“Small” number of leaseholders in high risk areas will be able to access affordable cover - insurers

The government hinted at a softer stance on Flood Re exclusions following a meeting yesterday with insurers today over the storms crisis.

Senior ministers said they want evidence from leaseholder groups to support their claim that tens of thousands of leaseholders will be unable to access affordable insurance under the government scheme.

It also called for small business groups to come forward with evidence of problems accessing competitive flood insurance.

During the summit insurers said they continued to provide insurance on a competitive basis to SMEs, and that the small number of leaseholders in high risk areas who will not be covered by Flood Re would still be able to access affordable insurance commercially.

Flood Re will exclude residential leasehold properties, private landlords, SMEs, housing association homes, houses built after January 2009, council homes and properties in council tax band H.

Businesses are not covered by Flood Re and the government said it would be inappropriate for a consumer levy to fund commercial organisations. But it said it would pass evidence of freeholders or SMEs unable to access insurance to the industry.

An alliance of trade associations, including the British Property Federation and the Council of Mortgage Lenders (CML) has previously argued that many millions of properties are likely to be excluded, including five million leasehold properties and four million homes rented out by private landlords, rather than the industry-cited estimate of 9,000 homes.

Insurers restate commitment to flood-hit customers

At the meeting in Number 10 today insurers also agreed to supply a team of technical experts to the government to advise on the allocation of the new “repair and renew” grants, announced by the prime minister last week.

The grants are expected to top up any money received from insurers to ensure flood resilience is built into homes and businesses as they are repaired.

Ministers will also draw on independent research to quantify the expected impacts of the grant scheme on the cost of insurance.

ABI director general Otto Thoresen said: “Insurers assured ministers the situation is under control and that customers have been helped speedily and effectively since the flooding and bad weather began in December. 

“They emphasised the long recovery process ahead and their commitment to helping customers through this difficult time.”

The insurers will continue to operate 24 hour flood helplines that can authorise immediate emergency payments at any time of the day or night, while ministers asked the companies to use lines with local network rates rather than premium rates.   

Ministers and the insurance companies have also agreed that they will work together to ensure that Flood Re will not just cover the repair of properties, but also support, where possible, better protection against future flooding.

AXA Group chief executive Paul Evans said: “Our message to government today was that supporting our customers through the trauma of flooding is exactly what we are here to do; we are very experienced at it and we are all extremely focused on the immediate and long term needs of our customers. 

“We have assured ministers that from the perspective of the claims of our customers, everything is under control.”

They also restated their commitment to voluntarily maintaining the 2008 Statement of Principles on flood insurance until Flood Re becomes operational in 2015.

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