27.02.12
Flooding risk causes insurance challenge
Insurance is soon to expire for around 200,000 homes at risk of flooding, unless the Flood Insurance Statement of Principles is replaced.
The Local Government Association (LGA) wants the commitment of this ‘safety net’ to be renewed to protect houses at risk. The Statement means insurers are required to offer insurance to existing customers if there are plans to reduce flood risk within five years, but expires next year.
The LGA claims that without a replacement, this could potentially risk a £11bn liability for areas in Nottinghamshire, Worcestershire, Devon, Kent and Huddersfield.
Clare Whelan, from the LGA’s environment and housing board, warned that councils could not afford to take the risk of such a huge cost.
She said: “It is imperative the insurance industry commits as soon as possible to providing affordable and fair insurance premiums once the current safety net agreement expires next year.
“Some families are already struggling to find cover for their homes, and we run the risk that tens of thousands more could soon face a double whammy of greater risk of flooding while being left unable to get insurance.”
However, Nick Starling, director of general insurance at the Association of British Insurers, said: “Insurers do not want to see people priced out of home insurance and have stood by their high flood risk customers under the Statement of Principles agreement for over 12 years.
“We now urgently need the Government to work with us to ensure that a sustainable flood insurance market is in place once the agreement ends in June next year.”
He added that local authorities “need to commit to investment in flood defences, and ensure that there is no more foolish development in high flood risk areas, particularly given the rising flood risk”.
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