Flood of trouble

The clock is ticking on the Flood and Water Management Bill, which realistically has to get pushed through the parliamentary houses this autumn or face being shelved for months, possibly years. With the £3bn damages bill for the 2007 floods still fresh in their minds, insurers are crying out for action.

So what are the key issues and how important is this bill?

Perhaps the key issue for insurers is water surface damage and flooding from drains and sewerage systems. AXA chief executive Philippe Maso says three quarters of the £250m claims paid out in 2007 were from this kind of flooding.

Then there’s the threat from global warming. The minister in charge of the bill, Huw Irranca-Davies, Parliamentary Under-Secretary for the Department for Environment Food and Rural Affairs, says in 30 to 40 years time the weather will become increasingly more erratic.

But for more erratic, read heavy torrential downpours like the devastating deluge in the summer of 2007, and that’s bad news for insurers.

So their hopes rely on the bill. Apart from the expected promises to beef up flood defences, the bill proposes that the Environment Agency has a national overview responsibility for flooding. That would be carried out at a local level by local authorities, who would work together to solve problems. The confusion over which local authority should be dealing with what flood was a feature of the 2007 storms.

It’s obvious the passing of the bill is important for insurers, but with the usual fierce debate over the finer detail, there’s no guarantee it will make it way through parliament.

Perhaps the greatest storm cloud on the horizon is the impending budget cuts. Both Prime Minister Gordon Brown and David Cameron have signalled their intent to cut public spending, with frontline services a priority.

Flood defence is unlikely to be seen as priority, one of the victims of the drought in public spending.