Flooding Limits Will Help Insurance

The Association of British Insurers (ABI) is warning home owners, who live in areas that are at more risk of flooding, that their properties may not be covered by home insurance policies, unless the Government, intervene and create measures that will limit floods and thus their damaging affects.

According to the ABI, there are 517,000 homes at significant risk of being flooded.  The floods of last summer, cost the ABI’s members £3 billion in claims.  Furthermore, nearly 5,000 homeowners are still living in temporary accommodation, following last year’s floods, according to the Government.  Of these people, it is estimated that at least one in eight households do not have insurance.

Nearly 50,000 properties were affected by the floods from last June and July, with Gloucestershire, Worcestershire, Oxfordshire, Berkshire and South Wales being the worst hit.

Speaking at a One Year On conference today, Nick Starling, ABI’s Director of General Insurance and Health, said: “The Government must take steps to identify and better manage the threat of flooding if cover is to remain widely available.

“Flood cover has been standard for household insurance for almost 50 years and is provided on the belief that floods will not occur more than once in every 75 years, or that adequate defences are planned within the next 5 years if the flood risk is higher.

However, last summer’s floods, which were the worst ever recorded, produced 4 years’ worth of claims in only 2 months.

Mr Starling added: “A sense of urgency in dealing with flooding is required.

Research by the ABI has revealed that 75 per cent of Britons believe that not enough action is being taken to prevent similar catastrophes while 98 per cent believe drainage should be at the top of the list in order to reduce the flood risk.”

Half of the insurance claims made last year, were related to flood claims from the victims affected.  Claims were made because of damage caused by water coming up through drains.  The floods last year revealed that many drainage systems are inadequate to deal with prolonged rain.

In response to the ABI’s findings, Phil Woolas, Environment Minister, said: “It was unfair to suggest that nothing had changed as since last year’s floods.  The Environment Agency and local authorities have undertaken a lot of work to put in place flood defence programmes.

Mr Woolas concluded: “Both the agency and councils are using their powers to restrict building on flood plains.”

Commenting on the ABI's calls for more action to reduce flooding, Andy Leadbetter, head of home insurance at price comparison site moneysupermarket.com, said: “The report out today is another call for the Government to step up its efforts to reduce flood risk and this time the ABI is acting as town crier. It has been one full year since floods hit Britain and homeowners are already finding it difficult to find affordable and competitive insurance cover, especially if they have made a claim for flooding.

“DEFRA announced yesterday the Environment Agency will be responsible for all forms of flood risk management throughout the country. However, adequate funding to increase flood defences in high risk areas is essential, as without this insurers will have no choice but to hike premiums for vulnerable homeowners or even simply just wash their hands of them and stop insuring these areas altogether.”