News Review: General Insurance


Government must consider flood cover


by Gary Little, head of key accounts, Assurant Intermediary


in January 2006, members of the association of British insurers renewed their commitment to make flood cover as widely available as possible in exchange for appropriate flood management by government. the aBi laid out its approach in its Statement of Principles on the Provision of Flood cover, clarifying where cover would be available as a standard feature of a policy and where they would examine risks on a case by case basis – in areas of significant flood risk where no improvements in defences were planned, for example. continued this


of


operation statement


depended on government progress on a number of action points including maintaining


investment


in flood management and implementing reforms to the land-use planning system to ensure new developments did not lead to an increase in national or local flood risk.


Agreement to end this agreement between the aBi and government comes to an end on 30 June 2013. While the amount of money that is being put into flood defence is significant, the chairman of the all Party Parliamentary group on insurance & Financial Services admitted earlier this year that it has reduced by a margin of 15% or so. the


aBi has openly said that the Statement of Principles is no longer fit for purpose and it is widely accepted by insurers and government that it will not be renewed. around one in six properties – five million homes and 185,000 businesses – in england are currently at risk of flooding according to the aBi. Speaking at an insurance industry event back in october, the aBi’s flooding policy manager urged a shared responsibility between insurers and government to deal with at-risk properties. Such a proposal would mean that homeowners living in high flood risk areas could potentially see their insurance part-covered by government subsidies. the aBi has also


expressed concerns that the government’s proposals to give local planning authorities more powers in the planning process could lead to a rise in developments being built in flood risk areas. it has called for safeguards to be included to avoid such an outcome and possibly a nightmare scenario of unsaleable, uninsurable and uninhabitable properties. the aBi has called for discussions to start sooner rather than later to avoid an outcome that could see homes and businesses going uninsured. reaching a new agreement is a major priority for the insurance industry over the coming months and it is clear that a market led solution will be needed to ensure homeowners and businesses in flood risk areas can access cover that is available and affordable in the future.


12 mortgage introducer JANUARY 2012


Drought fears


it may seem like going from the sublime to the ridiculous, but moving away from the subject of floods there is growing fear that drought could affect parts of the country next year. despite the showers that made June feel more like april and washed out many summer holidays, 2011 was a record dry year. it feels a bit odd to be talking about drought not long after people have taken down their christmas decorations, but the lack of rainfall over the past few months means that groundwater levels are still falling in many areas. at this time of year, the environment agency would expect the ground to be fully saturated and the autumn and winter rainfall helping to replenish supplies ready for the spring and summer. Some water authorities


have been granted permission to pump water from rivers to top up shallow reservoirs that should be seeing far more rain at the moment in preparation for the coming year. all this means that the


threat of subsidence in drought-affected areas has increased. the south east of england is one area in particular that could be affected, as a significant


percentage of subsidence damage is due to the shrinking clay soil commonly found in this part of the country. thames Water has told customers to conserve supplies after the firm was forced to use an underground reserve in London last month for the first time in six years. this comes after below- average rainfall for 15 of the past 19 months.


Subsidence if you have clients in areas that have been warned that they may experience a drought into next summer, it might be worth discussing the warning signs of subsidence and what they need to look out for. trees and hedges planted


too near to buildings take moisture from the soil, extending their roots and causing the ground to shift and the building’s foundations to crack. other contributing factors are blocked or damaged drains which may leak water and wash away soil. many cracks are innocent and often close up during the wetter winter months – but if they don’t, or grow beyond 5mm in width, then it could be time to call the insurance company!


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