Flooding: Insurance

Earl of Selborne Excerpts

Wednesday 26th June 2013 Lords Chamber

[Lord De Mauley]

My Lords, I had hoped we might have a constructive debate about this. However, since the noble Lord has raised the common agricultural policy, perhaps I should say that it was Labour’s leadership in the last round of CAP reform that cost us €550 million in disallowance and led us to the disastrous administration of the single farm payment. We, by contrast, are tackling another immensely complex negotiation on flood insurance in a measured and sensible way. We have to balance the interests of those at high risk of flood, wider policyholders and taxpayers, while the ABI is a membership organisation with a lot of interests to represent. The noble Lord asks about an opportunity to debate the eventual outcome. I would be pleased about that; it is not my role to guarantee it, but I am sure that we will have a chance to do that.

[The Earl of Selborne]

My Lords, to bring the question back to flood insurance, has my noble friend looked at the precedent in America, and are there lessons to be learnt as to how to deal with flood insurance from the treatment of vulnerable homeowners in America?

[Lord De Mauley]

My Lords, that is something to which we have given considerable thought. However, international comparisons provide no clear model. The state-backed national disaster insurance system in the US was in debt to the taxpayer by $17 billion even before Hurricane Sandy struck. Emergency legislation was required in January 2013 to increase the fund’s borrowing by $9.7 billion when the scheme was days from running out of money, to enable claims to be paid. So we have considered it, but it has its limitations.