Y rain continued to bring misery to swathes of the UK last night – as the government locked horns with the insurance industry over the future of domestic flood cover.
A week of poor weather has closed dozens of major roads, while some rail links are out of action and hundreds of homes have been affected.
But recent events have focussed attention on concerns that 200,000 households at high-risk of flooding will not be able to access insurance cover when the current deal runs out in June 2013. At the moment insurers offer universal cover in return for guaranteed government investment in flood defences.
City A.M. revealed earlier this month that talks on a replacement agreement are at a standstill following September’s cabinet reshuffle and yesterday the industry’s representative body broke ranks to confirm that negotiations with the government have “hit an impasse”.
Nick Starling of the Association of British Insurers (ABI) said his members wanted to push ahead with a plan to charge every UK household an extra £10 a year to subsidise a not-for-profit universal cover scheme. But the government has refused to provide the scheme with a temporary overdraft facility, making it “very difficult for it to go ahead”.
“No country in the world has a free market for flood insurance with high levels of affordable cover without some form of government involvement,” Starling added.
Environment secretary Owen Paterson told the House of Commons that the ABI’s statement was “complete nonsense”, although he admitted that finding a suitable solution for the affected homes remained a “conundrum”.
The government is wary of committing itself to the industry’s preferred scheme in case costs spiral out of control. This year’s UK flood payouts are expected to pass £1bn, according to accountancy firm PwC.