Reshuffle hits deal on flood cover for 200,000 homes

EFFORTS to guarantee household insurance for 200,000 homes at high risk of flooding have been hindered by the recent government reshuffle, City A.M. has learned.

A leading insurer said the recent reshuffle – which saw environment secretary Caroline Spelman replaced by Owen Paterson – has affected the much-delayed discussions.

Members of the Association of British Insurers (ABI) currently agree to cover homes at risk of flooding in return for state investment in flood defences. This deal ends in June 2013 and talks with the government on a replacement deal are still ongoing, leaving homeowners in limbo.

Barry Smith, chief executive of fast-growing insurer Ageas UK, told City A.M. that “a number of a key ministers” departed in September’s reshuffle, leaving “plenty to work on in terms of continuity and transfer of knowledge”. “[The new deal] needs to be now, not with a delay of a few months. There was some positive momentum but we need to bring it to a close,” he added.

A spokesman for broker AA Insurance agreed with this assessment: “The closer we get to 30 June next year, the greater the likelihood that there are properties that will be left without cover.”

The ABI said: “Reshuffles are something you have to live with. We and the government are acutely aware that the clock is ticking. New ministers have to be brought up to speed on the issues and we had a number of meetings with the new minister soon after he took office.”