After months of talks, on 29 June the government announced it has now reached an agreement with the Association of British Insurers (ABI) to ensure that homeowners will continue to be offered insurance cover, whether or not they are in an area that is susceptible to flooding.
A not-for-profit fund – to be known as Flood Re – will be built up from a levy charged to insurers to cover the cost of insuring homes that are at risk. According to the ABI, this equates to a levy of £10.50 on annual household premiums. The aim is for Flood Re to be up and running by summer 2015. In the meantime the current arrangements will remain in place.
Under the new plans, the flooding element of household insurance premiums will be capped at £210 a year for those living in homes in council tax bands A and B. This cap will rise for bigger homes to £540 a year for homes in band G. Homes in band H, and homes built after January 2009, will not have a cap.
Commenting on the new arrangements, ABI Director General Otto Thoresen said: “Flood Re would be a major undertaking for UK insurers and… reflects the industry’s desire to cover flood risk at an affordable price in the face of the increasing flood threat in the UK. The hard work now begins for both sides if we are to make this vision a reality”.
