Ministers are considering an insurance industry proposal to avert a crisis that could leave up to 200,000 households without flooding cover
Under consideration is an Association of British Insurers proposal for a “pooling” arrangement that would commit government to providing an “overdraft facility” for insurers in the case of a catastrophic flood.
The current agreement between government and insurers to provide flood cover in standard policies is set to run out in June 2013, leaving householders in high flood-risk areas in danger of being unable to get cover or finding that it is too expensive.
Talks have been underway since September 2010, with the Department for Environment, Food and Rural Affairs and insurers claiming they want to find a way to ensure that affordable flooding insurance remains available once the agreement runs out.
Earlier this year the Association of British Insurers (ABI), which represents the UK insurance industry, claimed it was “frustrated” with the slow progress of the talks.
It urged the government to accept that it should provide a “safety net” for those in the highest risk areas.
An announcement is due later this spring.