Red alert for West Cumbrian flood homes as insurance D-day looms

Times & Star on Friday, 31 May 2013 reported that Cockermouth residents in flood-risk areas could be left without house insurance within weeks if talks between the Government and the insurance industry are not resolved, Workington MP Sir Tony Cunningham has warned.An agreement between the Government and the Association of British Insurers to ensure that flood-hit properties could still get flood insurance is due to end on June 30.

The association has agreed to maintain the status quo of that agreement – known as the ‘statement of principles’ – for an extra month.

It ensures that high-flood-risk properties – which have a one in 75 chance of flooding in any year – can still get cover.

Its extension will give the industry and politicians more time to strike a new deal.

But Sir Tony has accused the Government of dragging its heels, and the association has warned that 200,000 households nationally would struggle to get cover in a free market.

Sir Tony said: “I have been saying for years something needs to replace this agreement. People want flood insurance at a cost that’s reasonable and without an excess that makes it not worth having in the first place.”

In a letter to Sir Tony, environment minister Richard Benyon said the Government was committed to discussions with the association.

But he added: “Even moving to a free market, the Government fully expects flood cover to remain widely available.”

In Cockermouth 424 properties have a one in 100 annual flood risk, which is being reviewed because of the new flood defences. No figures were available for a one in 75 annual flood risk.

Alan Kennon, Cockermouth Flood Action Group member and town and county councillor, said: “It’s a worry for people. If the insurance companies and the Government can’t agree, I don’t know where we can go from there.”

Charles Pollock, of Rubbybanks Road, said: “I think insurance companies would dearly love to just opt out of insuring homes at flood risk altogether.

“Property would be totally valueless without it.”

An association spokeswoman said the existing model was unsustainable as companies could charge unmanageable excesses and customers could not change provider.

She added that the association put a proposal to the Government at least a year ago. It would see premiums capped so that, even if their properties were deemed to be of high risk, policyholders would pay no more than a set fee.

That money, as well as a levy of less than £10 on all other home insurance policies, would go into an industry-wide pot to fund payouts to high-risk customers after a flood.

The association wants the Government to provide an overdraft to meet payouts if flooding early into the agreement saw the whole pot used up. But the Government has yet to agree and the spokeswoman warned that the current situation could not continue indefinitely.

She added: “We are doing everything we can to see if we can strike a deal by the end of July.”

A Defra spokesman said: “Negotiations are at an advanced stage. We hope to resolve the remaining issues soon.”

First published at 13:21, Friday, 31 May 2013
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