Insurance in doubt for homes at risk of flooding home

The Association of British Insurers (ABI) says cuts in Government funding for flood defences are “bound to have an impact” on the protection of communities, and is stepping up pressure on Floods Minister Richard Benyon to start explaining exactly how the gap will be filled.

Thousands of homes in areas of Yorkshire at risk of flooding are only guaranteed cover for their homes at the moment because of a deal between the insurance industry and Whitehall which is due to expire in 2013.

Serious questions have been raised over whether that can be renewed after the Government cut spending on flood defences by about a quarter.

With public spending being seriously squeezed, the Government is planning a new system to get flood defence projects built and a consultation – which included the possibility of Ministers part-funding schemes alongside a contribution from the community which benefits – ended recently.

Now the ABI is calling on Ministers to spell out their plan for the future, suggesting that a new deal is far from definite.

An ABI spokesman said: “The harsh reality that we all must face is that flooding is not going to go away. Flood risk and flash floods are predicted to get worse. And if the Government are going to give some responsibility to communities for flood management, they must provide more details to help them.

“The Government must offer direction, help and support now so that people in Cornwall can prepare themselves before the next flood hits.”

Yorkshire has experienced the full devastation of flooding which hit York in 2000 and wreaked havoc in Hull and South Yorkshire in 2007, costing millions to repair homes and businesses.

In 2008 the Government and the insurance industry agreed a Statement of Principles, which guaranteed cover to existing homes in flood-risk areas until 2013.

But insurance companies have raised serious questions over whether that can be renewed after Government funding for flood defences was slashed earlier this year.

Yorkshire has been particularly badly hit, with capital investment of £16.9m for the next financial year, a 41 per cent cut from this year’s £28.7m. The cuts meant that a £190m Leeds flood defence scheme – which would be built along a 19km (11.8 mile) stretch of the River Aire and help to protect 3,500 homes and businesses – has been shelved along with planned work in Thirsk and York.

The ABI said it “hoped” those at risk of flooding would still be able to insure their properties and businesses after 2013, but said the Government and the public needed to “take responsibility” for managing flood risks as well.

Insurers are “determined to do all they can to ensure that flood insurance continues to remain widely available”, a spokesman said, stopping short of guaranteeing a deal will be renewed.

Mr Benyon has suggested communities will have to contribute towards schemes in future, rather than relying on the Government to fund the full costs. Under one projection in the Government’s consultation on the idea last year, residents and business would be expected to find £600,000 for a £2m scheme.

According to the Government, 5.2 million properties in England are at risk of flooding – 1.4 million of them from rivers or the sea, 2.8 million at risk from surface water and one million at risk from both.

The Department for Environment, Food and Rural Affairs said it expected to spend at least £2.1bn on flooding and coastal erosion over the next four years, an eight per cent cut on the previous four years.

A spokesman said it expected to give an idea of the future direction for flood defence funding next month. A spokesman said: “On the Statement of Principles we’re working really closely with the ABI – they’re involved in a working group to decide how we’re going to go forward with that.”