Homeowners 'denied flood insurance'
Thursday 19 July 2012
Homeowners are being denied flood insurance because of delays by the Government and insurers coming to a new deal on affordable cover, it was claimed today.
The Local Government Association (LGA), which represents more than 350 councils in England and Wales, said an arrangement between the Government and the Association of British Insurers (ABI) to provide cover to flood-risk homes expires next June, and a new agreement has yet to be reached.
It said that a number of councils have reported homeowners who have tried to renew their insurance in the past few weeks have been denied cover or quoted hugely inflated prices.
It warned that the longer Government and industry stall on a new deal, the more households are likely to be denied cover and exposed to the risk of losing their homes in the event of severe flooding.
Although the Government announced earlier this week that councils would receive reimbursement for clearing up flood damage following record-breaking rainfall over recent weeks, local authorities are concerned that communities will be hit hard if high-risk areas effectively become blacklisted by insurers.
Councillor Clyde Loakes, vice chairman of the LGA's environment board, said: "The extreme weather we have seen over the past few weeks is a stark reminder of the importance of flood insurance.
"It is absolutely vital that Government and the insurance industry come to a new deal on providing affordable cover as a matter of urgency.
"Households are now being refused cover and left exposed to the risks of damage and destruction.
"A new agreement should have been sorted long before now and the continuing delays are having a very real and severe impact on thousands of people who will be exposed to the risk of losing their homes if they are unable to find insurance."
Councils have been calling for clarity on arrangements to replace the current statement of principles for the past two years.
The LGA said that when the north west of England was hit by floods earlier this month, one local authority found that an estimated 100 out of 800 homes affected were without insurance.
Local authorities also know of people in areas including Nottinghamshire, Worcestershire, Devon, Kent and Huddersfield who have been refused or priced out of home insurance because of flood risk.
But the ABI refuted the claims. Nick Starling, ABI director of general insurance, said: "It is wrong for the LGA to paint a picture of insurers leaving their customers in limbo on flood cover.
"Insurers continue to honour their commitments under the current agreement with Government, providing cover to their customers in high flood-risk areas as a standard part of home and small business insurance.
"Insurers are determined that flood insurance remains available and affordable and we are currently in constructive discussions with Government to explore how we can achieve this."
A spokesman for Defra 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."
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