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Daily Insurance Industry News
Sunday 21st of October 2018
October 11, 2007

ABI Will Withdraw Cover For Flooding

by Stewart Douglas

Story link: ABI Will Withdraw Cover For Flooding

The Association of British Insurers has today announced that its members will be unable to provide insurance cover to properties within high risk flood areas if the government sticks to its £800 million per year investment in flood defence mechanisms.

Following the government announcement that it would step up flood defence investment to £800 million on a yearly basis, the Association, covering insurers and brokers throughout the UK, said that it would become increasingly difficult to provide cover to those areas specifically at risk in light of less than adequate capital investment, calling for the government to do more to combat the effect of more severe weather patterns over the coming years.

Insurer Aon also echoed the sentiments of the Association of British Insurers, stating that any withdrawal of cover necessitated by a high risk environment had the potential to seriously upset the balance of commercial relations, and the economy as a whole.

One suggestion put forward by the industry was to have a nationwide insurance fund specifically designed to cater for flood damage, with contributions from policy holders, the industry itself and of course the government.

It is thought that by removing much of the burden directly from insurance companies the spending would be seen as less problematic, and the industry would be more than happy to offer cover to commercial and consumer clients on that basis.

It remains to be seen to what extent the insurance industry will impact upon the government’s policy in relation to flood defences throughout the UK.

The government has today announced it will review its spending policy on flood defences after widesread criticism from the insurance industry and further afield, particularly in light of the threat to household policy cover, and the potentially far reaching economic effects of such a withdrawal.

 

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