200,000 homes could be left without flood insurance

| November 26, 2012
200,000 homes could be left without flood insurance

With flood warnings in place across the whole of England, the Association Of British Insurers (ABI) has warned that 200,000 homes could soon be left without insurance.

The ABI claims that it has reached crisis point in its talks with the government over replacing an agreement which ensure that households in area at high-risk of flooding can secure insurance.

The current arrangement, which requires companies to insure high-risk properties while the government continues to improve flood defences, is due to expire next June.

Talks stalled after the government rejected the ABIa��s plan, which the organisation said was ‘simple and elegant’.

The ABI wants the government to share the risk for the areas where homes are at a greater than one in 75 chance of flooding.

It suggests that households should have A?8 to A?10 added to their premiums in order to create a A?100m not-for-profit fund to help cover homes affected by floods.

To support the industry while this fund builds up, it wants the government to approve a temporary, interest-free, overdraft, but this proposal has been rejected.

Unless new arrangements are made, many people could see their premiums rise to prohibitively high levels when the current agreement expires.

Nick Starling, director of general insurance at the ABI, said: “They [talks] have reached a crisis point.

a�?We have had two years to sort this out, during that time the insurance industry’s put a massive amount of work and money into coming up with an insurance-led solution and we seem to have reached an impasse.”

The Government says that talks are continuing with the industry and it has criticised that ABI for making its comments at a time when hundreds of homes are affected by floods.

Environment Minister Richard Benyon said: a�?Ita��s really important for people who live at flood risk to know that the Government is determined to find something thata��s better than the current arrangement.a�?

Around 800 home have already been flooded in the current storms.

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