ABI Says 200,000 UK Homes May Have No Flood Insurance From 2014
March 20 2012 - 9:21AM
Dow Jones News
About 200,000 homes across Britain face increasing risk of
flooding and may no longer be able to get insurance cover from
2014, the Association of British Insurers said Tuesday.
The warning comes amid concerns that the U.K. government may not
have the funds to build all the needed flood-control infrastructure
despite a continuing rise in sea and water levels due to global
warming.
This raises the prospect that many homes in the country would
have to spend money on flood defences and that insurance premiums
could become too expensive.
A so-called "Statement of Principles" signed between the
government and the ABI in 2000 guaranteed that U.K. insurers would
cover homes in high-risk areas where flood defences were planned to
be completed in five years.
"This (agreement) was renewed in 2008 but it will not be renewed
when it comes to end in 2013," ABI Director of General Insurance
Nick Starling told a property-insurance conference.
"We've kept our side of the bargain. Has government? Well, up to
a point," Starling said. He said that the government has improved
its data and planning processes but the "good spending" it has done
on flood defences "has slowed down."
"We calculate there's about 200,000 homes in the U.K. which, if
there was a completely free market in flood insurance, would either
be unaffordable to insure or insurance will simply not be
available," he said.
British Property Federation Chief Executive Liz Peace said:
"This is a huge issue that is not getting the focus it needs and
time is running out. Its impact will be felt not only by our
industry, but also by banks and mortgage lenders."
"Uninsurable property may be difficult to sell. Banks and
mortgage lenders may not wish to lend on properties in flood risk
areas. Bank covenants and lease obligations may not be met, making
it easier to prematurely end them," Peace said.
Rachael Hill, strategic development and flood risk manager at
the government's Environment Agency, told the conference: "There is
never going to be enough money to protect everybody, everywhere all
the time."
"The money we have during this current spending review is in
excess of GBP2 billion... Flood risk management is not only about
building walls. It is about the advise that we give very
effectively to local planning authorities," Hill said.
"So there will always be a shortfall of money. Whether (the
money) will come from a public purse, a third party or private
persons in the communities, we've got to understand flooding, flood
risk in the future and learn to live with that in many cases," she
said.
-By Vladimir Guevarra, Dow Jones Newswires; +44 (0) 2078429486,
vladimir.guevarra@dowjones.com
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