Thousands could be locked out of flood insurance by July
An impasse between insurers and government mean deal unlikely to be reached by summer recess
May 21, 2013
Thousands could be priced out of insuring their home against flooding as the government and insurers fail to reach a compromise Almost perennial flooding in certain parts of the country in recent years has led to some insurers doubling their annual premiums for high risk customers. Many are having to cough up £2,000 a year, with more hikes on the horizon.
The government has been in talks with insurers as the end of an agreement between the government and insurers approaches. This agreement, known as the “statement of principles”, obliges insurers to offer flood insurance as part of standard household policies at reasonable rates, providing the government invests in flood defences. Ministers have so far failed to persuade insurers to back a new agreement with “one or two key individuals” holding out.
At present, 75,000 homes pay £500 or more a year for their insurance. Under a free market this would increase to 650,000 homes. At the very top, the number who currently pay more than £2,500 for their insurance would rise from 1,200 homes to 4,000.
Matt Cullen, the Association of British Insurers’ policy adviser on flooding, said: “If a single large insurer decides to stop offering renewals to is high flood risk properties, it could leave thousands of properties struggling to find a new insurer.”