Flooding: Insurance

Lord Dubs Excerpts

Wednesday 18th July 2012 Lords Chamber

Asked By

[Lord Dubs]

To ask Her Majesty’s Government what discussions they have had with insurance companies to ensure that affordable flood insurance is available for householders in areas considered to be at risk.

[Lord De Mauley]

My Lords, Ministers have met with a range of representatives from the insurance industry, including the Association of British Insurers. Together, we are looking to deliver a new approach that genuinely addresses the availability of flood insurance as well as securing its affordability for the first time. A number of options are being considered that would allow policyholders in high flood-risk areas to continue to secure affordable insurance without having an impact on bills more generally.

[Lord Dubs]

My Lords, the Minister’s statement is welcome but is he aware that, given that thousands of homes have been devastated by floods in recent years, at present some insurance companies are imposing swingeing increases on premiums in order to deter householders, some of whom have to go to other companies that then bear all the risk? The insurance industry needs to put its house in order. Will the Minister take all that into account in his negotiations with the industry?

[Lord De Mauley]

Yes, my Lords. Although this is not exactly a declaration of interest I ought to say that my former home was flooded in 2007, so I have been through the process of claiming on the insurance. We recognise that the price of insurance is rising in areas of flood risk and has the potential to become unaffordable for some. This is precisely why the Government, working closely with the industry, are considering an internal industry levy which would allow policyholders in high flood-risk areas to secure affordable insurance without having an impact on bills more generally.

--- Later in debate ---

[Lord De Mauley]

My Lords, although it is early days in the negotiations, there are certainly a number of options as to which route could be followed. What my noble friend says is a very valid point and will certainly be taken into account.

[Lord Dubs]

My Lords, perhaps I may feed in one further point for the negotiations. Does the Minister agree that postcodes in the country often cover very large areas, encompassing both high-risk and low-risk properties? Does he further agree that it would be better if the insurance industry used Environment Agency maps to identify the risk for more specific locations?

[Lord De Mauley]

My Lords, I am very grateful for that point, which I will certainly take back.