human settlement preferences pre-date the onset of climate change. See S Goldenberg ‘Americans are still gambling with the Mississippi after centuries of flooding’The Guardian 23 May 2011.
4 The Flood and Water Management Act 2010, s 1(1), defines flood as including ‘any case where land not normally covered by water becomes covered by water’, and s 1(2) offers a non-exhaustive list of flood causes. The wording broadly echoes Directive 2007/60/EC on the Assessment and Management of Flood Risks [2007] OJ L 288/27, Art 2.1.
5 Behrens, A et al Future Impacts of Climate Change across Europe (Brussels: Centre for European Policy Studies, 2010 Google Scholar) p 5, citing estimates of a tenfold–twentyfold increase in flood risks by 2080 for the UK alone, under high emissions and high economic growth scenarios. See also European Commission Impact Assessment, accompanying White Paper on adapting to climate change: towards a European framework for action COM(2009) 147 final.
6 But see D Carrington ‘Breakthrough as scientists link climate change to flood devastation’The Guardian 17 February 2011.
7 Hansen, Je ‘Can we still avoid dangerous human-made climate change?’ (2006) 73 Social Research 949 Google Scholar at 956–958.
8 Dlugolecki, A ‘An overview of the impact of climate change on the insurance industry’, in Diaz, Hf and Murnane, Rj (eds) Climate Extremes and Society (Cambridge: Cambridge University Press, 2008) pp 256–259 Google Scholar, while acknowledging the potential of a ‘multidimensional, non-linear system’ to surprise, offers an estimate of 5.5 per cent; a range of 2.1–3.9 per cent appeared in the report Foresight Flood and Coastal Defence Project: Future Flooding (London: Office of Science and Technology, 2004).
9 See Arscott v Coal Authority and Merthyr Tydfil BC[2005] Env LR 6. Also Stallworthy, M ‘the curious persistence of the common enemy doctrine’ (2005) 13 Environmental Liability 39 Google Scholar.
10 J Kollewe ‘Rising flood risk could make some parts of UK uninsurable’The Guardian 29 July 2010.
11 Environment Agency Flooding in England: A National Assessment of Flood Risk (London: Environment Agency, 2009) pp 6–7. See also, Environment, Food and Rural Affairs Select Committee (EFRASC) Future Flood and Water Management Legislation, 1st Report 2010–2011, HC 522–1 (December 2010) [30].
12 The Pitt Report (Learning Lessons from the 2007 Floods (2008), available at: http://archive.cabinetoffice.gov.uk/pittreview/thepittreview/final_report.html) identified a further 1.6 million properties at risk from groundwater-related flooding [at 4.46–7]. Predictions of such threats are particularly problematic given the widespread inaccessibility of defined channels.
13 Typically, where precipitation exceeds capacity for draining away – a particular problem for urban areas, with high ratios of non-porous surfaces, and exacerbated impacts from sewer flooding where there is combined drainage (a common feature in the UK).
14 Based currently on a 1.3 per cent plus annual probability, or 1-in-75 annual return period (http://www.defra.gov.uk/environ/fcd/policy/insurance.htm).
15 Association of British Insurers (ABI) Fighting Flood Risk Together (London: ABI, November 2010) p 4.
16 Faure, M and Skogh, G Economic Analysis of Environmental Policy and Law (Cheltenham: Edward Elgar, 2003) pp 263–265 Google Scholar.
17 See Brookes, Ro, Jones, R and Virginia, Ra Law and Ecology: The Rise of the Ecosystem Regime (Aldershot: Ashgate, 2002) p 384 Google Scholar.
18 See Maynard, T ‘Climate change: impacts on insurers and how they can help with mitigation and adaptation’ (2008) 33 Geneva Papers 140 Google Scholar at 141.
19 See Fisher, E ‘Unpacking the toolbox: or why the public/private divide is important in EC environmental law’ in Freedland, M and Auby, J-B (eds) The Public and Private Law Divide (Oxford: Hart, 2006) pp 230–234 Google Scholar.
20 Though there are certain shared issues across the UK, distinctive circumstances apply to Scotland, including as to geophysical features, and legislative and regulatory background, and the focus under this head is on England and Wales.
21 The ABI (in light of the 2007 floods, as well as serious flooding in Cumbria in 2005/2009) has reported insurance payouts increasing by 200 per cent (from £1.5 to £4.5 billion in real terms) between the 2000s and 1990s (http://www.abi.org/Media/Releases/2010/11/Massive_rise_in_Britains_flood).
22 See Pitt Report, above n 12, ch 1.
23 B Mitchell ‘Effective floodplain development policy’[2006] JPL 59 at 60.
24 In June/July 2007, on some estimates, representing a return period of a 1-in-150 year event.
25 This occurs where river channel capacity is exceeded and retaining banks overtopped.
26 This is generally more resistant to modelling/mapping techniques, given dependence on such factors as incidence/intensity of rainfall, permeability of terrain, ground saturation levels, drainage and sewerage system capacities. See Pitt Report, above n 12, paras 4.37–45.
27 ABI Summer Floods 2007: Learning the Lessons (London: ABI, November 2007) p 19, in the following claim categories: 120,000 household, 27,000 commercial, 18,000 motor. It estimates total insured losses attributable to the event at over £3 billion. Cf. Environment, Food and Rural Affairs Select Committee Flooding 5th Report 2007–08, HC 49 [1–4].
28 Affecting communications, but more especially the respective failure and near-failure of water and electricity supplies over large areas. See Pitt Report, above n 12, especially chs 14–16.
29 Environment Agency Delivering Benefits through Evidence: The Costs of the 2007 Floods in England (London: Environment Agency, January 2010) especially s 4.
30 See above n 12. Its recommendations have been largely adopted. See The Government's Response to Sir Michael Pitt's Review of the Summer 2007 Floods: Final Progress Report (London: Defra, 27 January 2012).
31 FWMA, above n 4, Part 1.
32 Ibid, s 7 (under s 8, a strategy for Wales is the responsibility of the Welsh Ministers). Cf. its former more general supervisory remit: see, eg, s 6(4) Environment Act 1995, and specific flood defence functions affecting main rivers, certain default powers, flood warnings and information: eg, Part IV Water Resources Act 1991 and Land Drainage Act 1991.
33 Ibid, s 7. See Environment Agency Understanding the Risks, Empowering Communities and Building Resilience: The National Flood and Coastal Erosion Risk Management Strategy for England (London: Environment Agency, May 2011), available at: http://www.official-documents.gov.uk/document/other/9780108510366/9780108510366.pdf
34 See Environment Agency, above n 11, p 5, estimating that each £1 targeted and spent on appropriate defences produces a £8 saving when measured against the consequences of flood harm.
35 Treasury allocation under the Spending Review 2010 (October 2010) [2110–2111] represents annual flood defence expenditure at £590 million per annum (2007–2011) reducing by 8 per cent per annum, 2011–2015 (amounting to total spending of £2.1 billion). Cf. the Agency's estimation that even maintaining a constant level of investment would result in a further 350,000 properties in England being subject to significant flood risk by 2035. See further above n 11.
36 A benefit-cost ratio of at least 5:1 is required by Defra. See Report of the Comptroller and Auditor General, Flood Risk Management in England (London: National Audit Office, October 2011) paras 3.8–3.10.
37 This starts from a very low base, for in the last four-year planning period only £13 million was contributed in this way (ibid, paras 3.11–18).
38 Directive 2007/60/EC, above n 4.
39 In particular, the 2002 Danube and Elbe flooding disaster, resulting in around 700 fatalities and displacement of 500,000 people. See European Commission Explanatory Memorandum to original proposal for a Directive on the assessment and management of floods COM(2006)15 final (18 January 2006).
40 Directive 2007/60/EC, above n 4, Arts 4–8 require production of preliminary flood risk assessments (December 2011), flood hazard and flood risk maps (December 2013), flood risk management plans (December 2015). See further, Directive 2000/60/EC establishing a Framework for community action in the field of water policy [2000] OJ l 327/1.
41 Cf. LM Bouwer, D Huitema and JCJH Aerts Adaptive Flood Management: The Role of Insurance and Compensation in Europe Human Dimensions of Global Environmental Change conference (Amsterdam, May 2007) at 31, tentatively suggesting that, post-Directive, consideration might turn to developing ‘a European-wide insurance system to deal with residual flood losses’.
42 The European Solidarity Fund provides assistance toward governmental costs burdens in meeting the needs of urgent financial assistance in the event of an emergency. Council Regulation (EC) 2012/2002 establishing the European Solidarity Fund, OJ L 311/3 (14 November 2002).
43 For example, in 2007, the British Red Cross ‘National Floods Appeal’ contributed £3.8 million, with proceeds, through grants to local authorities and the voluntary sector, for those most in need (http://www.redcross.org.uk/What-we-do/Emergency-response/Past-emergency-appeals/National-Floods-Appeal-2007). Local funds were also generated in response to the crisis: eg, the Gloucestershire Relief Fund generated £1.8 million and assisted toward partial meeting of uninsured financial losses (affecting both householders and businesses) (http://www.gloucestershire.gov.uk/index.cfm?articleid=16291).
44 Typically as non-repayable ‘community care grants’ for those on income-related benefits with no capital or resources: sums involved under this scheme in 2007 were minimal, at around £650,000. Hansard HC Deb, col 2126W, 12 September 2007.
45 Available since 2007, and channelled through lower-tier local authorities for discretionary distribution toward local recovery work and those in greatest, most urgent need. The amount disbursed in summer 2007 was around £18.5 million. Hansard HC Deb, col 119WS, 12 September 2007.
46 Once urgent needs of the most vulnerable were addressed (those with disability, the elderly, those on their own with very young children) grants administered in one region directed extra help to uninsured householders. See D Crichton ‘The Hull floods of June 2007: some insurance industry implications’ at 3–4, available at: http://www.abuhrc.org/Publications/Crichton_Hull_2007.pdf
47 Directive 2007/60 EC, above n 4, Art 7(2).
48 Defra Making Space for Water: Developing a New Government Strategy for Flood and Coastal Erosion Risk Management in England (London: Defra, 2004); Defra Future Water: The Government's Water Strategy for England (London: Defra, 2008). See also Environment Agency, above n 33; Natural England, Economic Valuation of Upland Ecosystem Services (NECR029), available at: http://publications.naturalengland.org.uk/publication/48003
49 Reflecting on ‘fundamentally different’ views of property rights, see JL Sax ‘Property rights and the economy of nature: understanding Lucas v South Carolina Coastal Council’ 55 Stan Law Rev 1433. See also Freyfogle, Et ‘Private land made (too) simple’ (2003) 33 Envtl L. Rep. 10155 Google Scholar.
50 See Noll, Rg and Krier, Je ‘Some implications of cognitive psychology for risk regulation’ in Sunstein, C (ed) Behavioural Law and Economics (Cambridge: Cambridge University Press, 2000) p 331 Google Scholar.
51 See Gray, K ‘Equitable property’ (1994) Current Legal Problems 157 CrossRefGoogle Scholar.
52 Peel, J ‘Climate change law: the emergence of a new legal discipline’ (2008) 32 Melbourne U Law Rev 922 Google Scholar at 924, citing examples within constitutional, administrative and property law.
53 Ebbesson, J ‘the rule of law in governance of complex socio-ecological changes’ (2010) 20 Global Environmental Change 414 CrossRefGoogle Scholar.
54 ABI research brief ‘Under-pricing of the flood element of home insurance for domestic customers at significant risk’ (January 2011). AXA Insurance research suggests that high-risk flood homeowners benefit from an average annual subsidy of £511 (or 42 per cent of true cost), such that costs are spread across ‘low-risk’ customers at around 5 per cent on premium (http://www.axa.co.uk/media-centre/media-releases/news-story?id+20101202_0810).
55 Under the revised Block Exemption Regulation 267/2010 on the application of Article 101(3) TFEU certain categories of agreements, decisions and concerted practices in the insurance sector [2010] OJ L83/1, only the exchange of statistical information for risk calculation and the creation of insurance pools retain the benefit of antitrust immunity. See Lista, A ‘Stairway to heaven or highway to hell: what next for insurance competition regulation?’ (2011) 1 JBL 8 Google Scholar. A comment on the potential value of pooling arrangements, particularly in relation to catastrophic risks, appears below.
56 Last reviewed in the aftermath of the 2007 floods, and with a revised 2013 term date: http://archive.defra.gov.uk/environment/flooding/documents/interim2/sop-insurance-agreement-080709.pdf.
57 Note that buildings insurance is generally a condition of mortgage finance.
58 With the further potential for accessing advantages from the ‘bundling together’ of risks. Kron, W ‘Flood insurance: from clients to global financial markets’ (2009) 2 J Flood Risk Management 68 CrossRefGoogle Scholar at 74–75.
59 See ENDS Report 422, ‘Ebb tide for flood insurance agreement’ (November 2011) at 40–41. See also ABI/Welsh Assembly Government ‘Joint statement on flooding and insurance for Wales’ (London/Cardiff: ABI/Welsh Assembly Government, July 2009) para 4, noting inter alia that the Principles may distort the market.
60 This notion represents a risk of flooding that is no greater than 1-in-75 years. Cf. above n 14.
61 ABI Climate Adaptation: Guidance on Insurance Issues for New Developments (London: ABI, December 2008).
62 See, eg, ABI Coastal Flood Risk: Thinking for Tomorrow, Acting Today (London: ABI, 2006), discussing the potential costs of major coastal flooding, and seeking to identify the order of necessary increases in defences.
63 Planning Policy Statement 25: Development and Flood Risk (Department of Community and Local Government, December 2006), supplemented by Town and Country Planning (Consultation) (England) Direction 2009, CLG Circular 02/2009.
64 Green, C and Penning-Rowsell, E ‘Flood insurance and government: “parasitic” and “symbiotic” relations’ (2004) 29 Geneva Papers 518 Google Scholar.
65 Gunningham, N ‘Environment law, regulation and governance: shifting architectures’ (2009) 21 JEL 179 CrossRefGoogle Scholar at 209, referring to the area of ‘hybridity between the privatisation of the public and the publicisation of the private’. See Braithwaite, J, Regulatory Capitalism: How It Works, Ideas for Making It Work Better (Cheltenham: Edward Elgar, 2008 CrossRefGoogle Scholar).
66 M Huber ‘Reforming the UK flood insurance regime: the breakdown of a gentleman's agreement’, ESRC Centre for Analysis of Risk and Regulation, Discussion Paper 18 (2004) at 17–18, referring to a process of ‘unintended reform’. See also Hecht, Sb ‘Climate change and the transformation of risk: insurance matters’ (2008) 55 UCLA Law Rev 1559 Google Scholar at 1617–1618.
67 See M Clarke's discussion, juxtaposing, as ‘rights’ questions (for the public, to cover; and for the insurer, to select risks), Policies and Perceptions of Insurance Law in the Twenty-first Century (Oxford: Oxford University Press, 2005) pp 298–301.
68 See, generally, Multinational Gas & Petrochemical Co v Multinational Gas & Petrochemical Services Ltd[1983] Ch 258.
69 Where an objective is to secure an environmental good, this is not to say that regulatory failure can be no less real a phenomenon as market failure (cf. Pigou, Ac The Economics of Wealth and Welfare (London: Macmillan, 4th edn, 1932 Google Scholar), RH Coase ‘The problem of social cost’(1960) 2 J Law and Econ 1), but rather that in a wide range of environmental protection contexts ‘(p)rivate and public preferences belong to different logical categories’ to the extent that ‘(e)conomic methods cannot supply the information necessary to justify public policy’. See Sagoff, M ‘Economic theory and environmental law’ (1981) 79 Michigan Law Rev 1393 CrossRefGoogle Scholar at 1410–1411.
70 Environment Agency, Development and Flood Risk in England Report 2008–2009 (London: Environment Agency, 2009) p 5 suggests that 3.1 per cent (cf. 3.4 per cent, 2007–2008) of planning decisions reported back to the Agency went against Agency advice; confirming an improving trajectory since 2003–2004 (11.5 per cent). See Hansard HC Deb, col 571–2W, 22 June 2009.
71 See, eg, Davies-Jones, A ‘Implementing sustainable development for the countryside: a case study of agri-environment reform in Wales’ (2011) 13 ELR 9 Google Scholar.
72 See Report of the Comptroller and Auditor General, above n 36, paras 4.1–11.
73 See above n 35. Implications are discussed in proceedings of HC Committee of Public Accounts, Flood Risk Management in England, 64th Report, 2010–12 (HC 1659, 31 January 2012).
74 See further ABI Financial Risks of Climate Change (London: ABI, June 2005).
75 See Lazarus, Rj ‘Environmental law after Katrina: reforming environmental law by reforming environmental lawmaking’ (2007) 81 Tulane Law Rev 1019 Google Scholar at 1054–1055.
76 C Batchelor ‘The cold and costly reality of climate change insurance’Financial Times, 9 July 2005, citing a proliferation of data becoming available to enable more sophisticated geographical risk analysis and flood mapping.
77 This has been referred to as ‘random victimization’. See Faure and Skogh, above n 16, pp 282–285.
78 See Freeman, Pk and Kunreuther, H ‘Managing environmental risks through insurance’ in Folmer, H and Tietenberg, T (eds) International Yearbook of Environmental and Resource Economics 2003–04 (Cheltenham: Edward Elgar, 2003 Google Scholar).
79 Steele, J Risks and Legal Theory (Oxford: Hart, 2004) p 149 Google Scholar.
80 ABI, Insuring our Future Climate: Thinking for Tomorrow, Today (London: ABI, September 2007) p 12.
81 See Hulme, above n 1, pp 85–91. Cf. Pidgeon, N and Fischoff, B ‘the role of social and decision sciences in communicating uncertain climate risks’ (April 2011) Nature Climate Change 35 Google Scholar at 36–37.
82 Dlugolecki, A ‘Climate change and the insurance sector’ (2008) 37 Geneva Papers 71 Google Scholar at 77. See generally Berliner, R Limits of Insurability of Risk (Upper Saddle River, NJ: Prentice-Hall, 1982 Google Scholar).
83 Ross, A Reflections on the Future: Climate Change and its Impacts on the Insurance Industry (Toronto: Institute for Catastrophic Loss Reduction, 2000 Google Scholar).
84 Huber, above n 66, at 6, also citing Swiss Re Floods: An Insurable Risk? (Zurich, Swiss Re, 1998) p 49.
85 The ABI maintains that continuation was subject to assurances as to adequate risk management by government. See HC Treasury Select Committee, 4th Report, 2007–08, para 124. Moreover, it has called for Environment Agency targets related to reduction of properties at risk to become mandatory. See EFRASC, above n 11, at [39].
86 Moss, Da When All Else Fails: Government as the Ultimate Risk Manager (Cambridge, MA: Harvard University Press, 2001) p 326 Google Scholar, also p 40 citing Knight, Fh Risk Uncertainty and Profit (Chicago, IL: University of Chicago Press, 1971) p 233 Google Scholar.
87 Cf. Steele, above n 79.
88 Priest, Gl ‘Government insurance versus market insurance’ (2003) 28 Geneva Papers 71 Google Scholar.
89 A key concern of property law has been described as ‘the boundaries between private and public control of things’. See Byrne, Jp ‘Green property’ (1990) 7 Constitutional Commentary 239 Google Scholar at 244.
90 Treby, Ej, Clark, Mj and Priest, Sj ‘Confronting flood risk: implications for insurance and risk transfer’ (1981) 81 J Environmental Management 351 CrossRefGoogle Scholar at 357.
91 See, eg, Harlow, C ‘Export, import: the web and flow of English public law’ (2000) Public Law 240 Google Scholar at 252.
92 Through the Pool Re scheme in the UK. See http://www.poolre.co.uk/Introduction/html. Also see, inter alia, the Terrorism Risk Insurance Act of 2002 (US); ‘Gestion de l’assurance et de la reassurance contre les attendats (France); and Michel-Kerjan, E Financial Protection of Critical Infrastructure: Uncertainty, Insurability and Terrorism Risk (Paris: Institut Veolia Environnement, 2005) pp 35–47 Google Scholar.
93 See Brown, Jr et al ‘an empirical analysis of the economic impact of federal terrorism reinsurance’ (2004) 51 J Monetary Econ 861 CrossRefGoogle Scholar.
94 See Michel-Kerjan, above n 92, pp 10–12.
95 See, eg, Kolbert, E Field Notes from a Catastrophe (London: Bloomsbury, 2006 Google Scholar).
96 See, eg, Insurance Information Institute website: http://www.insure.com/low-insurance/fair-plan.html
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98 In 2004, some blue skies thinking emerged from a Background Paper produced for the Flood Management Division at Defra: Payment of Compensation, Relocation and Other Issues in Relation to Flooding and Coastal Erosion Risk Management (London: Defra, July 2004). More recently, a Defra working group has pointed to a need for further research to ‘identify and quantify specific communities or income groups’ that require support. See Defra Flood Risk Insurance: A Roadmap to 2013 and Beyond – Final Report of the Flood Insurance Working Groups (London: Defra, December 2011).
99 See, eg, Abraham, Ks Distributing Risk: Insurance, Legal Theory and Public Policy (New Haven, CT: Yale University Press, 1986) p 14 Google Scholar.
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102 It appears that a high market penetration of purely private cover occurs in few jurisdictions. See LM Bouwer et al, above n 41, at 20, suggesting reasonably comparable take-up rates only in Norway, Portugal, Spain, Sweden and Switzerland, arguably reflecting practical opportunities for broad bundling together of risks.
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106 See S King ‘Hurricane Katrina shows that America's free market does not have all the answers’Independent, 5 September 2005. Katrina-related insured losses (for hurricane damage, mainly commercial, including to oil rigs, refineries and under marine policies, and related disruption) were variously estimated at US$40–60 billion, and total losses at US$125 billion. Following the Katrina flooding, the federal government eventually promised to provide disaster relief in respect of full rebuilding costs.
107 See Risk Management Solutions Hurricane Katrina: Profile of a Super Cat – Lessons and Implications for Catastrophe Risk Management (Newark, CA: Risk Management Solutions, 2005) pp 22–25 and 28.
108 For a discussion of a federal disaster insurance reform proposal under a Homeowners Defense Act (HR 2555, 111th Congress 2009), see Young, J, ‘Efficient proximate cause: is California headed for a Katrina-scale disaster in the same leaky boat?’ (2011) 62 Hastings Law J 757 Google Scholar at 788–792.
109 See Trainor, Vy Hurricane insurance litigation: more than wind versus water’ (2008) 68 LA Law Rev 389 Google Scholar. See also R Knight ‘Insurers face battle over liability for “flood” repair’Financial Times, 12 September 2005.
110 National Flood Insurance Act 1968, PL 90–448, Title 13 (codified at 42 USC 4001–4028 (1994)). See also Flood Disaster Protection Act 1973, PL 93–234.
111 NFIP flood insurance is arranged through private insurers and agents for administration purposes. See http://www.fema.gov/nfipInsurance/companies.jsp
112 Such as lower floors of buildings to be above 100-year flood levels. Pay outs with the effect of securing upgrades in terms of resilience to future flooding has not been a feature of UK cover, and is an issue requiring review on any renewal of the Principles. See further Hecht, above n 66.
113 US$250,000 on residential property (plus US$100,000 for contents); US$500,000 on both business premises and contents.
114 The resulting subsidy coincidentally appears roughly to equate with the pooling effect under the UK's arrangements, albeit not strictly equivalent as the latter operates by cross-subsidy amongst policy holders. See above n 54.
115 There is therefore a burden (owed to the US Treasury) of around US$18.5 billion on the agency, FEMA. As a federal programme, the NFIP has been drawn into a political battleground over federal spending, resulting in sporadic threats of removal of funding and currently short-term extensions. This has likely also been an obstacle to securing agreement in both Houses to reform proposals seeking further subsidy reductions. See, eg, Insurance Information Institute: http://www.oii.org/media/hottopics/insurance/flood/
116 See Burby, Rj ‘Flood insurance and floodplain management: the Us experience’ (2001) 3 Global Envtl Change Part B: Environmental Hazards 111 CrossRefGoogle Scholar.
117 See Lave, Tr and Lave, Lb ‘Public perception of the risks of floods: implications for communication’ (1991) 11 Risk Analysis 255 CrossRefGoogle Scholar at 259: reporting general levels of cover at that time at only 12.7 per cent of houses in flood plain areas, and specific research across five varied communities with historic experience of flooding, suggesting household flood insurance cover at between 3.5 and 5.9 per cent.
118 See, eg, Browne, Mj and Hoyt, Re ‘the demand for flood insurance: empirical evidence’ (2000) 20 J Risk and Uncertainty 291 CrossRefGoogle Scholar.
119 See Nisse and Webb, above n 105. Estimated NFIP exposure to losses in the wake of Katrina was US$3 billion (Agence France Presse ‘One more woe for Katrina victims: no insurance’ (2005) 7 September).
120 Platt, Rh Disasters and Democracy: The Politics of Extreme Natural Events (Washington, DC: Island Press, 1999) p 9 Google Scholar.
121 McLeman, R and Smit, B ‘Vulnerability to climate change hazards and risks: crop and flood insurance’ (2006) 50 Canadian Geographer 217 CrossRefGoogle Scholar at 224.
122 Blanchard-Boehm, Rd, Berry, Kl and Showalter, Ps ‘Should flood insurance be mandatory? Insights in the wake of the 1997 New Year's Day flood in Reno-Sparks, Nevada’ (2001) 21 Applied Geography 199 CrossRefGoogle Scholar: also suggesting that 12 per cent of the US population reside in ‘special flood hazard’ areas (based on a 1-in-100 year return period).
123 See Thieken, Ah et al ‘Insurability and mitigation of flood losses in private households in Germany’ (2006) 26 Risk Analysis 383 CrossRefGoogle Scholar, whose studies cited include the aftermath of the 2002 Elbe floods, reporting higher risk awareness and participation in emergency networks on the part of insured parties (48.5 to 33.9 per cent), as well as a greater likelihood of engaging in some self-protecting mitigatory action (28.5 to 20.5 per cent).
124 See, eg, Hecht, above n 66, at 1615–1616.
125 See Thieken et al, above n 123, at 387.
126 For instance, in response to the Elbe flooding, see Crichton, D. ‘Role of insurance in reducing flood risk’ (2008) 33 Geneva Papers 117 Google Scholar at 118–119.
127 This would in part be accounted for by the exclusion of uninsured infrastructure costs. See Munich Re Annual Review: Natural Catastrophes 2002 (Munich: Munich Re, 2003).
128 Caisse Centrale de Reassurance Natural Disasters in France (Paris: Caisse Centrale de Reassurance, 1999).
129 The surcharge increasing to 12 per cent (from an original 9 per cent). See further Pitt Report, above n 12, paras 2.11–12.
130 Assuralia ‘De natuurramp endekking’Assurantie Info, 19 October 2005. Penetration of market insurance under the reforms starts from a low base, as compared with France. For discussion of the then reform proposals, see van Schoubroeck, C ‘the quest for private insurance for damage caused by natural disasters: a Belgian case’ (2003) JBL 558 Google Scholar.
131 EUrosion Project Report, Living with Coastal Erosion in Europe: Sediment and Space for Sustainability (Brussels: EU, 2004) p 76.
132 Levels of dyke protection in the Netherlands assume a risk return period of 1-in-10,000 years. See Munich Re Hurricanes – More Intense, More Frequent, More Expensive: Insurance in a Time of Changing Risks (Munich: Munich Re, 2006) p 23.
133 Bouwer etal., above n 41, citing Faure, M and Hartlief, T, ‘Schade als gevolg van natuurverschijnselen: de betekenis van de Wts’ (2001) 10 Milieu en Recht 240 Google Scholar.
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135 Verbond van Verzekeraars (Insurers Association) ‘Kabinet ziet af van overstromingspolis’, press release, 5 March 2010, available at: http://www.verzekeraars.nl/sitewide/general/nieuws.aspx?action=view&nieuwsid=722
136 Mills, E. ‘a global review of insurance industry responses to climate change’ (2009) 34 Geneva Papers 323 Google Scholar at 334–339.
137 EFRASC, above n 11, [41], suggests a renegotiation of Principles to link premium levels explicitly to resilience measures. See also Ward, Ret et al ‘the role of insurers in promoting adaptation to the impacts of climate change’ (2008) 33 Geneva Papers 133 Google Scholar at 137–138.
138 Take-up is estimated at around 80 per cent for the whole population: Demos Widening the Safety Net (London: Demos, 2005). Note that market pressures enhance take-up, eg, to meet terms of offers of mortgage funding.
139 Priest, Sj, Clark, Mj and Treby, Ej ‘Flood insurance: the challenge of the uninsured’ (2005) 37 Area 295 CrossRefGoogle Scholar at 301.
140 Impacts on land transactions, and issues of blight, are not considered here. It has been suggested that aggregate impacts will be of marginal effect, especially where it is possible to provide for physical mitigation measures. See Lamond, J and Proverbs, D ‘Does the price impact of flooding fade away?’ (2007) 24 Structural Survey 363 CrossRefGoogle Scholar, available at: http://www.emeraldinsight.com. See also, Pitt Report, above n 12, citing an average loss of 9–12 per cent in property value. Note that these figures do not address individual impact on those most vulnerable.
141 See Stallworthy, M ‘Sustainability, coastal erosion and climate change: an environmental justice analysis’ (2006) 18 J Environmental Law 357 CrossRefGoogle Scholar.
142 Convention for the Protection of Human Rights and Fundamental Freedoms (Rome: Council of Europe, 1950), available at: http://www.echr.coe.int/NR/rdonlyres/D5CC24A7-DC13-4318-B457-5C9014916D7A/0/ENG_CONV.pdf
143 See S v France (1990) 65 D & R 250 (App 13728/88). See also Marcic v Thames Water Utilities Ltd[2002] Env Law Rep. 32 [117–8] (Lord Phillips, in the Court of Appeal).
144 For example, Defra has opted for a Coastal Change Pathfinder project (2009–2011), allocating funds by tender (£11 million) to local authorities to explore new ways of ‘enabling coastal communities, individuals and businesses to plan for, adapt to and manage coastal change’. ‘Coastal Change Fund’ is a pilot programme, without long-term state support commitment. See http://www.defra.gov.uk/environment/flooding/coastal-change-pathfinders/east/. Such projects have enabled measures including offers of ‘asset acquisition’ of threatened properties at market value plus incentive ‘Supplemental Pathfinder Payment’ (including an exceptional conditional right to planning permission for replacement ‘roll back’ development inland), comparable with a home loss payment under compulsory purchase legislation. See http://www.northnorfolk.org/coastal/189.asp
145 Defra Consultation on Coastal Change Policy (London: Defra, June 2009), ch 3, especially paras 3.16–29.
146 See Flood Risk and Insurance: A Road Map to 2013 and Beyond: Interim and Final Reports of the Flood Insurance Working Groups (London: Defra, May/December 2011), in particular Working Group 1: ‘The financial risk from flooding’.
147 See HC Treasury Select Committee, Financial Exclusion, 12th Report, 2005–06, HC 848. Evidence from the ABI suggested that no significant progress towards increased take up on the part of poorer households had been made in the period 2000–2005.
148 See Clemo, K ‘Preparing for climate change: insurance and small business’ (2008) 33 Geneva Papers 110 Google Scholar at 111–112.
149 ABI, Helping Tenants Protect Their Possessions: Guide for Housing Officers (London: ABI, December 2010) p 3.
150 It is further estimated that 76 per cent of potential flood damage costs at domestic properties are not covered, due to non-insurance, underinsurance, and excess terms prevalent in certain areas. See Environment Agency, above n 29, p 20. See also, generally, Pitt Report, above n 12, ch 9.
151 See Defra, above n 146.
152 See Whyley, C et al Paying for Peace Of Mind: Access to Home Insurance for Low-income Households (London: Policy Studies Institute, 1998) p 60 Google Scholar. See also ABI Financial Inclusion and Insurance: Meeting Low-income Consumers' Needs (London: ABI, 2007).
153 Ipsos MORI Financial Exclusion and Home Contents Insurance: Research Carried Out on Behalf of the Financial Inclusion Taskforce (London: HM Treasury, 2007).
154 With only 52 per cent of respondents aware of living in an at-risk area, and of these only 57 per cent own to taking any advance measures. See Ipsos MORI Survey for Environment Agency (London: Ipsos MORI, April 2008).
155 The remit of the previous government's Financial Inclusion Exclusion Taskforce was extended to insurance in 2006 through an Insurance Working Group. Set up at its request as part of the strategy to build and coordinate partnerships with, inter alia, social landlords to promote financial inclusion (including home contents insurance take-up) was the Financial Inclusion Champions Initiative. Signoretta, S P et al Evaluation of DWP Financial Inclusion Champions Initiative: Final Report (Loughborough: Loughborough University, 2001 Google Scholar), available at: http://www.crsp.ac.uk/downloads/publications/fitf_researcg_champions_initiative_2011_report.pdf. The taskforce ceased to exist in March 2011.
156 For instance, Gloucestershire County Council, as a consequence of the 2007 floods, has further produced (in collaboration with a partner insurer) a flood guide (Your Essential Flood Guide), as a best practice template for other local authorities and housing associations (http://www.gloucestershire.gov.uk/index.cfm?articleid=17465).
157 For example, the ‘My Home’ product offered through the National Housing Federation.
158 Experian Report Mapping the Demand for, and Supply of, Home Contents Insurance Schemes Operated by Local Authorities and Housing Associations (London: HM Treasury, 2009), reports around 16 per cent overall take-up under social housing provider ‘insurance with rent’ schemes, compared with around 10 per cent in respect of arm's length schemes, where tenants contract directly with insurers.
159 Indicating a range among social tenants of 10–18 per cent: Morgan, J and Stallworthy, M A UK Law and Policy Analysis of Issues of Availability, Affordability and Take-up of Floods Insurance Cover (London: RICS Education Trust, April 2010 Google Scholar): http://www.swan.ac.uk/ceelp/publications/staffpublications/professormarkstallworthy/
160 The Government's Response to Sir Michael Pitt's Review of the Summer 2007 Floods: Final Progress Report (London: Defra, January 2012) p 25.
161 Tenants of commercial premises will often have full repairing and insuring leases which oblige them to arrange appropriate cover.
162 The operating name of the Office for Tenants and Social Landlords, the Agency was established under the Housing and Regeneration Act 2008, with responsibility for registering and regulating providers of social housing, including local authorities, housing associations, arm's length management organisations and ‘for profit’ providers. The Localism Act 2011 contains provisions to abolish the Agency, and transfer its regulatory operations into the Homes and Communities Agency.
163 Imposing, inter alia, information or other support obligations.
164 Housing and Regeneration Act 2008, s 87(7). Part I of schedule 16 of the Localism Act states that the fundamental objectives of the regulator are, inter alia, ‘to encourage registered providers of social housing to contribute to the environmental, social and economic well-being of the areas in which the housing is situated’.
166 See Financial Inclusion Taskforce, Insurance Working Group Report on Findings into Insurance and Financial Inclusion (London: HM Treasury, 2008).
167 Licensing is mandatory for houses in multiple occupation and local authorities are empowered to license all private landlords in designated low-demand areas experiencing a significant and persistent problem caused by anti-social behaviour (Housing Act 2004, Part 3).
168 See Law Commission Encouraging Responsible Letting, Consultation Paper No. 181 (London, Law Commission, 2007); Rugg, J and Rhodes, D The Private Rented Sector: Its Contribution and Potential (York: Centre for Housing Policy, University of York, 2008) p xviii Google Scholar; Department for Communities and Local Government The Private Rented Sector: Professionalism and Quality – The Government Response to the Rugg Review: Consultation (London: Department for Communities and Local Government, 2009).
169 Law Commission Renting Homes 1: Status and Security, Consultation Paper No. 162, (London: Law Commission, 2002).
170 See Clarke, above n 67, p 21 and 298, citing Lewis, Rk ‘When you must insure’ (2004) 154 NLJ 1474 Google Scholar.
171 For example, in respect of funding geriatric care, see Schwarze, R and Wagner, Gg ‘the political economy of natural disaster insurance: lessons from the failure of a proposed compulsory insurance scheme in Germany’ (2007) 17 Eur Env 403 CrossRefGoogle Scholar at 410.
172 The principal UK regimes relate to third party liability cover for drivers: Road Traffic Act 1988, Part IV; and employers' liability cover: Employers' Liability (Compulsory Insurance) Act 1969 and Employers' Liability (Compulsory Insurance) Regulations 1998/2578. Note that there is a duty placed on licensees of nuclear sites to ensure funds are available, by insurance or otherwise, to meet statutory claims relating to radioactive contamination: Nuclear Installations Act 1965, s 19.
173 Thus the peril insured against is the liability owed to third parties in damages, ie, not the damaging event and costs related to its alleviation. See Yorkshire Water Services Ltd v Sun Alliance and Law Insurance plc[1997] 2 Lloyd's Rep 21 at 27–28.
174 Prudential Insurance v Commissioners of Inland Revenue[1906] 2 KB 658 at 663 (per Channell J).
175 Cf. difficulties caused by driving without compulsory motor insurance. Clarke, above n 67 p 11, points to uninsured compensation payouts through the industry's Motor Insurance Bureau increasing from £11 million (1988) to £225 million (2000), and ‘still rising’.
176 Regulatory challenge may apply, eg, to opt-out schemes on grounds of inertia selling. Note that regulatory structures are in the course of reform: the role of the Financial Services Authority (FSA) as regulator under the Financial Services and Markets Act 2000 is to be replaced. See Bank of England The Prudential Regulation Authority: Our Approach to Insurance Supervision (London: Bank of England and the FSA, June 2011), available at: http://www.fsa.gov.uk/pubs/pra_insurance.pdf
177 Including on grounds of discrimination, or disproportionate response. Note that in respect of those few states where mandatory flood insurance exists (such as Switzerland), no complaints under the Convention appear to have arisen; nor a fortiori where flood cover might be regarded as a mandatory element (for purposes of premium setting) within an otherwise voluntary scheme, as in France.
178 The final report of the Defra Working Group acknowledged the need to investigate ‘the feasibility, value for money and deliverability of targeting funds to help those most in need’. See above n 146.
179 The responsible minister has given an initial indication that the government is unlikely to be supportive of a future model involving public subsidy of insurance premiums: HC Deb, col C140WS, 19 December 2011.
180 Cf. ENDS Report ‘Insurers attack Defra over flood insurance impasse’ (22 December 2011), available at: http://www.endsreport.com/32012
181 As to the need for management strategies fully to engage with vulnerable communities, see, eg, Impacts of Climate Change on Disadvantaged Coastal Communities, Report for Joseph Rowntree Foundation (March 2011), available at: http://www.jrf.org.uk/publications/impacts-climate-change-disadvantaged-uk-coastal-communities