Conclusions
The so-called "insurance guarantee" has distorted the market for forty years, and is no longer sustainable, at least in the South East of England, owing to the high demand for housing and the shortage of suitable land. Perhaps a new form of insurance guarantee is required to restore stability to the market, and the author has outlined a possible new guarantee arrangement in Appendix 6 to stimulate discussion.

At the end of the day, the number of houses built in flood plains should depend upon whether the public thinks that the risk is outweighed by the benefits. Until recently, public perceptions of flood risk have been reduced by subsidised insurance premiums, and as these perceptions of risk increase, along with higher premiums, problems in obtaining insurance, and consequent reduced property values, there is likely to be more demand for structural solutions because they are quick and visible. The position has been reached where the flooding problems in England and Wales are going to get a lot more costly unless some drastic action is taken.

By contrast, the measures already being taken in Scotland are proving effective in preventing any increase in exposure to the flood hazard, while at the same time an increasingly active and effective flood management programme is reducing the hazard itself. Fundamental to the Scottish strategy is the network of Flood Liaison and Advice Groups in which stakeholders have an opportunity to influence local policies, and advise local planners. These groups are crucial in helping to balance the profit motives of the housing developers with environmental and wider economic issues, not least the future availability of insurance, and the health and safety of local citizens.

Perhaps the last word should go to Peter Graham, Chief Executive at esure, who was quoted in an esure press release as saying:

"There has been an exceptional response to the problems of flooding in Scotland over the last five years. We believe that Scotland has in place many of the key elements that England and Wales are lacking in terms of planning and co-ordination. Now we are working to revise our risk-ratings across Scotland because of the speed with which the Scottish Executive and local authorities have acted to improve planning and defences."

"We congratulate the Scottish Executive and Flood Liaison and Advice Groups on their excellent work and will be calling for Parliament in Whitehall to become similarly enlightened in the measures it adopts."

© David Crichton , December 2004

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