These climactic changes have been coupled with massive environmental factors like rapid industrialization which has turned the natural hazards "from dangers into risks". The pollution caused by the industries is leading to a permanent change in the global climate, resulting in an unnaturally high rate of floods. Similarly, other environmental factors form a chain reaction which all inevitably lead to an increase in natural hazards like floods, storms etc.
The flood insurance in UK is covered by the private sector. The Government provides flood protection and management and the damages caused by the floods are covered by the private insurance companies. This "can be described as a "Gentlemen's Agreement" between the Government and the insurance industry". This system has been in place for more than half a century but increased flooding and subsequent costs to the insurance industry are now revealing the drawbacks of this system.
One reason for the increasing insurance costs is that the flood relief and management system that is place in the Government today is highly complex and ambiguous. "The Department for Environment, Food and Rural Affairs (DEFRA) is responsible for the overall policy The Environmental Agency (EA) has the responsibility of managing to all matters related to flood defence Furthermore, the Department of Transport, Local Governments and the Regions as well as the Internal Drainage Boards hold competences in flood protection". This system is very intricate with no clear cut delegation of responsibilities; most of these departments allocate their responsibilities to local and regional authorities thus creating disorder and disharmony. The resource allocation system is also not clearly defined with the resource allocation system and the flood defence system competing with each otherError: Reference source not found.2
Another factor that leads to enormous costs to the insurance industry is the irresponsible attitude of the house developers. "Government figures show that in 2005,9% of new homes were built in flood risk areas. Environment Agency statistics show that between 2003 and 2006, 707 developments were approved by local councils against its adviceError: Reference source not found."3 "There are more than 2 million homes at risk from coastal or inland flooding (10 % of total homes in the UK), and around 400,000 homes at very high risk of flooding (greater than 1.3 % annual probability or 1-in-75 chance).Error: Reference source not found"4 This problem is magnified several times by the behavior of the home owner's themselves. "The general public awareness of natural hazard is lowError: Reference source not found."5"Only those property owners that are aware of their being exposed to floods frequently and with severe consequences may consider to purchase insurance. An insurance population based in these assumptions makes natural hazards a bad risk for insurance.Error: Reference source not found"6. Besides general unawareness of the home owner's, the high costs to the insurance industry themselves contribute to people not having any insurance cover. The higher the risk of flood, the higher is the insurance premium; due to this many people are not able to afford having an adequate insurance cover. "In 2006, 52% of people who were affected by floods found that they weren't coveredError: Reference s