Seal flood cover deal or face blight says Labour
Mary Creagh has urged Ministers to stop dragging their heels in talks with the Association of British Insurers (ABI) and said it was crucial for an agreement to be reached within weeks to ensure cover was both available and affordable.
The Wakefield Labour MP said: “We really need to be planning for the future and the Government is going to have to do a deal immediately. They promised a deal by July this year and we have been waiting and waiting.
“If we don’t get a deal in the next couple of weeks we’re going to see entire areas where people aren’t going to be able to insure their homes. If they can’t insure them they can’t mortgage them and they won’t be able to sell them.
“We’ll see entire communities blighted and we want to avoid that at all costs.”
This summer’s floods have cost British insurers £500m in claims – the worst bill for flood damage since 2007, when more than 27,000 properties were flooded in Yorkshire and the Humber alone.
That year’s floods landed insurers with costs of £2.5bn.
“The Government needs to come up with another mechanism to make sure flood insurance is available across the country, particularly in areas hit in 2007 like Sheffield and Hull,” said Mrs Creagh.
An arrangement between the Government and insurers to provide cover to flood risk homes expires next June and a new agreement has yet to be reached.
If no deal is struck to replace the current Statement of Principles, an estimated 200,000 homes could be left uninsurable.
It was more important than ever to find a solution in the wake of the floods that devastated vast areas of Yorkshire and other parts of the UK over summer and during the past few days, Mrs Creagh said.
“This summer has cost the insurance industry half a billion pounds in claims and we have had flood warnings already for this winter because the rivers are now full,” she said.
“We are in unprecedented times. We are going into winter facing a fairly high risk of flooding because only a small amount of rain will mean potentially floods could happen.”
Most insurance companies already raise a small levy from all policy holders to cover the cost of insuring high-risk homes. The industry now wants to formalise this arrangement and correct an imbalance in the market that means some insurers are able to solely offer products to low risk customers while others have to offer cover to many high risk properties.
It is hoped the Chancellor may announce a deal in his Autumn Statement next month. Neither Defra nor the ABI would confirm what stage talks were at nor whether an announcement was imminent.
A Defra spokesman said: “We want to go further than the Statement of Principles to reach an agreement that ensures both the availability and affordability of flood insurance for the first time.
“The insurance industry and the Government continue to work together towards this goal.”
An ABI spokeswoman said: “Insurers understand the devastation flooding brings and we are determined to do all we can to secure an agreement that makes flood insurance accessible and affordable for those in high risk areas.
“We remain in intensive discussions with Government on an industry-led model we have developed to safeguard the availability and affordability of flood cover.”