The insurance industry claims ongoing talks with government over the future of flooding insurance are “more constructive” than they were three months ago, although a deal has not yet been agreed.
A source in the industry said this week that the talks had “moved on considerably in nature and tone”, and that both sides are committed to finding a sustainable solution.
There is currently an agreement between government and insurers that flood cover is provided as a standard part of domestic policies. But this is set to run out next year, resulting in the threat that some householders in high risk areas will be unable to insure their properties. (NCE 19 April)
Speaking last week environment secretary Caroline Spelman said: “This system has existed for more than half a century, and it is a system we all value” but added that the current agreement, known as the Statement of Principles, is “widely misunderstood” and “provides no universal guarantee of flood cover”.
Instead she advocated a risk-based approach to insurance pricing that incentivises households, businesses and communities to reduce their flood risk
The government is known to favour spending its limited budget on flood defences rather than using it to underwrite the insurance market.
Government initially said that a replacement for the Statement of Principles would be announced this spring.