A new Marsh & McLennan report has urged governments globally to tackle the growing threat of flood risk, which is set to become more severe and frequent in coming years, in part as a result of accelerating climate change.

Growing concentrations of people and economic assets in low-lying areas that are often most at-risk to inundation are also contributing to the increased flood risk, the report says.

Calling on governments to take a strategic approach to flood resilience, it says they need to have a strategy that incorporates mutually reinforcing elements such as investment in flood protection and resilience, enhanced access to flood risk data, and smarter land-use planning.

“Strategies must also be long term in their outlook, as climate change and increasing exposure mean risks in many countries will increase for the foreseeable future,” the report says.

“In particular, plans must anticipate and manage the threat of potential tipping points, such as the emergence of uninsurable regions or financial market corrections.”

In countries with large unprotected populations, narrowing the flood protection gap will be critical, the report says.

Governments can undertake a range of approaches, from targeting vulnerable groups with community-based flood insurance schemes, to national level public-private partnerships and public flood insurance programs.

It says care should be taken to ensure such schemes are administered efficiently, are fiscally sustainable, and do not create perverse incentives or crowd out private insurance.

“Across the world, climate change threatens a vicious cycle of more frequent flooding and deepening inequality,” the report says.

“Increasing insurance coverage among vulnerable communities can break this sequence, enabling people to recover faster so that the last flood does not leave them more vulnerable to the next.

“More broadly, economies with high rates of insurance penetration tend to be more resilient and enjoy more predicable growth rates.”

The report says flood disasters have led to economic damage in excess of $US1 trillion ($1.3 trillion) since 1980, with only 12% of the losses insured.

It also calls on governments to build resilience to flood risk, the report says, adding that governments are not “exempt from responsibility”.

“Planning regulations that fail to discourage construction on floodplains, low levels of investment in flood resilience, policies that undermine private insurance markets, and out of date or inaccessible flood risk data are only a few of the common public-sector failings that increase exposure and vulnerability to floods.”

Click here for the report.