Insurers 'should rebuild flood homes'

Insurance companies should offer financial incentives to those prepared for flooding and rebuild flood-hit homes to more resilient standards, Environment Agency Chairman Lord Chris Smith will say today.

Speaking at a London Insurance Institute seminar on flood risk, Lord Chris Smith will call for lower premiums and excesses for policyholders who have taken steps to prepare for flooding, such as registering for free flood warnings and flood-proofing homes and businesses.

Lord Smith said: “The Environment Agency is working hard to play its part to improve resilience and resistance to flooding, and will continue to do so. I recognise also, however, that the insurance industry is able to provide financial incentives that we cannot give: incentives that can help to change the way people respond to the dangers they face. In the eighteenth century, the London insurance industry was able to take the lead in providing incentives for people to reduce their fire risk, by introducing the first building fire codes in the form of fire marks. Actions to reduce risk will provide benefit to people and businesses, of course, but also to the industry itself.”

Insurers should also rebuild flood-hit properties to more resistant and resilient standards, “rather than simply returning them to their previous state only to be flooded again,” Lord Smith added.

“Recent discussions we have had with estate agents have revealed that, even in these harsh economic times, houses with such measures in place are much more likely to sell, and are selling at a greater rate than those without.”