The ABI has warned the government that insurance cover for homes in flood-affected areas could be withdrawn if it fails to meet its commitment to spending on flood defences.
Planned spending on flood defences, set to reach £564m in 2005/6, is under review as part of the Treasury's spending review.
The ABI has written to Paul Boateng, the chief secretary to the Treasury, voicing its concerns over the impact of spending cuts.
The ABI said it had been in discussions with the Treasury and the Department for Environment, Food and Rural Affairs over the review.
It warned that if the planned spending on flood defences were cut back, the cost of insurance available to houses in affected areas would inevitably rise.
“We need to see flood defence spending maintained,” said an ABI spokesman.
“Just because we haven't had severe rainfall in the last few years doesn't mean that the problem has gone away.
“The problem is still there and needs addressing through investment and flood defences.”
Following the severe flooding and disruption in 2000, the government increased its spending on defences. In response the UK insurance industry promised to continue providing cover to approximately 1.8 million of the 2 million homes and businesses in 'at risk'areas.
The ABI warned insurers might be forced to go back on this commitment if the government did not inject the promised spending into the project.
