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Insurers warning on floods cover Flood cover talks at crisis point, say insurers
(about 2 hours later)
Insurance companies are warning that a lack of progress in talks with the government could leave 200,000 homes without cover against flood damage. Talks about flood insurance are at "crisis point" and could leave 200,000 homes without cover, according to an insurers' body.
The Association Of British Insurers is discussing how to provide affordable premiums in high-risk areas. Many thousands more householders could see premiums rise if no deal is struck between insurers and the government.
But href="http://www.thetimes.co.uk/tto/news/" >the Times reports the talks are on "the brink of collapse" because the government is refusing to guarantee an overdraft if funds run out. The Association Of British Insurers (ABI) is discussing how to provide affordable premiums in high-risk areas, but says talks are at an impasse.
The Department for Environment insisted it wanted to reach a deal. But the government says there is no deadlock and discussions are ongoing.
The agreement with insurers, reached in 2008, obliges insurers to provide cover for high-risk properties while the government continues to improve flood defences. 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.
It comes as the Environment Agency says some 800 homes have been flooded in the latest storms to hit the UK.
Deadlocked
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.
The Times says the industry had hoped to reach a deal soon which would see 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. Nick Starling, director of general insurance at the ABI, said that the government had turned down its "elegant" solution.
But the paper says the talks are deadlocked because ministers have not agreed to 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. "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.
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