An agreement between government and the insurance industry over the future of flood insurance is imminent – but could see householders paying out extra costs. as reported 17 July 2012 by the North West Evening Mail. The insurance industry has an agreement with the government – which runs out in 2013 – committing it to provide cover for customers, as long as flood risk is properly managed.But the situation after 2013 is still subject to ongoing discussions with government and the insurance industry.
Environment secretary Caroline Spelman said recent events, including flooding in South Cumbria, underlined the importance of safeguarding the widespread uptake of affordable insurance. Under plans being looked at by government and the insurance industry, households could face higher premiums under a scheme that would ensure 200,000 homes in areas at high risk of flooding can still get cover.
Any house that would normally incur a much higher premium because of flood risk would have the extra paid out of a levy on every home policy in the UK.
Ms Spelman said: “We want to go further than the Statement of Principles to reach an agreement that ensures both the availability and the affordability of flood insurance for the first time.
“The insurance industry and the government,working closely together, have made great progress towards this goal.
“The best and most sustainable way of keeping insurance affordable in the long-term is to help prevent flooding in the first place. We are spending more than £2.1bn on flood risk management, and are on course to exceed our goal to better protect 145,000 homes by March 2015.”
Ms Spelman announced government will now reimburse local authorities for all of the money they have spent on cleaning up after the floods above 0.2 per cent of their budget. She also insisted the effects of the recent floods would have been worse if councils and the Environment Agency not been so well prepared.