Home Insurance: Flood-risk Properties Could be 'uninsurable'

More than half a million homes in England could be ineligible for home insurance unless action is taken to protect them against flooding, the insurance industry warned today. The Association of British Insurers (ABI) warned that its members could stop offering flood protection as standard on all home insurance policies, in a report published a year after thousands of homes in Hull were hit by flooding.

The report stated insurers could not commit to covering all the homes identified by the Environment Agency as being at significant risk of flooding, over 517,000 of them, unless the government announced plans for them to be adequately defended.

The ABI added that without government action and stricter enforcement of planning controls to prevent new homes being built on flood plains, some properties could become "uninsurable, unsaleable and uninhabitable". It was also stated that last year's floods in Hull and Gloucester led to 180,000 claims for flood-damaged homes, businesses and vehicles, and that its members had dealt with four years' worth of claims in two months.

More than 17,000 policyholders were put up in temporary accommodation and a total of £3bn was paid out in claims.

Statistics regarding some of those living in the flood-hit areas found eight out of 10 thought the danger of flooding was increasing, while three-quarters did not think enough was being done to tackle the problem. Improving drainage was seen as a top priority for 98% of people, followed by tougher planning controls for new homes. Three-quarters of people believed the government's target of 3m new homes by 2020 should be reduced if it would lead to more homes being at risk of flooding.

Nick Starling, the ABI's director of general insurance and health, said: "These findings reinforce our call for a long-term flood management strategy.

"In particular, we must tackle the problem of surface water drainage. Planning for the future is essential if we are to minimise a repeat of last year's terrible floods, and to ensure that flood insurance protection remains widely available."

A spokesman for the government's communities and local government department said: "If councils properly use the tough new planning rules we have put in place to protect new homes against flood risk, which includes consulting the Environment Agency, it will ensure that all homes are safe from flooding and sustainable for the future - effective surface water drainage and flood defences must also be part of new housing infrastructure."

The ABI (Association of British Insurers) represents the collective interests of the UK’s insurance industry. The Association speaks out on issues of common interest; helps to inform and participate in debates on public policy issues; and also acts as an advocate for high standards of customer service in the insurance industry.

The Association has around 400 companies in membership. Between them, they provide 94% of domestic insurance services sold in the UK. ABI member companies account for almost 20 per cent of investments in the London stock market.

The ABI’s policy work is organised around four main policy departments: General Insurance; Life and Pensions; Financial Regulation and Taxation and Investment Affairs.In addition, the ABI has an expert Research and Statistics Department, and represents the insurance industry to external audiences through its Media and Political Affairs and European and International teams.

The ABI organises a large number of conferences, seminars and other events for the insurance industry. It also publishes research reports and policy documents.