Why the property lobby has been less than enthusiastic about insurers’ deal with the government on floods.
While insurers seem more than happy with the deal hammered out with the government over flooding, the property lobby has given a lukewarm response.
The ABI believes it has won a victory in forging an agreement that the Statement of Principles, which commits insurers to offer flood cover to at risk homes, will come to an end in 2013. It has also won a place at the table when the government hammers out its long term investment plan for all important flood defence spend. And if it doesn’t like the result? It can simply up and leave – the agreement is not binding.
But the British Property Federation, which represents major property owners, has yet to be convinced. The federation has pointed out that the government has yet to put its money where its mouth. In a statement, it reiterated that the Government “will need to make a financial commitment to supporting flood defences if businesses and homeowners are not to be left high and dry in the event of more major floods”.
What this really shows is that the property industry, used to having the ear of ministers, has been on the fringes of this agreement. And its not good news, from its point of view. The end of the statement of principles means that if property owners want their buildings to be insurable, and therefore saleable, they will have to pay for adequate flood defences themselves. Moreover, the agreement does not cover new build homes, or commercial property, where the real money is for developers.
They want the government to pay for flood defences, or insurers to pick up the tab when things go wrong. The idea that they will have to pay for the flood defences themselves has alarmed developers, who are suffering badly from the current economic downturn.
The property industry has had it good for a long time. Soaring profits, political power and sympathetic planning authorities combined to give it more than a decade of good times. It sometimes used its comfortable position to attack insurers, claiming that they had a responsibility to offer insurance on buildings, whether on floodplain or not.
Now, the tide has turned, and it’s insurers’ turn to call the shots.
