Barclays is intensifying its assessment of clients’ exposure to flooding as increasingly severe weather events and concerns over insurance availability affect lending and investment decisions across the UK.
The bank has expanded its internal modelling to evaluate different flood scenarios and identify clients requiring closer scrutiny, according to Amit Puri, Barclays’ head of sustainability for business.
- Barclays is strengthening flood risk assessments using internal models to evaluate client exposure to extreme weather and potential financial losses.
- A Barclays survey found that 86% of UK businesses have experienced difficulties obtaining climate-risk insurance, while half have redirected investment away from higher-risk locations.
- More than 40% of real estate and housing businesses have shifted investment toward climate resilience rather than emissions reduction, reflecting growing concern about physical climate risks.
According to Bloomberg, the assessment process has developed over the past two years as Barclays responds to the increasing threat of flooding and uncertainty over whether properties in vulnerable areas will remain insurable.
UK banks also face greater regulatory scrutiny of physical climate risks. In 2025, the Bank of England’s Prudential Regulation Authority published proposed guidelines calling for more detailed assessments of exposure to flooding, storms and other climate-related threats.
Barclays survey finds 86% of UK businesses face climate insurance difficulties
A Barclays survey published Tuesday found that 86% of UK business leaders had experienced difficulties obtaining insurance against climate-related risks.
Half of respondents said they had redirected capital away from locations considered more vulnerable to extreme weather, while approximately one in 10 reported that climate change had influenced decisions to close or reduce business operations during the previous five years.
The findings indicate that physical climate risks are already affecting investment allocation and business activity.
Flood risk was the most significant climate-related factor influencing the attractiveness of business locations across the surveyed sectors.
In real estate and housing, more than 40% of businesses reported reallocating investment toward improving resilience to extreme weather rather than reducing emissions.
More than half of respondents in those sectors said they would invest in additional resilience measures if they had better information about the potential benefits for their businesses.
The research covered 700 leaders of mid-sized, large and very large UK businesses across industries including agriculture, hospitality, manufacturing, housing and transport.
UK flood insurance concerns increase pressure on banks
The growing financial implications of flooding are prompting UK lenders to demonstrate a clearer understanding of climate-related risks within their portfolios.
Insurance availability is a particular concern for properties exposed to repeated flooding.
Flood Re, the UK’s reinsurance programme designed to support affordable insurance for homes at high risk of flooding, provides protection for eligible households. However, the scheme is scheduled to end in 2039 and excludes properties built after 2009.
Those restrictions add to concerns about the longer-term availability of flood insurance and the potential consequences for property owners and lenders.
Puri said the need to direct capital toward protecting assets against the physical effects of climate change has become more urgent as risks previously viewed as distant begin to emerge.
