Floods could increase home insurance costs for all
The growing risk of flooding in the UK could lead to an increase in the cost of home insurance for everyone, regardless of where they live.
Britain has been awash with rain for the last three months and with many parts of the country suffering from repeated flooding, insurance companies are likely to miss their profit targets because of the deluge of claims.
A new report from the Environment Agency’s Committee on Climate Change warns that the number of properties at risk of flooding in England is likely to quadruple by 2035 to 610,000, unless flood defences are improved.
An agreement between the Government and insurers which ensures that householders in the UK are able to secure flood insurance expires next year.
If this is not renewed, householders in areas affected by flooding could face soaring premiums or may be unable to insure their properties against flooding.
In order to ensure that insurance remains affordable for these people, the government and the insurance are discussing the introduction of a flood levy.
This would lead to higher home insurance premiums for everyone, with the extra revenue being used to subsidise insurance premiums for households in areas at risk of flooding.
Environment Minister Caroline Spelman said: “The government and insurers are determined to see insurance premiums remain affordable, particularly in light of the pressure household budgets are currently under and the pattern of flood events we have seen over recent years”.
This would prevent insurers seeking a competitive advantage by refusing to offer flood cover to people living in at-risk regions.
The Association of British Insurers estimates that this summer’s floods have caused between £200m and £300m worth of damage, while flooding costs the UK economy £1 billion a year.
3,000 properties have been flooded in the last two months alone.