Worries over flood insurance ‘left to unregulated market’

The National Flood Forum fears a recent Ministerial Statement from Defra suggests the Government is set to leave flood insurance to an unregulated free market.

Defra Minister Richard Benyon was due to announce his proposals for a new framework of flood insurance to replace the “Statement of Principles”, a gentleman’s agreement between the insurance industry and Government, which gives some assurance that householders will be offered insurance after a flood.

But the Ministerial Statement included nothing to suggest that the Government would take any steps to replace the SoP.

National Flood Forum chairman Charles Tucker said the Government was failing in its duty to provide assistance to the thousands of people affected by flooding – or will be in the next few decades. Some people have seen their insurance premiums go up five-fold since 2007, and excesses for claims have increased from a few hundred pounds to £5,000 or £6,000.

The NFF has suggested creating a funding pool to shelter those at the highest risk of flooding from extreme insurance costs from a one or two per cent levy on all those buying insurance, reasoning that flooding affects communities in ways beyond the individual.

Mr Tucker said: “We feel very let down by this lack of leadership from Government – and so will the thousands of communities throughout the country where getting insurance after a flood is becoming more and more expensive.

“We called on Government to take the lead to ensure that flood insurance was fair and affordable. Now they seem to be walking away.”

The charity has worked closely with Defra, the Treasury, the Environment Agency, the Association of British Insurers, Local Government Association and others over the past 12 months to find a replacement for the SoP.

Mr Tucker said “All this time and effort will have been wasted if Government fails to provide the leadership we expect from them. Flood victims will be dismayed and frustrated by the lack of any clear direction from Government, after more than a year of discussions and workshops designed to find solutions to the ever-growing difficulty of finding flood insurance once you have been flooded.

“It’s Government’s job to take the lead here – and we’re desperately disappointed and frustrated that they are not doing so.”

Speaking last week Environment Minister Richard Benyon said he wanted a new “shared understanding” agreed by the Spring and said his priority was to improve flood defences rather that subsidising insurance premiums, which he said would “do nothing to protect against the wider, non-monetary, health and wellbeing impacts of flooding”.

Otto Thoresen, director general of the Association of British Insurers, said the Government seemed to be “listening less and less”.