We’re delighted to hear that – at last – a provisional deal has been reached over affordable flood insurance. The new Flood Re agreement will cap flood insurance premiums and link them to council tax bands, so that people will know the maximum they have to pay.
We’ve written about the previous agreement, called the Statement of Principles, in previous blogs, and an extension to this was due to run out at the end of July. Under this previous scheme, insurers provided cover for properties in high-risk flood areas in return for extra state investment in flood defences. If a new agreement had not been reached, it was estimated that around 200,000 householders would face difficulties in covering their properties, which would also have affected mortgage offers and property values.
The last-minute announcement of Flood Re involves an industry-backed levy to support insurers in covering those at most risk of flooding. All UK household insurers will pay into this pool to create a fund which will then be used to pay flood-related claims in high-risk areas.
It’s not completely resolved though: this is only what is called a ‘Memorandum of Understanding’. The proposal will only be given legal backing when the new Water Bill has passed through Parliament, and this isn’t likely to happen until 2015.
But it’s really good news.