James Moore: Stormclouds over the insurance companies
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Thursday 03 January 2013
Outlook Most people tend to view long-term weather forecasts with a healthy degree of scepticism. Unless they work in the insurance industry, that is.
Underwriters will have taken careful note of today's figures showing that 2012 was the second wettest year on record. They will also have been taking the predictions that it might not hold that position for long extremely seriously.
In six months' time a deal between the industry and the Government over the provision of cover for people in living areas at serious risk of flooding comes to an end.
That agreement has been extended before, but this time the industry doesn't look as if it's willing to cave in. Long-term forecasts of what the weather will do might be difficult to make with any accuracy. Predicting the costs if the forecasts are anything close to being accurate is rather easier.
What's kept the industry from pulling the plug so far is all those reports on the BBC of anguished householders looking that their sodden homes with tears in their eyes. Having those householders berate their insurance companies for leaving them to swing in the wind is the sort of thing that gives PR departments sleepless nights. Unfortunately, the cost projections of providing flood cover are now giving finance departments sleepless nights, and today's figures won't have helped.
Guess who has the upper hand right now.
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