Talks between the government and insurers about the provision of flood cover for high risk homes and businesses are still deadlocked, NCE can report.
An existing agreement between the government and insurers runs out in June, and if a solution is not found, 200,000 high risk homes could be left without insurance cover for flooding.
Last year The Association of British Insurers (ABI), which is negotiating on behalf of the insurance industry, proposed a solution that involves the government providing a “temporary overdraft facility” as a contingency while the industry builds up enough funds to pay off claims in the event of a major flood.
Ministers are reluctant to agree to any solution that would involve public funds being used to underwrite insurance, and has so far rejected the plan.
But the insurance industry says it will repay the government money with interest as soon as enough funds have built up - possibly within a year.
ABI head of property Aidan Kerr said the proposal is “the only workable model to safeguard both the availability and affordability of flood cover”.
“No country in the world has a free market for flood insurance with high levels of affordable cover without some form of state involvement, and the ball is now in the government’s court to commit to the industryled model and provide certainty to those at high flood risk,” he said.