BIBA response to DEFRA on future funding of flood and costal erosion risk management in England

25th February 2011

The British Insurance Brokers Association (BIBA) is the UK's leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers.

BIBA membership includes 1700 regulated firms. Insurance brokers and intermediaries distribute nearly two-thirds of all UK general insurance. In 2007, insurance brokers and intermediaries generated £1.5 billion of invisible earnings and they introduce £22 billion of premium income into London's insurance market each year.

BIBA is the voice of the industry, advising members, the regulators, the Government, consumer bodies and other stakeholders on key insurance issues.  BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards. BIBA works closely with the Chartered Insurance Institute to provide training to those working in the industry and actively participates in helping the industry and its customers deal with some of the major issues of the day.

BIBA members provide professional advice to businesses and consumers, playing a key role in identification, measurement, management, control and transfer of risk.  They negotiate appropriate insurance protection tailored to individual needs and operate to a very high standard of customer service with the aim of ensuring peace of mind, security, financial protection and the professional advice required.


BIBA completely support DEFRA’s 3rd Key objectives to maintain the wide spread take up of Flood Insurance. This is something BIBA fully endorse and the other two objectives (to encourage more investment in flood and costal risk management, and to enable more local input on local defense projects) we also support. 

Our response to your 10 consultation questions is set out below:


Q1.Do you think that the existing funding prioritisation and allocation system should continue, in which Government focuses on funding the most cost-beneficial projects?

Q2.Do you have any other comments or anything to add to the analysis in Section 1?
More local funding should lead to spending being prioritised on projects where local knowledge is required and the specific situation better understood.  

Q3.Do you agree with the objectives in Section 2?  If not, which would you change, or what others would you add?
Agree, insurance operate on a system of risk based pricing and therefore there is a direct relationship between flood risk and the price and availability of cover. 

Q4.Do you agree with the guiding principles outlined in Section 3?  If not, which would you change, or what others would you add?
Overall this is a logical approach. We agree with principles 2, 3 and 4. Principle 1 is perhaps not required as there should not necessarily be a restriction on spreading grant-aid over numerous projects if the priority is to focus on fewer more vital projects.        

Q5.In particular, do you agree that the costs of protecting new development should not fall to the general taxpayer, now or over the long-term?
We agree, we refer you to our answer to IC8 of the Pitt report:

IC 8 The interim conclusion of the Review is that PPS25 should be rigorously applied by local planning authorities, including giving consideration to all sources of flood risk and ensuring that developers make a full contribution to the costs both of building and maintaining any necessary defences.

BIBA strongly agree with this interim conclusion. It is vital that the developer is responsible for this and the review should recognise that the insurance industry cannot continue to insure new vulnerable developments in flood zone areas without the appropriate level of funding for defences .

BIBA also suggest that PPS25 apply to ALL NEW DEVELOPMENTS regardless of size and not just those in excess of ten properties.

Q6. Do you agree with the rationale for the ‘payment for outcomes’ approach?
Yes, there must be a justifiable value for money approach when prioritising spending of tax payers money.





Q7.Do you agree that a payment for outcomes system would be more likely to deliver the objectives stated in Section 2, in comparison with the current prioritisation and allocation approach?  An accompanying impact assessment provides a more detailed comparison

Q8.Do you have any comments or suggestions on the role of RFCCs and the local levy?

Q9.Do you have any comments on the analysis in Section 6, or your own views of the potential benefits and risks of the payment for outcomes approach?
No comment

Q10.Do you have any suggestions for improving the way a payment for outcomes system might work?
No comment  

Thank you for taking the time to consider our response. If you have any further queries please contact Graeme Trudgill, BIBA’s Head of Corporate Affairs for further information on 02073970218 or on [email protected] or Steve Foulsham, BIBA’s Technical Services Manager on 02073970234 or [email protected] or Peter Staddon, Head of Technical Services on 0207 397 0204 or [email protected]


Yours sincerely





Eric Galbraith

Chief Executive