Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • November 2012
11

Flood insurance talks have reached an impasse, says ABI

Open-access content 26th November 2012

Talks aimed between government and the insurance industry which aim to ensure homeowners at high-risk of flooding can receive affordable cover have reached ‘an impasse’, the Association of British Insurers claimed today.

2

According to the ABI, ministers have 'indicated' they will not provide the temporary overdraft facility needed to get a proposed not-for-profit special insurance fund for high-risk households up and running.

The fund is intended to help the 200,000 households who will otherwise struggle to get affordable household insurance when the current Statement of Principles agreement between insurers and the government expires at the end of June 2013.  The Statement obliges insurance companies to provide flood cover as part of standard insurance policies.

Under the ABI's plans, the fund would be paid for by a small levy on insurance policies reflecting the level of existing price cross-subsidy between the policies sold to high-risk and low-risk households.  The temporary overdraft facility it has asked the government to provide would cover the scheme in the event of a major flood taking place in the first few years of its operation, with any money used being paid back as the scheme progresses.

Nick Starling, director of general insurance at the ABI, said: 'The government has indicated it will not provide any temporary overdraft facility for the insurance industry's not for profit scheme, which makes it very difficult for it to go ahead.

'As a result, negotiations have hit an impasse. Insurers know their customers are increasingly worried about flood cover and we will therefore continue talks with government to try and find a way forward.

He added: 'The severe floods experienced by many areas of the UK this year are a reminder of the rising flood risk facing the UK. It is therefore vital that insurers and government tackle this issue together - this is not just a problem for insurers. No country in the world has a free market for flood insurance with high levels of affordable cover without some form of government involvement.'

Following heavy rain in recent days there are currently 250 flood warnings and 300 flood alerts in place in England and Wales, as well as two flood alerts in Scotland.

A spokeswoman for the Department for Environment, Food and Rural Affairs said she had no comment on the specific statements made by the ABI in relation to the temporary overdraft facility and that the department was 'not going to negotiate in public'.

But, she told The Actuary that 'discussions are ongoing and we're looking at a number of options'.

Earlier this year, councils warned that delays in finalising a successor agreement to the Statement of Principles were already making it both harder and more expensive for high-risk householders to secure flood insurance.

This article appeared in our November 2012 issue of The Actuary.
Click here to view this issue
Filed in:
11
Topics:
Environment
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Actuarial Analyst, Reserving

London (Central)
Up to £75,000
Reference
118759

Actuarial Analyst, Reserving

London (Central)
Up to £40,000
Reference
118758

Student Pricing Actuary

London (Central)
£45,000 - £55,000
Reference
118764
See all jobs »
 
 

Most-Popular

 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200