UK floods: Severe weather set to continue as it emerges 200,000 householders may lose home insurance policies

Three people have already died in the latest spell of severe weather, with hundreds more force to flee water-logged properties.

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Government ministers are at loggerheads with the insurance industry in a rancorous row about flooding, after 200,000 people in high-flood-risk areas were warned they could lose their home cover.

As the current flooding, the worst since 2007, affects more and more towns and villages across Britain, ministers traded accusations with insurers about the worrying possibility huge numbers of households in areas of flood risk could become uninsurable from next year.

After the first major flooding of recent years, in the autumn of 2000, the Association of British Insurers  agreed a “statement of principles” with the Government, promising that people in risk areas who had insurance would continue to be offered it. But this agreement runs out next year, and to replace it, the ABI has proposed a fund based on an annual levy of about £8 on all Britain’s 25 million insured properties, which would enable premiums of high-flood-risk homes to be kept affordable. Otherwise, the industry says, they would rise so high that such houses would, in effect, be uninsurable.

Yet to cover its operations in its early years, the ABI has asked the Government for an “overdraft” which might be drawn on if a very severe flooding episode swallowed up the youthful fund in its entirety. Such an overdraft would be paid back in full within a year, the insurers say – but the Government has refused to countenance it.

Nick Starling, director of general insurance and health at the ABI, said: “We want a solution even more now after the difficult events of the weekend...but we seem to have reached an impasse.”

Environment Secretary Owen Paterson accused the insurers of being alarmist. “There are a lot of people across the country who are going to face some very bad weather over the next few days,” he said. “Many people are extremely worried and I think it is not helpful to alarm people when we are in close, detailed negotiations.”

He insisted the Government was “completely determined” to come up with an affordable and comprehensive scheme that did not burden taxpayers.

But just what losing cover might mean was being dramatically brought home across Britain as the floods entered their sixth day. More than 900 homes have already been hit, with 70,000 more issued with flood warnings, and it may be tomorrow before the worst of it is over.

There are likely to be more such floods: a Government-commissioned report published in January said by 2080 annual damage to property from flooding could reach £12bn per year, compared with current costs of £1.2bn.