Cross-party MPs have called for changes to the UK’s Flood Re scheme after an investigation found that insurers benefiting from the public-private flood protection programme are also underwriting and investing in fossil fuel projects linked to rising climate risks.
Flood Re estimates that it currently backs 353,000 insurance policies across the UK.
Flood Re is funded through a levy on UK home insurance policies. Participating insurers can use the scheme to cover flood claims, helping homeowners in areas at high risk of flooding obtain insurance. That are the within the guidelines of the Water Act 2014.
The Bureau used Freedom of Information (FOI) requests to establish that Flood Re insurers are involved in providing insurance for several fossil fuel projects in the US.
It found that four participating insurers, Aviva, Allianz, Zurich and Covéa, have almost $20bn invested in fossil fuel companies.
Aviva accounts for about $15bn of those investments, including more than 100 holdings in coal companies. The Bureau said some of the investments appear inconsistent with the insurer’s stated climate commitments.
The Insurers cannot take money from a government-backed scheme designed to protect people from flooding, while actively financing the fossil fuel expansion that makes those floods worse and more frequent.
Government must use the ongoing reform of Flood Re to make sure insurers benefiting from public-backed flood cover aren’t simultaneously fuelling the crisis behind it.
Flood Re estimates that it currently backs 353,000 insurance policies across the UK. The scheme is undergoing reforms intended to change how flood risk is addressed as climate-related losses increase. It is set to end in 2039.
Flood Re said it does not receive taxpayer funding and that the Government has no financial liability under the scheme.
