Indemnifying against flood loss in a changing environment

Legal Studies

Volumn 33, Issue 2, 2013, Pages 239-263

  Morgan, Jill ^a   Stallworthy, Mark ^a  

^a SWANSEA UNIVERSITY   (United Kingdom)

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EID: 84877667979     PISSN: 02613875     EISSN: 1748121X     Source Type: Journal    
DOI: 10.1111/j.1748-121X.2012.00245.x     Document Type: Article

References (184)

1. 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.
2. M Hulme Why We Disagree about Climate Change: Understanding Controversy, Inaction and Opportunity (Cambridge: Cambridge University Press, 2009)
3. N Oreskes and E Conway Merchants of Doubt (London: Bloomsbury, 2010) ch 6.
4. UN International Panel on Climate Change Fourth Assessment Report, Climate Change 2007: The Physical Science Basis, Working Group I (Cambridge: Cambridge University Press, 2008).
5. M Lynas High Tide (London: Harper Perennial, 2005).
6. S Goldenberg 'Americans are still gambling with the Mississippi after centuries of flooding'The Guardian 23 May 2011.
7. 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.
8. A Behrens et al Future Impacts of Climate Change across Europe (Brussels: Centre for European Policy Studies, 2010) 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.
9. But see D Carrington 'Breakthrough as scientists link climate change to flood devastation'The Guardian 17 February 2011.
10. JE Hansen 'Can we still avoid dangerous human-made climate change?' (2006) 73 Social Research 949 at 956-958.
11. A Dlugolecki 'An overview of the impact of climate change on the insurance industry', in HF Diaz and RJ Murnane (eds) Climate Extremes and Society (Cambridge: Cambridge University Press, 2008) pp 256-259, 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).
12. See Arscott v Coal Authority and Merthyr Tydfil BC[2005] Env LR 6. Also M Stallworthy 'The curious persistence of the common enemy doctrine' (2005) 13 Environmental Liability 39.
13. J Kollewe 'Rising flood risk could make some parts of UK uninsurable'The Guardian 29 July 2010.
14. Environment Agency Flooding in England: A National Assessment of Flood Risk (London: Environment Agency, 2009) pp 6-7.
15. st Report 2010-2011, HC 522-1 (December 2010) [30].
16. 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.
17. 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).
18. 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).
19. Association of British Insurers (ABI) Fighting Flood Risk Together (London: ABI, November 2010) p 4.
20. M Faure and G Skogh Economic Analysis of Environmental Policy and Law (Cheltenham: Edward Elgar, 2003) pp 263-265.
21. See RO Brookes, R Jones and RA Virginia Law and Ecology: The Rise of the Ecosystem Regime (Aldershot: Ashgate, 2002) p 384.
22. See T Maynard 'Climate change: impacts on insurers and how they can help with mitigation and adaptation' (2008) 33 Geneva Papers 140 at 141.
23. See E Fisher 'Unpacking the toolbox: or why the public/private divide is important in EC environmental law' in M Freedland and J-B Auby (eds) The Public and Private Law Divide (Oxford: Hart, 2006) pp 230-234.
24. 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.
25. 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).
26. See Pitt Report, above n 12, ch 1.
27. B Mitchell 'Effective floodplain development policy'[2006] JPL 59 at 60.
28. In June/July 2007, on some estimates, representing a return period of a 1-in-150 year event.
29. This occurs where river channel capacity is exceeded and retaining banks overtopped.
30. th Report 2007-08, HC 49 [1-4].
31. 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.
32. Environment Agency Delivering Benefits through Evidence: The Costs of the 2007 Floods in England (London: Environment Agency, January 2010) especially s 4.
33. 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).
34. FWMA, above n 4, Part 1.
35. 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.
36. 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.
37. Directive 2007/60/EC, above n 4.
38. 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).
39. 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.
40. 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'.
41. 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).
42. 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).
43. 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.
44. 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.
45. 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
46. Directive 2007/60 EC, above n 4, Art 7(2).
47. 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
48. JL Sax 'Property rights and the economy of nature: understanding Lucas v South Carolina Coastal Council' 55 Stan Law Rev 1433
49. ET Freyfogle 'Private land made (too) simple' (2003) 33 Envtl L. Rep. 10155.
50. See RG Noll and JE Krier 'Some implications of cognitive psychology for risk regulation' in C Sunstein (ed) Behavioural Law and Economics (Cambridge: Cambridge University Press, 2000) p 331.
51. See K Gray 'Equitable property' (1994) Current Legal Problems 157.
52. J Peel 'Climate change law: the emergence of a new legal discipline' (2008) 32 Melbourne U Law Rev 922 at 924, citing examples within constitutional, administrative and property law.
53. J Ebbesson 'The rule of law in governance of complex socio-ecological changes' (2010) 20 Global Environmental Change 414.
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 A Lista 'Stairway to heaven or highway to hell: what next for insurance competition regulation?' (2011) 1 JBL 8. 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. W Kron 'Flood insurance: from clients to global financial markets' (2009) 2 J Flood Risk Management 68 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. C Green and E Penning-Rowsell 'Flood insurance and government: "parasitic" and "symbiotic" relations' (2004) 29 Geneva Papers 518.
65. N Gunningham 'Environment law, regulation and governance: shifting architectures' (2009) 21 JEL 179 at 209
66. J Braithwaite, Regulatory Capitalism: How It Works, Ideas for Making It Work Better (Cheltenham: Edward Elgar, 2008).
67. 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
68. SB Hecht 'Climate change and the transformation of risk: insurance matters' (2008) 55 UCLA Law Rev 1559 at 1617-1618.
69. 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.
70. See, generally, Multinational Gas & Petrochemical Co v Multinational Gas & Petrochemical Services Ltd[1983] Ch 258.
71. AC Pigou The Economics of Wealth and Welfare (London: Macmillan, 4th edn, 1932)
72. RH Coase 'The problem of social cost'(1960) 2 J Law and Econ 1)
73. M Sagoff 'Economic theory and environmental law' (1981) 79 Michigan Law Rev 1393 at 1410-1411.
74. 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.
75. See, eg, A Davies-Jones 'Implementing sustainable development for the countryside: a case study of agri-environment reform in Wales' (2011) 13 ELR 9.
76. 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).
77. See further ABI Financial Risks of Climate Change (London: ABI, June 2005).
78. See RJ Lazarus 'Environmental law after Katrina: reforming environmental law by reforming environmental lawmaking' (2007) 81 Tulane Law Rev 1019 at 1054-1055.
79. 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.
80. This has been referred to as 'random victimization'. See Faure and Skogh, above n 16, pp 282-285.
81. See PK Freeman and H Kunreuther 'Managing environmental risks through insurance' in H Folmer and T Tietenberg (eds) International Yearbook of Environmental and Resource Economics 2003-04 (Cheltenham: Edward Elgar, 2003).
82. J Steele Risks and Legal Theory (Oxford: Hart, 2004) p 149.
83. ABI, Insuring our Future Climate: Thinking for Tomorrow, Today (London: ABI, September 2007) p 12.
84. See Hulme, above n 1, pp 85-91. Cf. N Pidgeon and B Fischoff 'The role of social and decision sciences in communicating uncertain climate risks' (April 2011) Nature Climate Change 35 at 36-37.
85. A Dlugolecki 'Climate change and the insurance sector' (2008) 37 Geneva Papers 71 at 77. See generally R Berliner Limits of Insurability of Risk (Upper Saddle River, NJ: Prentice-Hall, 1982).
86. A Ross Reflections on the Future: Climate Change and its Impacts on the Insurance Industry (Toronto: Institute for Catastrophic Loss Reduction, 2000).
87. Huber, above n 66, at 6, also citing Swiss Re Floods: An Insurable Risk? (Zurich, Swiss Re, 1998) p 49.
88. 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].
89. DA Moss When All Else Fails: Government as the Ultimate Risk Manager (Cambridge, MA: Harvard University Press, 2001) p 326, also p 40 citing FH Knight Risk Uncertainty and Profit (Chicago, IL: University of Chicago Press, 1971) p 233.
90. Cf. Steele, above n 79.
91. GL Priest 'Government insurance versus market insurance' (2003) 28 Geneva Papers 71.
92. A key concern of property law has been described as 'the boundaries between private and public control of things'. See JP Byrne 'Green property' (1990) 7 Constitutional Commentary 239 at 244.
93. EJ Treby, MJ Clark and SJ Priest 'Confronting flood risk: implications for insurance and risk transfer' (1981) 81 J Environmental Management 351 at 357.
94. See, eg, C Harlow 'Export, import: the web and flow of English public law' (2000) Public Law 240 at 252.
95. 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 E Michel-Kerjan Financial Protection of Critical Infrastructure: Uncertainty, Insurability and Terrorism Risk (Paris: Institut Veolia Environnement, 2005) pp 35-47.
96. See JR Brown et al 'An empirical analysis of the economic impact of federal terrorism reinsurance' (2004) 51 J Monetary Econ 861.
97. See Michel-Kerjan, above n 92, pp 10-12.
98. See, eg, E Kolbert Field Notes from a Catastrophe (London: Bloomsbury, 2006).
99. See, eg, Insurance Information Institute website: http://www.insure.com/low-insurance/fair-plan.html
100. Cf. H Kunreuther 'The role of insurance in managing extreme events: implications for terrorism coverage' (2002) 22 Risk Analysis 427.
101. 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).
102. See, eg, KS Abraham Distributing Risk: Insurance, Legal Theory and Public Policy (New Haven, CT: Yale University Press, 1986) p 14.
103. Notwithstanding asserted links between the process of subrogation and a theory of deterrence. See Clarke, above n 67, at 290, also 252-254, citing, in relation to reinforcement of risky behaviour: CJM Schuyt 'The paradox of welfare and insurance' (1995) 77 Geneva Papers 430.
104. MW Downton and RA Pielke 'Discretion without accountability: politics, flood damage and climate' (2001) 2 Natural Hazards Rev 157.
105. 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.
106. GF White, Human Adjustment to Floods, Choice of Adjustment to Floods (Chicago, IL: University of Chicago Press, 1945, 1964); RW Kates Hazard and Choice Perception in Flood Plain Management (Chicago, IL: University of Chicago Press, 1962). See also above n 3.
107. E Mills 'Insurance in a climate of change' (2005) 309 Science 1040, citing US Government Accountability Office, Catastrophe Risk: US and European Approaches to Insure Natural Catastrophe and Terrorism Risks (Washington DC: GPO, 2005).
108. See, eg, J Nisse and T Webb 'Insurers balk at paying out to one million Katrina flood victims'Independent, 11 September 2005.
109. 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.
110. 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.
111. For a discussion of a federal disaster insurance reform proposal under a Homeowners Defense Act (HR 2555, 111th Congress 2009), see J Young, 'Efficient proximate cause: is California headed for a Katrina-scale disaster in the same leaky boat?' (2011) 62 Hastings Law J 757 at 788-792.
112. VY Trainor Hurricane insurance litigation: more than wind versus water' (2008) 68 LA Law Rev 389
113. R Knight 'Insurers face battle over liability for "flood" repair'Financial Times, 12 September 2005.
114. 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.
115. NFIP flood insurance is arranged through private insurers and agents for administration purposes. See http://www.fema.gov/nfipInsurance/companies.jsp
116. 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.
117. US$250, 000 on residential property (plus US$100, 000 for contents); US$500, 000 on both business premises and contents.
118. 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.
119. 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/
120. See RJ Burby 'Flood insurance and floodplain management: the US experience' (2001) 3 Global Envtl Change Part B: Environmental Hazards 111.
121. See TR Lave and LB Lave 'Public perception of the risks of floods: implications for communication' (1991) 11 Risk Analysis 255 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.
122. See, eg, MJ Browne and RE Hoyt 'The demand for flood insurance: empirical evidence' (2000) 20 J Risk and Uncertainty 291.
123. 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).
124. RH Platt Disasters and Democracy: The Politics of Extreme Natural Events (Washington, DC: Island Press, 1999) p 9.
125. R McLeman and B Smit 'Vulnerability to climate change hazards and risks: crop and flood insurance' (2006) 50 Canadian Geographer 217 at 224.
126. RD Blanchard-Boehm, KL Berry and PS Showalter '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: 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).
127. See AH Thieken et al 'Insurability and mitigation of flood losses in private households in Germany' (2006) 26 Risk Analysis 383, 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).
128. See, eg, Hecht, above n 66, at 1615-1616.
129. See Thieken et al, above n 123, at 387.
130. D. Crichton 'Role of insurance in reducing flood risk' (2008) 33 Geneva Papers 117 at 118-119.
131. 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).
132. Caisse Centrale de Reassurance Natural Disasters in France (Paris: Caisse Centrale de Reassurance, 1999).
133. Assuralia 'De natuurramp endekking'Assurantie Info, 19 October 2005.
134. C van Schoubroeck 'The quest for private insurance for damage caused by natural disasters: a Belgian case' (2003) JBL 558.
135. EUrosion Project Report, Living with Coastal Erosion in Europe: Sediment and Space for Sustainability (Brussels: EU, 2004) p 76.
136. 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.
137. Bouwer etal., above n 41, citing M Faure and T Hartlief, 'Schade als gevolg van natuurverschijnselen: de betekenis van de WTS' (2001) 10 Milieu en Recht 240.
138. WJW Botzen and JCJM van den Bergh 'Insurance against climate change and flooding in the Netherlands' (2008) 28 Risk Analysis 413.
139. 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
140. E. Mills 'A global review of insurance industry responses to climate change' (2009) 34 Geneva Papers 323 at 334-339.
141. EFRASC, above n 11, [41], suggests a renegotiation of Principles to link premium levels explicitly to resilience measures. See also RET Ward et al 'The role of insurers in promoting adaptation to the impacts of climate change' (2008) 33 Geneva Papers 133 at 137-138.
142. 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.
143. SJ Priest, MJ Clark and EJ Treby 'Flood insurance: the challenge of the uninsured' (2005) 37 Area 295 at 301.
144. 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 J Lamond and D Proverbs 'Does the price impact of flooding fade away?' (2007) 24 Structural Survey 363, 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.
145. See M Stallworthy 'Sustainability, coastal erosion and climate change: an environmental justice analysis' (2006) 18 J Environmental Law 357.
146. 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
147. 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).
148. 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
149. 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'.
150. 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.
151. See K Clemo 'Preparing for climate change: insurance and small business' (2008) 33 Geneva Papers 110 at 111-112.
152. ABI, Helping Tenants Protect Their Possessions: Guide for Housing Officers (London: ABI, December 2010) p 3.
153. 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.
154. See Defra, above n 146.
155. See C Whyley et al Paying for Peace Of Mind: Access to Home Insurance for Low-income Households (London: Policy Studies Institute, 1998) p 60. See also ABI Financial Inclusion and Insurance: Meeting Low-income Consumers' Needs (London: ABI, 2007).
156. Ipsos MORI Financial Exclusion and Home Contents Insurance: Research Carried Out on Behalf of the Financial Inclusion Taskforce (London: HM Treasury, 2007).
157. 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).
158. 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. S P Signoretta et al Evaluation of DWP Financial Inclusion Champions Initiative: Final Report (Loughborough: Loughborough University, 2001), available at: http://www.crsp.ac.uk/downloads/publications/fitf_researcg_champions_initiative_2011_report.pdf. The taskforce ceased to exist in March 2011.
159. 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).
160. For example, the 'My Home' product offered through the National Housing Federation.
161. 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.
162. Indicating a range among social tenants of 10-18 per cent: J Morgan and M Stallworthy A UK Law and Policy Analysis of Issues of Availability, Affordability and Take-up of Floods Insurance Cover (London: RICS Education Trust, April 2010): http://www.swan.ac.uk/ceelp/publications/staffpublications/professormarkstallworthy/
163. The Government's Response to Sir Michael Pitt's Review of the Summer 2007 Floods: Final Progress Report (London: Defra, January 2012) p 25.
164. Tenants of commercial premises will often have full repairing and insuring leases which oblige them to arrange appropriate cover.
165. 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.
166. Imposing, inter alia, information or other support obligations.
167. 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'.
168. http://www.bis.gov/files/file45019.pdf
169. See Financial Inclusion Taskforce, Insurance Working Group Report on Findings into Insurance and Financial Inclusion (London: HM Treasury, 2008).
170. 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).
171. See Law Commission Encouraging Responsible Letting, Consultation Paper No. 181 (London, Law Commission, 2007); J Rugg and D Rhodes The Private Rented Sector: Its Contribution and Potential (York: Centre for Housing Policy, University of York, 2008) p xviii; 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).
172. Law Commission Renting Homes 1: Status and Security, Consultation Paper No. 162, (London: Law Commission, 2002).
173. See Clarke, above n 67, p 21 and 298, citing RK Lewis 'When you must insure' (2004) 154 NLJ 1474.
174. For example, in respect of funding geriatric care, see R Schwarze and GG Wagner 'The political economy of natural disaster insurance: lessons from the failure of a proposed compulsory insurance scheme in Germany' (2007) 17 Eur Env 403 at 410.
175. 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.
176. 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.
177. Prudential Insurance v Commissioners of Inland Revenue[1906] 2 KB 658 at 663 (per Channell J).
178. 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'.
179. 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
180. 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.
181. 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.
182. 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.
183. Cf. ENDS Report 'Insurers attack Defra over flood insurance impasse' (22 December 2011), available at: http://www.endsreport.com/32012
184. 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