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Flood cover talks at crisis point, say insurers | |
(about 2 hours later) | |
Talks about flood insurance are at "crisis point" and could leave 200,000 homes without cover, according to an insurers' body. | |
Many thousands more householders could see premiums rise if no deal is struck between insurers and the government. | |
The Association Of British Insurers (ABI) is discussing how to provide affordable premiums in high-risk areas, but says talks are at an impasse. | |
But the government says there is no deadlock and discussions are ongoing. | |
The row comes as the Environment Agency says some 800 homes have been flooded in the latest storms to hit the UK. | |
Solution | |
An existing agreement, reached in 2008, obliges insurers to provide cover for high-risk properties while the government continues to improve flood defences. | |
Discussions have been taking place for months to try to make sure the arrangement continues after June 2013. | Discussions have been taking place for months to try to make sure the arrangement continues after June 2013. |
The ABI wants the government to share the risk for the areas with the most homes at significant flood risk - defined as a greater than one in 75 chance of flooding in any given year. | The ABI wants the government to share the risk for the areas with the most homes at significant flood risk - defined as a greater than one in 75 chance of flooding in any given year. |
Nick Starling, director of general insurance at the ABI, said that the government had turned down its "elegant" solution. | |
"Our members are out there looking after people who have been affected by these tragic floods and this means that we want a solution even more now after the difficult events of the weekend," he said. | |
"They [talks] have reached a crisis point. We have had two years to sort this out, during that time the insurance industry's put a massive amount of work and money into coming up with an insurance-led solution and we seem to have reached an impasse." | |
Insurers want householders pay an extra £8 to £10 on top of their premiums which would go into a £100m pool used by insurers to cover flood affecting their homes. | |
Mr Starling said ministers had rejected the proposal of a temporary, interest-free, overdraft for the industry, to help it meet the cost of emergencies in the first few years of the scheme while the fund builds up. | |
'Affordable' | |
Environment minister Richard Benyon criticised the ABI's timing by raising the argument when people were suffering from the effects of flooding. | |
But he added that 5.2 million properties were potentially at flood risk and the government was working hard to find an affordable solution to the issue. | |
He said he did not want to see a huge burden being placed on those who pay insurance premiums across the country or on the taxpayer. There was no "bottomless pit" of government funds, he said. | |
There was no deadlock, he added, and the government was open to make sure discussions continued. It wanted a deal that improved on the current agreement. | |
A Defra spokesman said they would be very disappointed if the talks broke down "because our door is always open for further discussions". | A Defra spokesman said they would be very disappointed if the talks broke down "because our door is always open for further discussions". |
"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," he 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," he said. |
"The insurance industry and the government continue to work together towards this goal. | "The insurance industry and the government continue to work together towards this goal. |
"We are considering a number of options to ensure that home insurance continues to be widely available and affordable in areas of flood risk." | "We are considering a number of options to ensure that home insurance continues to be widely available and affordable in areas of flood risk." |
Earlier in the year, a committee of MPs raised concerns about what funds were available to maintain flood defences. | |
It was unclear "where the buck stops" for managing the risk of flooding, a report by the Public Accounts Committee (PAC) said. | |
The PAC said that there was a great deal of uncertainty about whether there was enough money to improve flood defences and protection in the long-term, and who paid for it. | |
Have you been affected by the flooding? Please use the form below to share your experiences with us. |