The article about flood insurance, "The state must bear the flood risk", (News Analysis, 19 April) raises some timely issues.  

The government's position on provision of compensation or insurance for flood damage has always been clear. Nick Raynsford when Minister for Planning, told parliament in 2000: "That would not be a wise or sensible position for any government to take."  

The many governments around the world which do provide such cover were too polite to comment on the implications of that statement.

It is not surprising that brokers, property developers, and estate agents want government insurance for new flood plain development in England. They are beginning to realise the problems of selling new houses to private buyers in flood plains if the buyer cannot get insurance, because without insurance they cannot get mortgages.  

The top four property developers make £1.6bn profits every year.

A worrying trend is that property developers are increasingly using flood plains not for private housing but for social rented housing for low income families, homes for the elderly or disabled, schools and hospitals.

Planning policy and insurance problems in England are leading to the creation of ghettos of the most vulnerable people in flood hazard areas.

There are now over 2,000 schools and 80 hospitals in flood hazard areas in England. And 18.2% of the population in England have a limiting illness or disability, with 7.6% aged 75 or over.

The recent judgment in Tate Galleries v Duffy (2007) is very significant in that for the first time in 30 years, there is now a sensible legal definition of 'flood' which is in line with the new EU Flood Directive.  

This opens the way for insurers to offer household and small business policies subject to a general exclusion of flood risk, or to apply a standard large excess for flood damage claims to all policy wordings at renewal, perhaps with the option to "buy back" flood cover for an additional premium depending on the risk.   

Much will depend on whether the mortgage lending industry will accept such general limitations of cover.

If insurers take this approach it will put more pressure on the government to change planning rules in England, or alternatively to offer flood insurance underwritten by the taxpayer. It should be borne in mind however that where government does provide flood insurance, as in the US, it is characterised by high premiums, despite costly subsidies from taxpayers.  

This is due to low take-up rates (less than 50%), high adverse selection, low underwriting and claims handling standards and inefficient administration. It also encourages flood plain development, so no doubt property developers would approve.

Given that it appears that in future the flood plains of England will be increasingly populated by the very poor and the very old, perhaps the UK government should consider extending housing benefit to cover the cost of paying insurance premiums for contents insurance?  

While the number of owner-occupiers with contents insurance is growing (from 89% in 1995 to 93% in 2004), only 39% of tenants in the social rented sector in England and Wales had contents insurance in 2004. (In Scotland, the figure is 57%.) Three million low income house-holds in England are uninsured for contents.

Finally it should be noted that while 11% of new housing in England since 2003 has been in flood plains, such developments are forbidden under planning policies in Scotland, Wales and Northern Ireland.  

Insurance availability is not an issue in Scotland thanks to flood liaison and advice groups (Flags) which now cover 94% of the population.

So this is very much a problem for England, not for the rest of the UK. Members of the CII can access more information from the Flood Fact File  on the CII website.

David Crichton is visiting professor at Benfield UCL Hazard Research Centre, and author of the CII Flood Fact File