James Moore: Flood Re can mop up this water problem but what about the future?

Outlook Bring on Flood Re. The most recent estimate of deluge-related damages from the Association of British Insurers stands at £426m. If that sounds rather low, it's worth remembering that it only covers the festive period and new year up to 8 January.

It's also true that the floods have largely affected low-lying areas where premiums were set in anticipation of such events, mitigating losses. However, the River Thames is lapping at the bottom of the gardens of some of Britain's more expensive properties, so that could soon change.

It says much that Hiscox yesterday warned premiums may have to rise. Hiscox, of course, is a Lloyd's of London business that successfully branched out into the somewhat specialist area of providing cover to the wealthy. So it has more than a passing interest in what the Thames does next.

Events like this are becoming more common, and it's not climate scientists saying that to upset UKIP. The information comes from insurers' modelling.

Of course, next time it might not be such an issue because Flood Re will take the strain. Everyone with a UK policy pays a levy into its coffers so those facing flood risk get protected for an affordable sum.

Insurance is based on mutual pooling; this just does it on a grand scale, and it makes a lot of sense even to those (like me) who live at or near the top of hills.

As such it applies Polyfilla to the cracks in the old deal between Government and the industry. That required existing insurers to continue to provide cover to those at risk. Unfortunately it didn't restrict prices (so insurers made them unaffordable) and new entrants could anyway ignore anyone living down dales while offering cheap and profitable home insurance to those up hills.

But Flood Re only deals with an existing problem – how to ensure that those at risk of flooding now can get affordable cover. The future presents another problem. There is a crying economic and demographic need for new homes to be built. Attempts have already been made to relax planning rules that prevent this. What happens if they get built on flood plains in the future? Or places that might become at risk of floods (remember it's not just climate scientists warning that this problem is getting worse).

Flood Re, now advertising for a CEO, isn't supposed to cover new builds.

Prospective new-build owners had better check flood maps (assuming they can find them) because they're on their own.

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