The West Country in particular Somerset has recently experienced some of the worst flooding for over 100 years. As we are aware thousands of residential properties have been affected over the past few months causing concern towards insurance claims and future premiums.
After an intensive period of negotiation with the Association of British Insurers (ABI), The Water Bill which is currently being passed through parliament is to introduce a scheme called Flood Re by 2015 which would cap the cost of insurance for vulnerable properties. The idea is to pool a small amount of the premiums paid by every household to ensure flood insurance stays affordable for those facing enormous bills due to living in high risk areas. Up to 500,000 households may be affected. However Brokers are warning that insurance costs for some homeowners are rising sharply and a delay to Ford Re would result in a protracted period without a premium cap.
The Environment Agency does not have a formal role in the transition to the Flood Re approach but should ensure their data is readily available to insurers. The Environment Agency assists the Government in their work with the ABI to support the insurance industry’s commitment to continue to offer flood risk insurance in risk areas. Although they don’t have a role in determining insurance cover a common goal is shared with the ABI to provide information to the public. Assessments are made of the likelihood of flooding also taking into account flood defenses and strict guidelines are in place as to how insurers use this information.
As the current floods continue to devastate households we hope the new legislation will help improve flood risk management and increase resident’s ability to cope and respond to natural disasters. However Flood Re is only a temporary measure and due to last up to 25 years after which households are expected to face market-based pricing which is calculated on risk. This could lead to unaffordable insurance premiums and problems for the housing market.
WBW Solicitors have a long established residential conveyancing practice and our specialist teams are happy to assist you.
Contact Clare Handley, firstname.lastname@example.org 01392 202404