Leader: A little help from above

The coalition government is getting tough on motor. In a double whammy, ministers this week introduced legislation that will make it an offence to own (rather than just drive) an uninsured vehicle; and promised to press ahead with plans to share DVLA data with insurers to crack down on fraud.

Both are welcome, and well overdue. Hopefully the transport select committee’s inquiry into rising motor insurance prices, which prompted the second statement, will force a reality check. Action on cowboy credit hire companies and the implementation of the Jackson reforms would be the obvious next steps. When insurance is legally required, the government is duty bound to support the insurance industry in making it affordable for consumers on the one hand, and viable for businesses on the other.

Ministers would do well to remember this principle when it comes to renegotiating the agreement over flood insurance. They should also remember that insurers are not under any obligation to underwrite a risk if it jeopardises their bottom line, and therefore their responsibilities to shareholders and the existing policyholders, who rely on their financial health.

It’s up to the market to find a solution. Compelling insurers to cover flood risks is an unfair and outdated approach – at least without significantly increased flood defence spending. We report this week that Biba is already on the case for a market solution. As it has no doubt realised, helping householders negotiate this maze post-2013 will be a golden opportunity for brokers. The work starts now. IT

ellen.bennett@insurancetimes.co.uk.