With negotiations between the Government and the Association of British Insurers coming to a virtual standstill in regards to who will foot the bill for flood defences, the ABI has reached out to give a candid explanation of the Governments reluctance to reach agreements.
The Association of British Insurers (ABI) has spoken out against the Government’s approach to flood negotiations, saying;
“The Government has indicated it will not provide any temporary overdraft facility for the insurance industry’s not for profit scheme, which makes it very difficult for it to go ahead. As a result, negotiations have hit an impasse. Insurers know their customers are increasingly worried about flood cover and we will therefore continue talks with Government to try and find a way forward.
“The severe floods experienced by many areas of the UK this year are a reminder of the rising flood risk facing the UK. It is therefore vital that insurers and Government tackle this issue together – this is not just a problem for insurers. No country in the world has a free market for flood insurance with high levels of affordable cover without some form of Government involvement.”
As of yet, there has been no progress in seeing whether the Government and the ABI will come to an arrangement in renewing their current agreement on flood insurance premiums, which is due to expire in June 2013.
The impact of these flood insurance reforms extends beyond home owners, to commercial and agricultural sectors as well. The National Farmers’ Union has reached out to the Department of the Environment, Food and Rural Affairs (DEFRA) on the matter, requesting that DEFRA put in place a subsidised insurance system for farms at risk of flooding.
With the National Flood Forum saying the breakdown in negotiations could ‘spell financial ruin for thousands‘, there are hopes that there will be renewed co-operation between the Government and the ABI.
Discussing the matter this week, ABI spokesman Malcolm Tarling said: “We continue to be in talks with the Government about how we could come up with a solution to see that flood insurance remains affordable and available to people at high risk… We cannot guarantee a solution and if no solution is agreed it will be a free market, but we are 100% committed to working with the Government to come up with a solution.”
One in six homes is at risk of flooding, with nearly 500,000 people facing significant flood risks. It has been estimated that figures could rise to 840,000 people over the next two decades if the UK does not make significant investments into flood defences.
- Previously: Impact on flooding for insurance industries