It is terrifying to see, yet again, the damage that heavy rainfall and subsequent flooding can cause; thousands of people have felt the direct impact of the most recent floods across England and Wales, with homes and property devastated and tragically even lives lost.
Given the frequency and severity of flooding in the UK in recent years, there are clearly high priority issues to be dealt with. Every time flooding occurs, the agreement between the Association of British Insurers (ABI) and the Government returns to the spotlight; all the more urgently now given that the ‘Statement of Principles’ is due to expire in mid-2013, and little progress has been made towards a solution beyond this deadline.
Through the Statement of Principles, insurance companies voluntarily agreed with the Government that they would make flood insurance as widely available as possible in the UK, including high risk areas and properties, and guaranteeing to continue offering cover until 2013 on properties where flood insurance was already in place. The insurers agreed this on the basis of a commitment by the Government to invest in considerable improvements to UK flood defences.
It is estimated that there are at least 200,000 homes in the UK at risk of being without insurance after mid 2013, due to their perceived or actual risk of being impacted by flooding, unless a solution is found to follow on from the current agreement.
We repeatedly see the officials of today, including the Prime Minister, emphasising that pressure will be used to make sure that insurers “do what they’re meant to”, by which of course they mean pay for the damage this flooding has caused; whilst insurance companies are often vilified in the press and round the dinner table, it is important and only fair to note that, despite having entered into this agreement voluntarily, insurers have exceeded what is required of them in the agreement, paying out as much as £3bn after the 2007 floods and £174m after the Cumbrian floods of 2009.
It is in fact the Government who have failed to meet their obligations in this agreement, and who need to take responsibility for the situation looking ahead to 2013. Clearly the solution will involve many parties working together; insurers, developers and planners (to avoid building on marsh land where possible), the Government (in terms of meeting their flood defence obligations) and of course all of us, as UK citizens and homeowners.
The silver lining is that there are some insurers who will provide insurance cover in what we would describe as a “non-standard” circumstance, such as with a history of flood, subsidence or unusual construction. Where some of the more mass-market insurers will be driven by post code level decision making, we can help home owners to put their case to insurers and we would advise anyone who think they may have a problem to seek advice sooner rather than later to avoid finding themselves with an insurance problem at their 2013 renewal.
This will not however provide a solution for everyone and a nationwide governmental solution must be an absolute priority.
Andrew Boldt, MD Insurance Tailors