Recommendation 6

HM Government · verbatim extract Not Addressed

Government response The Government is supporting coastal communities to adapt to the impacts of coastal erosion. This includes locally developed long-term strategies which strengthen adaptation and avoid inappropriate development in vulnerable areas. The government has no plans to explore government-backed insurance for coastal erosion and landslides. Flooding is generally an insurable risk because it is sudden, uncertain, and event-based. This enables risk to be pooled and priced within a functioning private insurance market, with Flood Re operating as a reinsurance mechanism to support affordability where that market exists. By contrast, coastal erosion is a typically known, permanent and progressive risk, rather than an unforeseen event. The likelihood, location and long-term outcome are often well understood in advance, meaning losses are inevitable rather than uncertain. As a result, this risk is generally considered uninsurable, and standard home insurance policies typically exclude cover for losses arising from coastal erosion. Given the absence of a viable underlying insurance market, the Government does not consider there to be a case for acting as a reinsurer in this area. Instead, the most effective actions are to provide clear, accessible information about risk, support local planning and adaptation decisions, and ensure local authorities can work with affected communities to respond appropriately over time. In contrast, coastal flooding is usually covered within home insurance, and the Government and industry have already taken steps to support affordability of flood cover through Flood Re – a joint Government–industry reinsurance scheme that helps insurers manage the costs of high flood risks, enabling them to offer more affordable home insurance to households in flood-prone areas.