Local governments are under pressure to revisit insurance and business continuity plans in the wake of last summer’s floods.
The Audit Commission intends to issue guidance to local authorities and auditors about how councils should purchase insurance and mitigate catastrophe exposures.
The Commission has teamed up with the Association of Local Authority Risk Managers to survey members over how its members handled the floods.
In December 2007, the Audit Commission published a report into how local authorities responded to the floods of June and July 2007.
Audit Commission. Managing Director of policy, research and studies Peter Wilkinson said: “The cost of catastrophes is high and it is our responsibility to look at the value for money of public expenditure.” He added: “Our concern is that the public gets value for money out of what local authorities decide to spend on insurance.''
He said the commission was struck by how local authorities consider insurance and business continuity planning. He said: “The commission also was surprised by the wide range of mitigation choices by local authorities, there were big variations on the amount of insurance, self-insurance, excess levels, types of buildings covered, and definitions of flood and windstorm.”
The Commission has completed its second survey of how ALARM members deal with flood risks and is compiling the results. Wilkinson added: “We are conducting a survey with ALARM members and, after making site visits, we will decide whether to publish a report. We will decide what guidance to give auditors and local authorities on the thinking about this, whether we publish a report or not.”
Lynn Drennan, chief executive of ALARM, said the commission is looking into the financial effect of last year's floods and wants to find the best model for financing losses.
Drennan said a lack of clarity about government funding in the event of a catastrophe needs to be addressed.
