Daily Insurance Industry News
 
 
Daily Insurance Industry News
Monday 19th of February 2018
September 17, 2007

Aon rejects EA flood cover proposal

by Gill Montia

Story link: Aon rejects EA flood cover proposal

Aon rejects EA flood cover proposal

Aon has reacted strongly to a suggestion by Baroness Young, the Chief Executive of the Environment Agency, that the insurance industry should withdraw flood cover in instances where developers plan to build on flood plains, despite being refused planning permission.

According to Bill Gloyn, chairman of European Real Estate at Aon, the Baroness’s suggestion is incredible because it shifts “the responsibility onto insurance companies to be the final arbiters of building development”.

Mr Gloyn goes on to say that the idea “is merely a smokescreen to hide the decades of government under-investment in flood defences”.

The property sector already receives risk management advice from insurers and brokers, and this includes advice about adequate loss prevention in the event of a flood.

However, Mr Gloyn believes that developing that role in the way suggested by Baroness Young would be outside any insurer’s remit.

He also points out that Baroness Young has not taken into account the fact that the withdrawal of property insurance could affect existing as well as new buildings.

In addition, he point out that the removal of flood cover has implications under the 2007 Commercial Lease Code as it would leave the property owner responsible for all repairs.

If flooding occurs, repairs could be long delayed because of lack of funds and property owners may lose rent.

At this point both property owners and their financiers will be in difficulties servicing the debt attached to the property investment and the Government could be pressed into creating some kind of insurance pool, as it has done for terrorism.

 

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