On Flood Alert
Not a day goes past without us hearing about some sort of freak weather pattern making its way across the globe… just the other week Storm Sandy hit New York, leaving a trail of destruction in its wake. Closer to home, the UK is on another flood alert after torrential rain, snow and blizzards battered Britain yet again… bring potential misery to homeowners and businesses once more.
Back in 2007, the floods cost the UK economy £3.2 billion. 48,000 homes were affected, costing insurers between £20,000 to £30,000 on average, and from £75,000 to £112,000 for businesses. Whilst more recently, we may not have seen flooding on quite the same scale, the issue hasn’t gone away.
Pockets of regular flooding seem to be more the norm these days, but that doesn’t mean they’re any less devastating. And of course with public spending being slashed, there’s even less money to invest in the necessary defences; despite the Environment Agency estimating that expenditure needs to increase to £1 billion per year to have a fighting chance of containing the problem!
And of course, rocketing insurance premiums simply aren’t helping the matter either. People just can’t get the cover they need to protect their personal and business interests. But it’s an inevitable fact of life that premiums will rise, because flooding is simply becoming more common.
Interestingly, it’s worth remembering that the UK is pretty unique in offering flood insurance alongside other cover as standard; in many other countries, it can only be purchased as a specialist policy or government backed arrangement.
So what’s the solution? There are some interesting ideas floating around at present from insurers about the use of double glazing to minimise damage and bring premiums or excesses down. Whether such measures will in practice, have the desired affect, is, of course, questionable.
Many would agree that the most sensible solution is for our Government to negotiate a new agreement by the end of this year with the Association of British Insurers. This could potentially mean a commitment to more substantial investment in flood defences, in return for the industry’s continued agreement to cover exposed risks.
But whether this will happen in reality is another matter. There appears to have been an impasse in the most recent discussions, with the Government suggesting there is sufficient financial capacity provided by UK insurers to already meet these risks.
There can be no doubt that flooding is an issue that’s here to stay. It will be in everyone’s interests if a sensible solution can be reached so that the country can go about its business as usual, and concentrate on getting back to economic strength.