Flood insurance to remain available
Last year's floods cost insurers £3 billion
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Friday, 11, Jul 2008 12:07
Flood insurance will remain widely available after insurers and government reached an agreement following last summer's devastating flooding.
In 2007, flood claims cost insurers more than £3 billion, significantly denting profits, and insurers want assurances the government will try to limit further catastrophes.
The government has agreed to put in place a long-term investment strategy to pay for flood defence and has promised to ensure the planning system prevents "inappropriate" development in flood-risk areas.
In return, the insurance industry said it will continue to make flood insurance for homes and small businesses available, where the flood risk is no worse than a 1 in 75 (1.3 per cent) annual risk and offer flood cover to existing customers at significant risk, provided there are plans to reduce this risk in the next five years.
Floods minister Phil Woolas said: "The devastation caused by last year's unprecedented rainfall has shown just how vital it is for people to be able to insure their homes and livelihoods against the risk of flooding.
"Working together we have succeeded in ensuring that flood cover is available in both the short and long term. I'm delighted that the industry has agreed to work with us to raise awareness and encourage homeowners to take steps to protect their homes where appropriate."
Stephen Haddrill, the ABI's director general, said: "This agreement is good news for everyone at risk of flooding.
"We are pleased that the government recognises that a long-term investment strategy, adequately funded, is the best way to manage the growing flood threat.
"It will help ensure that the flood insurance protection, relied upon by millions of householders and businesses, remains widely available."
The insurance industry has previously warned the cost of last year's floods would make many homes uninsurable unless the government stepped up defences.
In February, the association said many new homes will be "unsaleable, uninsurable and uninhabitable" unless stricter planning rules were introduced to stop building in flood-risk areas.