The UK Government’s proposed flood insurance scheme may not be sustainable because it does not account for climate change, a submission from the London School of Economics warns.

The Flood Re program – backed by the Association of British Insurers (ABI) – aims to make cover available to 500,000 high-risk homeowners by adding a levy to all policy premiums.

But the scheme is “likely to be put under increasing pressure and may prove unsustainable because the number of properties in future that will be at moderate and high probability of flooding has been significantly underestimated”, a consultation response led by climate expert Swenja Surminski says.

Flood Re has also been criticised by the British Property Federation, which says thousands of SME businesses which are currently excluded from the scheme may not have access to affordable cover.

“SMEs employ more than 14 million people in the UK and have already seen a marked increase in their property insurance premiums and excesses,” federation CEO Liz Peace said.

“Those in high-risk areas will see the cost of their insurance increase considerably and in some cases they may not be able to secure it at all unless the Government extends Flood Re.”

The British Insurance Brokers’ Association has raised similar concerns and noted a £100 million ($170 million) gap between the Flood Re pool’s limit and reinsurance’s start point.