‘Defra, we need a decision’

Rumours were circulating at yesterday’s ABI property conference that the guest speaker, Defra minister Caroline Spelman, would reveal the government’s plans for the future of flood insurance. The department had previously promised to make an announcement by the end of the spring, and the ABI conference seemed like the ideal time and place.

But those hoping for revelations from Spelman were disappointed. The minister shed little light on insurance, but instead spoke about the need for ongoing discussions with the ABI and other bodies on the issue, as well as Defra’s plans to spend money on flood defences and to become greener.

Flood insurance at present is only available under the Statement of Principles between insurers and government, which expires in June next year. The statement agrees that insurers will provide affordable flood insurance for homes and small businesses, provided the government spends money to reduce the overall risk by building flood defences. Defra now has to decide what will replace it, and is considering ideas from the ABI and Marsh, and could combine the two.

Disappointment

There was palpable disappointment after Spelman left the stage, and several attendees noted that Defra had not made any visible progress on the issue since the previous year’s conference.

However, the conference did give insurers and homeowners some hope. Spelman said that the discussions had created “the beginning of a solution” and that affordable flood insurance cover would continue. The replacement of the statement is likely to include some form of pooling system for flood risks, with the government acting as insurer of last resort.

Irritatingly silent

The question is: when will Defra make its mind up? The department has been irritatingly silent on exactly what is going on behind the scenes, apart from vague assurances that talks with the ABI are going well.

Defra owes a debt to homeowners, business owners and insurers to make a decision soon. In a month’s time, insurers will be writing policies that run up against the end of the statement. The department is still saying that it will make a big announcement before the end of spring, even if the detail has to be filled in later. Let’s hope it keeps its promise.