With changes in weather patterns leading to heightened flood risk areas in the UK, how will the government and insurance sectors respond to the heightened risk?
“Shocking scenes of flooding in Cornwall and around the country. Govt will help ensure everything is being done to help.” This was tweeted by prime minister David Cameron at 2.35 pm on Sunday 25th November 2012.
In the summer of 2012 Britain encountered floods, however government cuts were made that meant just under 300 flood defence schemes have not been put in place that were in line for funding. This means fewer homes have been protected and caused devastation in the recent floods in Britain. There has been concern that insurance premiums for those in the risk areas will increase and possibly some homes may become uninsurable.
The Environment Agency has advised that there are over five million UK homes that are in the risk areas of flooding. The damage that has occurred recently has taken four lives and the cost of the property damage may cost insurers up to 1 billion pounds.
The government has stated that they would like to work something out with the industry and do not want to leave households without flood insurance. They want insurers to provide protection for the areas that are at high risk of flooding, without raising the premiums for householders. However the industry may have to try raising their premiums with other customers to be able to cover the costs if and when floods occur.
Since the devastation in the recent floods, David Cameron announced that an extra 120 million pounds will be needed to help set up defences for 60,000 more homes in the flood risk areas.
It is not just home insurance that has been affected by the floods; many cars have suffered serious damage too. The AA insurance has estimated the cost of cars that have been written off could be up to 14 million pounds. There is also a concern around fraud as the AA have warned that after the cars have dried out they could be sold on with potential damage, rather than car owners making an insurance claim.