Rise in the price of home insurance premiums

On 15 June 2012 Jan Harris of Finance Markets reported that recent flooding could lead to higher insurance premiums. Floods currently affecting Wales and south east England could be following by a rise in the price of home insurance premiums, according to analysts.

The heavy rainfall could cause some insurance companies to miss their profitability targets, and there is more rain on the way according to the Met Office, with flood warnings in place across the UK.The heavy floods of 2007 cost insurers £3 billion and were followed by an increase in insurance premiums of as much as 10 per cent.

Prime Minister David Cameron has called on insurance companies to deal with claims from flood victims as a matter of urgency.

Speaking in the House of Commons, he said that the most difficult time for flood victims was when they returned to their damaged homes.

In answer to a question from Ceredigion Liberal Democrat MP Mark Williams, Mr Cameron said:

“I think in many ways the most difficult phase to get right is when people are going back into soaked homes with peeled plaster and all the other problems that come about and making sure they get swift action in terms of help from their district council but above all from the insurance companies and I certainly will work with him to make sure that happens in this case.”

The latest floods have once again raised the question of whether flood cover will still be available after June next year, when a voluntary agreement expires.

The voluntary ‘Statement of Principles’, which has been in place since 2000, ensures that insurers will provide flood cover as long as the Government continues to invest in flood defences.

After the agreement expires, the 200,000 homeowners living in properties at the highest risk of flooding could lose their insurance cover completely or could face premiums and excesses of tens of thousands of pounds.

The Association of British Insurers is in talks with the Government over the issue.

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