Insurer bosses prepare to work with ministers following CSR
Towergate executive chairman Peter Cullum has blasted the government’s decision to slash funding for flood defences, warning that premium rates will rise and people will struggle to obtain cover.
The government announced last week that it will reduce funding from the current level of £2.15bn over three years to £2bn over four years.
Cullum said: “From my perspective, this is the result of flawed thinking. Inevitably, insurers will be forced to significantly increase premium rates, and homeowners on flood plains will find it increasingly difficult to obtain cover at all.
“Insurers are not here to bail out government departments making unintelligent budget cuts,” said Cullum, who strongly backs the government’s overall deficit-reduction programme.
The government and insurers are locked into a deal until 2013 called “statement of principles”, under which insurers will continue to insure homes at risk of flooding in return for a government strategy to tackle funding.
Ageas chief executive Barry Smith, who chairs the ABI’s flood working party, said insurers must focus on the best way of spending the money in the short term. He stressed that insurers must continue to influence the decision-making of the government on important issues such as infrastructure, planning permission for flood-prone homes and, ultimately, the next round of flood defence spending. Smith also wants insurers to begin work immediately on preparing a course of action for when the statement expires.
RSA chief executive Adrian Brown said that, overall, the government’s commitment to flood spending is a “positive step”. He said: “Barry and I are on the same page with this, in that we need to continue a dialogue with government and look at the different ways in which you can provide insurance cover for people in homes.”
According to the Environment Agency, for every £1 spent on flood plain defences, society makes a future saving of £8 in terms of reduced damage.