Aviva chief warns England is building homes that may never be insurable

Homes being constructed across England today could become effectively uninsurable within a matter of years because of rising flood risk, the boss of one of the country's largest insurers has warned. Amanda Blanc, chief executive of Aviva, said the danger is no longer a distant prospect but something already being baked into new developments on the edges of floodplains and in areas that were previously considered reasonably safe.

"That doesn't seem to me to make sense. We need to think about where those homes are being built," Blanc said in an interview with the BBC's Big Boss Interview podcast. She described the risk of flooding as "absolutely increasing", and said England was "for sure" building properties that might be uninsurable at some point further down the line.

The scale of the warning is spelled out in Aviva's own analysis. Based on current building patterns, roughly 115,000 new homes will be constructed in flood zones over the next decade alone. That is on top of the existing stock: the Environment Agency estimates about 6.3 million homes and businesses in England are already at risk of flooding.

Company research points to a more recent deterioration in the quality of new build. Aviva found that one in nine homes completed between 2022 and 2024 are at medium to high risk of flooding — a significant share of recent developments that were, at the point of completion, effectively new.

Longer-term projections are more worrying still. According to Aviva's figures, almost a third of the homes built in 2024 will be exposed to some level of flooding by 2050, while one in seven are expected to face medium to high risk as extreme weather becomes more frequent and more acute. Horizon insurers and lenders will use these projections when deciding what properties they are willing to cover, and at what price.

That shift is already under way in the climate data. The Met Office has estimated that, at current levels of global warming, record-breaking wet winters of the kind the UK experienced in 2023-2024 have moved from being once-in-80-year events to once-in-20-year events. If the baseline itself moves, so does the price of risk, and the premium attached to a home in a marginal location rises accordingly.

Blanc argued that the problem is partly one of basic planning discipline rather than an insoluble technical challenge. Flood-prone areas are already well mapped, she pointed out, and the industry knows where they are. "It's very well known where these flooding areas are. Let's think very carefully about homes that are being built."

She also said construction on the edges of, or bordering, those zones needs to be treated differently. Rather than accepting vulnerability as fixed, she argued mitigation is possible: measures can be built into a property to make it more or less exposed to floodwater. Flood resilient construction, raised floor levels, permeable surfaces and improved drainage all shift the odds, but only if they are specified at the design stage rather than retrofitted after the first serious inundation.

The flood points are only part of the picture in a wide-ranging interview. Blanc used the conversation to press the government on the wider policy picture, urging ministers to avoid "kite flying" — announcing and then revising proposals — ahead of Chancellor John Healey's first Budget on 28 October. Her concern is partly commercial and partly reputational, and it also reflects how the insurance market reads political instability.

Her sharpest language was reserved for speculation about pension reform. Aviva is a major provider of private pensions in the UK, and Blanc said speculation in recent Budgets about changes to the system had triggered a surge in people taking money out. In the last year alone, withdrawals ran at about 30 times the normal rate. She warned customers may come to regret it, because a tax-free lump sum, once taken, cannot be returned to the pot.

"So we would say be very, very thoughtful about the things that you are testing, thinking about," she said.

Announcements made so far ahead of the Budget have been limited. They include a scheme intended to help first-time buyers get onto the property ladder, and a commitment from Healey to deliver a "new age of industrialisation" for the UK. Neither addresses directly where — or whether — new homes should be built in locations exposed to flooding.

On investment, Blanc said Aviva is "ready with capital" to put into UK infrastructure. The group already invests more than £100bn in the UK, including around £35bn directed into infrastructure ranging from hospitals and schools to windfarms. She said the returns are attractive for pension holders and scheme members, while acknowledging that more detail is required to convert that readiness into actual deployment.

She was also drawn into the debate over the pension triple lock, under which the state pension rises by the highest of average wage growth, inflation or 2.5%. Blanc declined to say what she thought should happen to it, but noted the trade-off inherent in any change: lower increases to the state pension would have consequences elsewhere. "If you've got a lower state pension then you need a higher private pension, don't you? So you need to think about that balance."

The interview illustrates a widening gap between how homes are approved and where they are actually needed, and how insurers are pricing the risk. If 115,000 more homes go up in flood zones, the burden does not disappear — it is transferred to future owners who may find cover withdrawn, premiums soaring, or mortgages unavailable. The BBC has approached the government for comment.