Draft Flood Reinsurance (Amendment) Regulations 2022

Alex Sobel Excerpts

Wednesday 9th March 2022 General Committees

[Alex Sobel (Leeds North West) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Mr Robertson. I thank the Minister for introducing the draft regulations.

In recent years, we have seen a sharp increase in extreme weather events all over the world. In the UK, storms and increased rainfall have destroyed homes and claimed lives. We are now at a point where communities are faced with flooding on a semi-regular basis. For those communities, flooding brings misery and huge inconvenience. It can also be financially devastating, which is why people living in flood-risk areas must have access to good, affordable insurance.

In my constituency, that happened on Boxing Day 2015, when the River Wharfe flooded parts of Otley. Since being elected in 2017, I have had to support flooding victims on the difficulties of getting reinsured due to the increased risks. Flood Re has been useful to my constituents, so I am particularly pleased to be responding to the draft legislation. Independent research shows that the availability of insurance for householders at risk of flooding is improving, so I am pleased that Flood Re has been successful in that respect. I am also glad that the scheme is financially secure—it has met its initial liquidity and capital requirements, and has a high solvency ratio.

For those reasons, I agree that reducing the levy on insurance companies from £180 million to £135 million a year makes sense. The figure needs to be kept under review, as climate risk will mean that insurance risk will vary. I will continue to monitor that and hold the Minister to account in future years if more support is needed for flooding victims.

Her Majesty’s Opposition have some questions, which I would be thankful if the Minister will help to address. Flood Re proposes to reimburse insurers up to £10,000 for the Build Back Better scheme in order to reduce the future risk of the property flooding and/or the cost of repair. That will mean that property owners can pay for repair after a flood, which makes the home more resilient to flood damage than before. I was pleased that the Minister mentioned air brick covers and other such innovations in her introduction.

I am very much in favour of the support, but I am concerned that, under the proposals, insurers are not obligated to participate in the Build Back Better scheme. Does the Minister not agree that it should be compulsory for all Flood Re policies to participate in the scheme, when we consider the increased threat of flooding and subsequent need to make buildings more flood resilient? Has she considered making the measure compulsory and, if so, what are the reasons for her rejection of that?

In addition, I will express concerns that I know have been raised in the past, but that I am not convinced have yet been adequately resolved. The existing proposals protect only homeowners. Will the Minister consider widening access to the scheme to protect those in tenanted and rented properties? Renters are likely to be more vulnerable to the financial impact of flooding and yet, under the proposals, they are the least protected. Renters are also less likely to realise the flood risk of their property and many renters are in precarious employment that might be dependent on equipment which could be destroyed in flooding, leaving them without income. Insurance becomes the difference between them working and not.

I have also been in contact with farmers, who are concerned that their homes are not protected under the scheme. Will the Minister clarify the status of farmhouses, which fall into a grey area between residential and business premises?

The scheme is targeted towards households at high risk of flooding across the UK. If recent years and the extreme weather events that have defined them are anything to go by, however, we know that high risk—risk in general—is broadening its scope, and areas previously deemed to be safe now experience flooding events never seen before. Therefore, how is “high risk” defined by the Environment Agency, and how are areas reassessed in a way that keeps up with the impact of extreme weather events? I want to know whether the Minister has had discussions with the Environment Agency about risk. I am interested to hear what assessments were made about the changes that might be needed.

Finally, I draw attention to the fact that more than 5,000 new homes in flood-risk areas of England were granted planning permission last year, despite the Environment Agency advising against such developments. Does the Minister agree that the Environment Agency should be given power to ensure that homes are not built against its advice? In my view, that is a crucial change to avoid unnecessary future flooding and the devastation that comes with it. I hope that the Minister will address my concerns.

I can see the Minister desperately looking for her papers, so I will talk for a few more seconds to give her time.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

She is all right.

[Alex Sobel]

The Minister is doing very well. I am sure she will give a full response to all my queries. People up and down the country, whether homeowners, renters or farmers, are all keen to get clarification on those points. She shares my concerns about the increased number of flooding events and the impact of climate change on our rivers. We need to be constantly mindful of the risks involved in potential flooding events. If she does not need more time, I will conclude.

[The Chair]

There are others who wish to speak.