Aon request government action on flood insurance

by Richard Kilner

Story link: Aon request government action on flood insurance

The government’s pledge of £800m yearly to invest in British flood defences is inadequate and may cause insurers to not offer flood protection policies, the Association of British Insurers has announced.

Following the impending withdrawal of household cover the government has decided that its funding decision will be reviewed.

Aon has stated concern regarding the effect upon commerical policyholders should cover be removed. The firm’s chairman of real estate in Europe, Bill Gloyn, has expressed his feeling that high risk, uninsurable regions will become more widespread should the ABI threat be carried out.

He added that of particular concern to property owners was potential interruption of rent payments from tenants, which would create problems servicing debt payments to their banks.

Gloyn suggested a government sponsored insurance pool to handle claims could be a solution, as occurred in the City of London in 1992 following the withdrawal of market cover for terrorism.

Gloyn believes that the ultimate responsibility for finding a way through the difficulties over flood insurance rests with the government. Either creating a pooled insurance arrangement, similar to the City of London’s terrorist protection, or, preferably, by committing sufficient funds to the flood defences to convince insurers that maintaining flood coverage is financially viable.