This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.guardian.co.uk/money/2013/jun/27/flood-insurance-deal-industry-government
The article has changed 5 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| Flood insurance deal sees fears recede over future cover | Flood insurance deal sees fears recede over future cover |
| (4 months later) | |
| Hundreds of thousands of flood-hit homeowners will still be able to buy insurance after a deal was reached between the government and the insurance industry. | Hundreds of thousands of flood-hit homeowners will still be able to buy insurance after a deal was reached between the government and the insurance industry. |
| The agreement will cap flood insurance premiums, linking them to council tax bands so people will know the maximum they will have to pay. It is expected to protect up to 500,000 households, but they will have to wait until 2015 before the agreement comes into force. Minister Richard Benyon said: "there is still a lot of detail to work out." | The agreement will cap flood insurance premiums, linking them to council tax bands so people will know the maximum they will have to pay. It is expected to protect up to 500,000 households, but they will have to wait until 2015 before the agreement comes into force. Minister Richard Benyon said: "there is still a lot of detail to work out." |
| Under the terms of the scheme, known as Flood Re, all UK household insurers will have to pay into £10.50 each to a fund that can be used to pay claims for people in high-risk homes. But the insurance industry said this already happened informally now, so general premiums should not rise. The scheme will operate for 20-25 years, after which homeowners will be expected to protect themselves. | Under the terms of the scheme, known as Flood Re, all UK household insurers will have to pay into £10.50 each to a fund that can be used to pay claims for people in high-risk homes. But the insurance industry said this already happened informally now, so general premiums should not rise. The scheme will operate for 20-25 years, after which homeowners will be expected to protect themselves. |
| Homes built after 2009 will not be covered by the new cap. Benyon said: "We have to be absolutely sure that some of the mistakes in the past are not made again. We do not believe building should take place in areas of high flood risk." | Homes built after 2009 will not be covered by the new cap. Benyon said: "We have to be absolutely sure that some of the mistakes in the past are not made again. We do not believe building should take place in areas of high flood risk." |
| In the event of a huge flood event, which led to a national emergency, the government would step in if the money in the Flood Re scheme was insufficient. | In the event of a huge flood event, which led to a national emergency, the government would step in if the money in the Flood Re scheme was insufficient. |
| The agreement, which will form part of the water bill, follows months of talks over the future of insurance for properties at risk of flooding. A statement of principles, which obliged insurers to continue providing cover to existing customers but had no provisions for cost, was due to expire at the end of July. That will now continue until the new system comes into force. | The agreement, which will form part of the water bill, follows months of talks over the future of insurance for properties at risk of flooding. A statement of principles, which obliged insurers to continue providing cover to existing customers but had no provisions for cost, was due to expire at the end of July. That will now continue until the new system comes into force. |
| Otto Thoresen, director general of the Association of British Insurers, said his members' priorities had always been to make sure flood insurance remains affordable and available for everyone who needs it. | Otto Thoresen, director general of the Association of British Insurers, said his members' priorities had always been to make sure flood insurance remains affordable and available for everyone who needs it. |
| "Getting to this stage has required compromise by both sides, and there remain issues that need to be overcome," he said. "Insurers and the government are now working towards a shared vision, with Flood Re as the government's preferred choice." | "Getting to this stage has required compromise by both sides, and there remain issues that need to be overcome," he said. "Insurers and the government are now working towards a shared vision, with Flood Re as the government's preferred choice." |
| The cap on the amount households will pay for flood insurance premiums will start at no more than £210 per annum in Bands A and B, rising to £540 per year in B and G. | The cap on the amount households will pay for flood insurance premiums will start at no more than £210 per annum in Bands A and B, rising to £540 per year in B and G. |
| Aiden Kerr, head of property at ABI, said: "The statement of principles didn't address anything about price - just that insurers had to offer a renewal. This new levy is designed to provide those at the highest risk with an affordable level of cover. This will bring an end to anyone having to pay thousands of pounds for their insurance in flood risk areas, or huge excesses – with a standard excess of between £250 and £500." | Aiden Kerr, head of property at ABI, said: "The statement of principles didn't address anything about price - just that insurers had to offer a renewal. This new levy is designed to provide those at the highest risk with an affordable level of cover. This will bring an end to anyone having to pay thousands of pounds for their insurance in flood risk areas, or huge excesses – with a standard excess of between £250 and £500." |
| Owen Paterson, the environment secretary, said there were still areas that need to be worked through. "Flooding is terrible for anyone affected by it, and can lead to worries the next time there is heavy rainfall. We have worked extremely hard with the industry to reach an agreement on the future of flood insurance. | Owen Paterson, the environment secretary, said there were still areas that need to be worked through. "Flooding is terrible for anyone affected by it, and can lead to worries the next time there is heavy rainfall. We have worked extremely hard with the industry to reach an agreement on the future of flood insurance. |
| "People no longer need to live in fear of being uninsurable, and those at most risk can get protection now and in the future." | "People no longer need to live in fear of being uninsurable, and those at most risk can get protection now and in the future." |
| Paul Cobbing, chief executive of the National Flood Forum, said there were still questions about the scheme. "What we don't have are answers to the impact on households, and how affordable and accessible this scheme will be for people, and whether it protects those who are vulnerable. | Paul Cobbing, chief executive of the National Flood Forum, said there were still questions about the scheme. "What we don't have are answers to the impact on households, and how affordable and accessible this scheme will be for people, and whether it protects those who are vulnerable. |
| "However, this is the preferred approach because it actually does what insurance is supposed to do, which is providing cover for everybody and sharing risk between them, whereas other models didn't do this." | "However, this is the preferred approach because it actually does what insurance is supposed to do, which is providing cover for everybody and sharing risk between them, whereas other models didn't do this." |
| The NFF charity said the number of calls to its helpline trebled in the past year, with some callers reporting huge rises in the cost of their cover, and others saying they were unable to sell their properties. Some householders' premiums had doubled to £2,000 a year, and in one case a small business saw its premium rise from £4,000 to £25,000 a year. | The NFF charity said the number of calls to its helpline trebled in the past year, with some callers reporting huge rises in the cost of their cover, and others saying they were unable to sell their properties. Some householders' premiums had doubled to £2,000 a year, and in one case a small business saw its premium rise from £4,000 to £25,000 a year. |
| Shadow environment secretary, Mary Creagh, warned: "The process announced today is fraught with difficulties and may not be completed by the time of the next election." | Shadow environment secretary, Mary Creagh, warned: "The process announced today is fraught with difficulties and may not be completed by the time of the next election." |
| Benyon said new powers in the water bill to directly regulate flood insurance premiums were a "fallback" plan. | Benyon said new powers in the water bill to directly regulate flood insurance premiums were a "fallback" plan. |