Decision on flood insurance is good – but concern over informal gap until 2015.

REDRUTH, U.K. - July 1, 2013 - PRLog -- The Government and Association of British Insurers have managed to pull off an agreement at the eleventh hour, meaning that there will be flood insurance cover available to Britain’s 200,000 at-risk home owners. However, the deal still has to get regulatory approval and there is a grey area between now and when the new ‘flood re’ period starts in summer 2015. Essentially, this period will be covered by insurers standing by the former ‘Statement of Principles’ deal.

Michael Cooper of Richfords Fire and Flood said: “It is good that there is now an agreement, even though we note that there is still a lot of detail to work out. We hope to play an active part in filling in the gaps in the Flood Re model. While we welcome this decision, because of the length of the legislative process, we would have liked to have seen a more formal arrangement to cover the period between now and 2015."

The ‘Flood-Re’ model covers major events by re-insurance and caps premiums with a link to council bands. Insurers signed up to the deal will be charged an annual £180 million fee which translates as a £10.50 levy on household premiums.

Owner of Richfords, Steven Richfords, said: “It is only after the new model has been tested in real circumstances that we can properly evaluate how effective it is – and whether it solves the UK’s growing insurance dilemma.”

The industry is now watching to see how the successor to the ‘Statement of Principles’ is deployed and believes the real test will come after a future major flooding event.

Richfords Fire and Flood believes that following that future major event, an official re-evaluation period needs to be held in order to tweak the system.  

Michael Cooper also said: “We carried out a survey of public opinion on flood insurance prior to this decision being announced. What we want to do is compare these results to what people think after the next serious flooding.”

Richfords commissioned a survey in the Spring showing 17% of respondents had been turned down for insurance because of a flood risk. 41% of those who answered told Richfords they were aware they lived in an area of high risk of flooding. 7.5% of those hit by flooding recently had been told their home was uninsurable.

ENDS.

For further comment and interviews, call: Michael Cooper 01209 722 522 / 07968 175 455

Notes for editors:

·         Richfords suggested a Flood Re-Mu model, allowing a pot of money to be built up in advance from a levy on property insurance, and then accessed at the claims stage. This would mean that people’s risk is reduced by the fund, but kept comparative to their size of risk. It would also mean that the tax-payer would not have to step in as the last resort.

·         Richfords Fire and Flood has bases in Pool, Cornwall and Cullompton, Devon.