HUNDREDS of York households at risk of flooding could be left without insurance when a deal between insurers and the Government expires.
The national deal – agreed in 2000 to ensure high-risk homes could get flood insurance – finishes in April 2013 and insurance industry bosses have warned it will not be renewed.
Speaking as workmen installed huge sandbags yesterday to protect the Clementhorpe area from flooding by the River Ouse for the first time this winter, the Association of British Insurers (ABI) said the agreement was a “temporary sticking plaster measure” which was now long past its sell-by date.
Director General Otto Thoresen said some people in lower-risk areas were paying more for their insurance to subsidise cover for people in higher-risk areas, and also claimed the insurance market had been distorted, with insurers who originally signed the deal being left with an unfair burden of risk.
The ABI said 200,000 home owners nationwide could be left unable to get cover or facing very expensive charges unless the Government considered subsidising cover for high-risk areas.
Residents in River Street, Clementhorpe, which was inundated in the floods of November 2000, spoke of their concerns, and also called on City of York Council to look again at installing flood defences after it abandoned a pilot project a couple of years ago.
Peter Lockton, who lives in the street and rents out other properties which came very close to being flooded in 2000, said: “I think it’s absolutely terrible. We are already paying much more for insurance – it went up by something like £200 last time from £120 to £300-plus – and this could make it worse.”
Rosanna Gwynn, whose home was flooded in 2000, said: “It’s worrying.” She said she had moved there after 2000 on the basis that the council was going to install flood defences, and she urged it to have another go at installing them.
The Department for Environment, Food and Rural Affairs said it wanted flood insurance to remain widely available and was continuing to work with the insurance industry to ensure that this happened after the current agreement expired in 2013.
“As part of these discussions, over the next few months we will consider whether there are feasible, value for money ways of targeting funding support to those most in need. We will make further announcements in spring.”
About 450 properties across the York area – and many hundreds more across North and East Yorkshire – were flooded in November 2000, but some places, such as Rawcliffe, Elvington, Malton and Stamford Bridge, have since seen flood defences installed or improved.
York council cabinet member Coun Dave Merrett said there was a real potential for some York residents to be left without insurance when the deal expired, leaving potential problems if they ever wanted to sell their homes. “The Government needs to sort the issue out before the national agreement expires,” he said.
He said an “aqua barrier” pilot project in Clementhorpe had been abandoned because of fears there could be a failure. However, the authority had now signed an agreement with the Environment Agency for a feasibility study into a possible flood defence scheme.
Insurers must soak up risk
THE news that hundreds of householders in York whose homes are at risk of flooding may be unable to get home insurance is deeply troubling.
A national deal, agreed by the Government and the insurance industry in 2000, to ensure even homes at a high risk of flooding can be insured, ends in April 2013.
Now the insurance industry is saying that unless the Government agrees to subsidise cover for those in high-risk areas, once the deal expires tens of thousands of homeowners across the country could be left without insurance.
Part of the argument being put forward by the insurance industry for Government subsidies seems to be that people in low-risk areas are subsidising those in high-risk areas.
This seems an odd argument. Because that is surely the case with all forms of insurance – whether for your car, your health, or your life.
There are always some people who are higher risk than others: just as there are those who claim more often than others.
The industry manages this to a certain extent by adjusting premiums to fit risk.
But it is vitally important that those premiums should not be set so high as to be unaffordable. Home insurance must be available and affordable for all.
It is up to the insurance industry, however, to ensure this without expecting the Government to step in and take away all the risk.
Insurance is a risky business. That hasn’t, by and large, stopped the industry from doing very well out of it.
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