The ABI must ensure the government sticks to its word.

The government’s ambitious housing plans may be in ruin for a variety of economic reasons but out of their ashes the ABI has finally managed to negotiate a flood cover deal. For the last decade Gordon Brown has been churning out ambitious new house building targets and pumping billions of pounds into a housing sector booming and riding the crest of a wave.

Meanwhile, the ABI had been shouting from the rooftops, citing the plans as unworkable and pointing to parts of the country earmarked for development, claiming that they carried a far too high flood risk. It wasn’t until the catastrophic events of last summer’s floods that the ABI’s pleas for planning restraint finally stopped falling on deaf ears.

But now, with the onset of the credit crunch and the house building sector laying off thousands of workers and scaling back all development, it is more politically convenient for the government to finally reach a deal with the insurer lobby. But will this deal ever see the light of day or will the government renege at a later date?

One view is that the ABI has not struck as good a deal as it first appears. It is a lot more difficult for the ABI to back away from the commitment to continue covering property under threat for a further five years than it will be for the government to renege on any gentleman’s agreement on a broad palette of improvements.

The government may aim to increase flood defence spending this summer or improve the country’s drainage infrastructure and improve the way it manages surface level flooding problems, but will it fudge the delivery in the end? After all, you’ve only got to assess the way it has handled the personal injury reform process and the power of the vested union interests to realise that no deal is ever really done until the ink is dry and it is safely through the legislative process.

In the interim however, the ABI has expertly negotiated this current position with the government, spotting the window of opportunity. The real work must now begin to make sure the government does not back away at a later date. The ABI must use all of its Parliamentary power to make sure that the government stands true to its word, otherwise it will be back to the drawing board and insurers will be in the firing line once again.