Flood agreement is good news for home insurance

15 July 2008 / by Rachel Mason
As repeat floods become a real possibility due to excessive rain for the second consecutive summer, the Association of British Insurers (ABI) and the Government have reached an agreement that will make flood insurance easier to obtain.

The floods that hit last summer saw the insurance industry hit for an estimated £3billion for around 185,000 claims. Consequently, the ABI had threatened to stop offering flood damage protection unless more action was taken by the Government to prevent such damage happening again.

Statistics show that around five million people in two million properties live in flood risk areas in England and Wales, and without adequate home insurance, these people could be left footing the bill.

As a result, the Government and ABI have reached an agreement which will ensure that home insurance in flood areas remains widely available now and in the long term. The agreement also outlines actions that the Government will undertake, including a long term investment plan, which will 'set out strategic flood prevention aims and assess future policy options and funding needs.'

Floods Minister, Phil Woolas, said: "The devastation caused by last years unprecedented rainfall has shown just how vital it is for people to be able to insure their homes and livelihoods against the risk of flooding.

"Working together we have succeeded in ensuring that flood cover is available in both the short and long term. I'm delighted that the industry has agreed to work with us to raise awareness and encourage homeowners to take steps to protect their homes where appropriate."

Stephen Haddrill, the ABI's director general, also commented: "This agreement is good news for everyone at risk of flooding. We are pleased that the Government recognises that a long-term investment strategy, adequately funded, is the best way to manage the growing flood threat.

"It will help ensure that the flood insurance protection, relied on by millions of householders and businesses, remains widely available. We will continue to work closely with Government, and review progress each year," he concluded.

The agreement will also aim to make home insurance more accessible to those on a low income. Andy Leadbetter, head of home insurance at moneysupermarket.com, commented:

"Following on from the positive noises made in the final report of the Pitt Review last month we are delighted an official agreement has been reached.

"It is especially encouraging to see the agreement will promote access to home insurance for low income households, meaning those that are most at risk of being underinsured, or worse completely uninsured, are given a helping hand." he concluded.

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