Halifax draws on banking muscle to help homeowners in flood areas

Properties in flood prone areas could be eligible for discounted loans to help fund flood prevention measures, if a plan by Halifax General Insurance comes to fruition.
Halifax General Insurance managing director Simon Stevens said that the general insurance division had been talking to the banking division about providing special loans to help mortgage holders develop flood defences. The division includes Halifax, Bank of Scotland and other retail brands in the HBOS group.

Stevens said: "What we want to do is to look at a number of things that we can offer to our customers - for example sponsoring flood defences for individual customers' homes, where perhaps the bank can offer some advantageous financial terms to put flood defences in."

This would help Halifax avoid extensive redlining. "The way we approach flood is that we see it as a very time-honoured universal way of insurance, which is that the many subsidise the few.

"There will be a general subsidised flood rating across all of our pricing to make sure there isn't any room for discrimination against people who are unfortunate to live in these areas."

From 1 January, Halifax General Insurance begins underwriting its own household book after cutting short its partnership with Royal & SunAlliance (R&SA). This means that HBOS' insurance division, which includes esure, St Andrews and HGIS, will have a gross written premium of £1.4bn - this would make it a top ten insurance group based on this year's FSA returns.

Stevens said that as a result of underwriting its own book, Halifax rates in the direct market would become more competitive than previously.

"When were first involved in home insurance R&SA was quite wary about us getting involved in direct insurance because it was looking at what it was doing in More Th>n and it didn't want to sponsor somebody else who was going to take business away from it.

"So the underwriting criteria and the net ratings we had from R&SA were very conservative.

From 1 January there will be a way that we can be much more accommodating to classes of business that we are currently quite conservative about."