Why the Insurance Industry Is Warning Against the NPPF Flood Risk Changes

For anyone bringing land forward, this is worth reading closely. It is not the usual objection from campaign groups; it comes from the people who price flood risk for a living, and they are telling government that the numbers no longer add up.

This is more than insurers

The striking thing about the letter is the breadth of who signed it. The signatories include the ABI, Aviva, Allianz, AXA, Zurich, Admiral, Ageas and Covea, alongside Flood Re itself, UK Finance for the mortgage lenders, the British Insurance Brokers’ Association, the National Flood Forum, the Town and Country Planning Association, Marsh and the International Property Flood Resilience Association. Seventeen signatories in total. When the reinsurer that underpins the flood insurance market and the body that represents mortgage lenders put their names to the same letter, this reads less like lobbying than a signal from the whole property-risk chain: insurers, lenders, brokers and the people who help households recover after a flood.

What the insurers are actually warning

The letter is unusually specific about cost. Insurers paid out £1.2 billion in weather-related property claims in 2025, up 14 per cent on the year before, with £758 million of that on damage to people’s homes and possessions. Against that backdrop, the signatories set out why building in the wrong places stores up a bill someone eventually has to meet:

• 6.3 million homes in England are now at risk of flooding, 4.6 million of them from surface water alone, up from 5.5 million at the last national assessment in 2018.
• One in nine new homes built between 2022 and 2024 already sits in an area of flood risk, rising to around one in seven by 2050 once climate change is taken into account.
• The average flood payout to a homeowner reached £30,000 in 2025, 60 per cent higher than the year before, while fitting a basic “no regrets” resilience package into a new home costs roughly £1,000.
• Two thirds of the public say they do not believe the country is prepared for future flooding.

The letter points to a recent ITV News investigation into planning breaches on housing estates as a sign of what happens when development in high-risk areas goes unchecked. For the detail of the policy changes themselves, see our breakdown of the December 2025 NPPF draft.

The real crunch: Flood Re, 2039 and the post-2009 gap

This is where the warning bites hardest, and it is the part most coverage skates over. Flood Re, the reinsurance scheme that keeps cover affordable for higher-risk homes, was always designed to end in 2039, with a private market expected to take over from there. It has never covered homes built after 2009. That exclusion was deliberate, meant to keep the scheme from rewarding building in flood-prone places. Put those two facts together, and every new home in a flood-risk area is already outside the safety net.

Relax the planning rules, the signatories argue, and the country drifts further from the point where an affordable, risk-reflective market could ever take over, leaving high-risk homes facing premiums owners cannot meet, or no cover at all. An uninsurable home is the practical definition of a stranded asset.

What this means for developers

It is tempting to read a letter from insurers as someone else’s problem. It is not. The thread running through all of it is that flood risk has become a commercial risk to the scheme. A home that cannot be insured cannot, in practice, be mortgaged; a home that cannot be mortgaged cannot be sold. Surface water risk that a few years ago might have been parked as a drainage detail to settle by condition now reaches the saleability of the finished units.

The timing sharpens it. From April 2026, changes to the planning appeals process mean the appeal stage can no longer be relied on to rescue a weak flood risk assessment. Getting it right at submission matters more than it used to. In practice that means a Sequential Test that genuinely engages with surface water, climate change allowances applied at the upper end, and a drainage strategy designed to the 2025 SuDS standards from the first sketch rather than retrofitted at discharge of conditions.

Our view

Unda supports the thrust of the coalition’s letter. The case for siting development on the evidence, and designing properly for the water that lands on a site, is the one Unda makes to clients every week. Jackie Stone, Director at Unda, says the industry is right to raise the alarm now, while the rules are still being written, rather than after another decade of homes have gone up in the wrong places.

For Jackie, flood risk is no longer a box to tick late in the process. It has become a question of whether the finished homes can be sold and lived in at all.

For developers, that makes flood risk an early design decision rather than a late compliance check.