Government to review flooding insurance for homes

The government has appointed insurance industry bigwig Amanda Blanc to chair a review of flood insurance for homeowners, following on from the catastrophic floods earlier in the year.

The decision to hold the review, terms of reference for which were published yesterday, comes after claims in February that anything up to 70,000 owners of new build homes on flood plains are unable to get home insurance.

Blanc is the former chair of the Association of British Insurers (ABI) and a board member at insurance giant Aviva.

The government said the review will focus on identifying the barriers preventing households from having access to suitable insurance cover and working out the scale of the problem. The review will include a “deep dive” into the experience of residents in parts of Doncaster that suffered from some of the worst flooding in November last year.

Homeowners in areas of high flood risk are supposed to be able to access insurance under the government’s “Flood Re” agreement with the insurance industry, which guarantees cover. However, the scheme does not cover homes built since 2009, meaning that owners of new build homes in these areas are at risk of not being able to get affordable insurance.

A study by right-leaning think tank Bright Blue published in February estimated that around 70,000 homes have been built in areas of high flood risk since 2009, with 20,000 of these benefitting from no flood protection at all.

The government has in recent years ignored calls from the Riba and others to introduce standards for the construction of homes in flood risk areas, given the prevalence of permissions given. 

The review will ask what level of insurance cover is typically held by those most recently affected by floods and whether this raises any systemic issues in the provision of flood insurance? However, it will not consider the conduct of insurance companies, which the government said is being looked at by a separate Financial Conduct Authority investigation.

The review will make recommendations for future policy, and is timetabled to be published in September.

Blanc said on Twitter: “Suffering a flood is such a terrible experience for businesses and residents. I’m keen to get started on this review to understand if the current system works for people or needs to be changed ready for when we have come through Covid19 together.”

The review was welcomed by the ABI, which said it was committed to working with government and stakeholders to aid the review.

James Dalton, director of general insurance policy at the ABI, said: “We all have an important role to play in ensuring those in flood risk areas are able to access flood insurance. This will include building public awareness of how the insurance market has changed since Flood Re was established which, to date, has enabled over 300,000 homeowners to access affordable flood cover.”

He added that insurers were currently helping people get their lives back on track following recent floods, despite the challenges posed by covid-19.