The Government refuses to consider a temporary overdraft for a proposed flood insurance fund. Talks between the insurers and the Government on how to insure flood zone postcode homes and business have broken down. The Government have refused to consider an overdraft facility for a proposed ‘flood insurance fund’.
The ABI called for the Government to commit to a joint flood insurance solution, saying the current talks had reached an ‘impasse’. The news comes after the UK was hit again with heavy flooding over the weekend, with more expected over the next couple of days too.
Insurers and the Government are trying to put in place a replacement for the Statement of Principles, which ensures provision of flood insurance to homes and businesses in risk areas. The statement, an agreement between the Government and insurers, is due to expire on 1 July 2013. The ABI said “the breakdown was caused by the Government’s refusal to provide a temporary overdraft facility to a proposed not-for-profit special insurance fund for 200,000 high-risk households and businesses, which the ABI argues will otherwise struggle to get affordable household insurance or business insurance when the current arrangements end next year”.
The temporary overdraft facility is requesting to be used to pay claims for serious floods which whilst it’s still in its early years and whilst the reserve of monies is being built on. The ABI’s Director of General Insurance, Nick Starling said “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.”