This paper outlines the different approaches to state and private flood insurance in Europe and around the world, with particular reference to the United Kingdom. The UK is unique in the world in that private insurers agreed in 1961 to guarantee to include cheap flood insurance as part of the standard household package policy for all households, regardless of the hazard. This means that around 95% of households in the UK have flood insurance.

This high penetration of cover has justified the investment of considerable resources by insurance companies in UK flood mapping and modelling for both coastal and river floods and indeed some insurers arguably have better flood maps than the government. Insurers have also pooled their detailed claims data and have funded research to identify ways in which buildings could be made more resilient.

The author’s “insurance template” indicates what levels of flood hazard are acceptable to insurers and has been widely adopted by planning authorities in Scotland. Unfortunately demand for housing in England and Wales means that 27% of new homes are now being built in flood hazard areas.

As a result, UK insurers have been forced to review the 1961 guarantee. In 2001 the price cap was removed, and at the end of 2002, the guarantee was removed altogether for areas where the flood hazard exceeds 1 in 75 years.