AA Insurance has welcomed the announcement today (18 December) that agreement has finally been reached that will complete the legal framework needed to establish Flood Re, which should now be incorporated in the Water Bill during 2015.
Janet Connor, managing director of car and home insurance broker AA Insurance said:
“I’m particularly pleased that Band H (Band I in Wales) homes will, after all, be included in the scope of Flood Re.
“What this means is that insurers will be able to offer competitive home buildings and contents insurance to those most likely to be affected by flooding because claims costs will shared through the Flood Re pool, funded by a subsidy from all home insurance policies. The industry has invested heavily, to the tune of £17m, in helping to develop Flood Re to the point that it can be built into the statue books. It has taken many months of detailed discussions to reach this stage although there is still a lot of work left to do.”
Meanwhile, the so-called ‘statement of principles’ established in 2000 which was designed to enable owners of homes at serious risk of flooding to continue to obtain insurance, although often at high premiums and excesses for flood claims, continues following an extension when it expired in June 2013.
The AA, which operates the benchmark British Insurance Premium Index, believes the new agreement will have a marginal effect on home insurance premiums, which have been falling over the past two years.*
“Although premiums are likely to be higher for homes in areas prone to flooding than those that are not; they will be more affordable than they are now and homeowners will be able to look for competitive quotes.
“Currently, while an existing insurer will continue to offer cover to homeowner with a history of flood claims, it will be difficult find another insurer to take the risk on. Flood Re will ensure that they can look for a competitive quote just like anyone else,” Ms Connor points out.
“But it is vital that that the government continues to invest heavily in flood alleviation and defence schemes.
“Without that commitment, Flood Re will flounder.”
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