BPF calls for urgent renewal of flood cover agreement

The British Property Federation (BPF) is calling for urgent renewal of the flood insurance provision agreement between the government and insurers.

The Federation warns that the 2013 expiry of the current agreement could start hitting businesses and consumers seeking flood cover in just four months’ time, resulting in uncertainty and “prohibitively expensive” insurance premiums.

The existing agreement for flood cover provision between the UK government and insurers – the ABI/government Statement of Principles – is due to expire in June 2013.

However, BPF argues that the uncertain future of flood insurance will hit businesses and homeowners from July 2012 as insurance policies covering the period including June 2013 start to be renewed.

The association warns that the expiry of the Statement of Principles, which it says guarantees near-universal provision of flood cover, could leave around 200,000 homes in high flood risk areas uninsurable and leave homeowners and thousands of businesses facing unaffordable bills.

“This is a huge issue that is not getting the focus it needs, and time is running out. Its impact will be felt not only by our industry, but also banks and mortgage lenders,” BPF chief executive Liz Peace said in a statement. “Uninsurable property may be difficult to sell; banks and mortgage lenders may not wish to lend on properties in flood risk areas. Bank covenants and lease obligations may not be met, making it easier to prematurely end them.”

ABI director-general Nick Starling told a joint BPF/Peter Brett Associates summit this morning: “Insurers are determined that flood insurance remains as widely available and as competitively priced as possible after the current Statement of Principles agreement with the government ends in June next year.

“This can only happen if the government agrees with the industry a new, long-term and sustainable flood insurance model – and the need for that agreement is urgent. The current agreement is well past its best-by date as it distorts the market for both consumers and insurers.

“This is why we need a new approach, based on some form of pooling arrangement, to ensure that flood cover remains available to those at higher risk.”