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22-02-2012

Glimmer of hope for Government flood insurance subsidies

There are signs that the Government may agree to subsidise the insurance cover on homes at risk from flooding, after pressure from both MPs and the insurance industry. This pressure has arisen because of the ending of an agreement between UK insurers and the Government on protecting flood-risk areas.

The Department for Environment, Food and Rural Affairs (Defra) has been under considerable pressure to renegotiate a new Statement of Principles with insurers. The current agreement, which ends in 2013, meant that insurers provided flood coverage as standard in home insurance policies in return for extra state investment in flood defences.

Now, a Defra spokesperson has said: “Over the next few months we will consider whether there are feasible, value-for-money ways of targeting funding support to those most in need. We will make further announcements in the spring.”

It seems that this latest move is in response to recent damning criticism from the Public Accounts Committee in the House of Commons. Among its recommendations, it has said that “the Government needs to reach an agreement with the insurance industry urgently and work more closely with the industry to ensure insurance cover is both available and affordable”.

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