Flood risk emerges from the dynamic interaction between natural hazards and human vulnerability. Methods for the quantification of flood risk are well established, but tend to deal with human and economic vulnerability as being static or changing with an exogenously defined trend. In this paper we present an Agent-Based Model (ABM) developed to simulate the dynamical evolution of flood risk and vulnerability, and facilitate an investigation of insurance mechanism in London. The ABM has been developed to firstly allow an analysis of the vulnerability of homeowners to surface water flooding, which is one of the greatest short-term climate risks in the UK with estimated annual costs of £1.3bn to £2.2bn. These costs have been estimated to increase by 60-220% over the next 50 years due to climate change and urbanisation. Vulnerability is influenced by home-owner’s decisions to move house and/or install measures to protect their properties from flooding. In particular, the ABM focuses on the role of flood insurance, simulating the current public-private partnership between the government and insurers in the UK, and the forthcoming re-insurance scheme Flood Re, designed as a roadmap to support the future affordability and availability of flood insurance. The ABM includes interaction between homeowners, sellers and buyers, an insurer, a local government and a developer. Detailed GIS and qualitative data of the London borough of Camden are used to represent an area at high risk of surface water flooding. The ABM highlights how future development can exacerbate current levels of surface water flood risk in Camden. Investment in flood protection measures are shown to be beneficial for reducing surface water flood risk. The Flood Re scheme is shown to achieve its aim of securing affordable flood insurance premiums, however, is placed under increasing pressure in the future as the risk of surface water flooding continues to increase.