The government and Association of British Insurers (ABI) have agreed to work together to meet the needs of the public when it comes to home insurance, after the impact flooding had last year. Here, Helen Barnes looks into the future of flood insurance.
Back in January we looked at the impact flooding had last year on the insurance industry. At the time insurers were still recovering from the multiple floods around the UK, as well as those affected by the severity of the floods, not to mention the lives and homes lost.
The loss hugely affected those in flood risk areas, and continued with concerns that insurance premiums for those in risk areas would increase or become uninsurable.
We have seen the effect this has had on the insurance industry in terms of the increased requirements from our clients for complaint handlers in home and motor insurance.
The government and Association of British Insurers (ABI) agreed to work together to sort out this issue that would affect so many people, and an agreement has now been reached to meet the needs of the public. The new agreement that has been put in place will show people the maximum they will have to pay, and will cap flood insurance premiums which links them to council tax banks. This means that all UK household insurers will be paying into a fund that can be used to pay out claims for people in high risk homes. But how does this increase affect those in low risk areas?
This new agreement will last for the next 20 years. For the time being Defra are making a 6-year commitment to invest in flood defences.
By 2021 more than 300,000 households will be better protected and this will largely help to keep insurance affordable long term. The government are currently spending around £2.3 billion on flood defences such as:
- Improving weather forecasting and earlier warning systems;
- Improving flood protection for homes in high risk areas;
- Ensuring existing flood defences are monitored and in working order.
The government are keen to keep flood insurance affordable and the new Water Bill will be looking to give them more legal powers to keep it that way.
In England 1 in 6 properties are at risk of flooding so this issue could affect a huge number of people. Let’s hope for more summers like the one we’ve had this year!
We would be keen to hear your opinions on the changes and whether you think these are positive or negative for both the insurance industry and the public. Please feel free to share your views in our official LinkedIn group.