Should the taxpayer fund insurance for those on flood plains?

Graham_Devon

The insurance industry is asking the government for public money to help them pay out insurance to those people who live on flood plains and have been flooded. They say this will be repaid, but that would depend on funds being built up.....bit of a bank bailout situation.

The insurer took on the policy, but now claims they need help. The people buying on the flood plains, also claim they need help.

It's diffucult to get my head around this one and figure out where I stand on this. One part os me says it's both the fault of the insurer and the buyer. The other half of me questions why these houses were built in the first place, and why the government and council ever allowed it in the first place.

The answer seems to be greed from every angle. Cheap land equals higher profits. Insurers not risk managing properly equals lower costs and higher profits.

So, should the taxpayer be on the hook for the bill for flooded homes on flood plains?

I guess the question is, should we continuously bail out those who take risks, at the costs of those who haven't? You'll pay less for a house on a flood plain because of the risk associated. Yet when that risk turns to reality, suddenly no one is responsible for their risk taking.

CLAPTON

the government allowed building on the land

they therefore should made provision to make sure that it is safe to do so.

it's reasonable for an ordinary person to assume a location is safe and that adequate flood defenses are in place.

Graham_Devon

CLAPTON wrote: »

the government allowed building on the land

they therefore should made provision to make sure that it is safe to do so.

it's reasonable for an ordinary person to assume a location is safe and that adequate flood defenses are in place.

This is where I am struggling to figure out where I stand on the subject. As, I know, when I paid for searches, I was paying for those to find out if indeed, I'm on a flood plain. Infact, I still have the detailed drawings and risk sheets.

So although they were allowed to be built, people will have paid to make an informed decision.

It's not as if it's a miss sell, or hidden information. We pay to get that information.

Conrad

Yes Gov't ought to fund this just as it would fund ambulances for drivers in an accident. If we had years of drought, those in dry areas would expect assistance.

somethingcorporate

CLAPTON wrote: »

the government allowed building on the land

they therefore should made provision to make sure that it is safe to do so.

it's reasonable for an ordinary person to assume a location is safe and that adequate flood defenses are in place.

And what about the company that has provided the insurance for those properties that were at risk? Are they really blameless?

If those properties were uninsurable then that would be a different question, because the insurance company are finding these liabilities they have taken on are not going to be profitable I find it a bit rich them going cap in hand to the government.

CLAPTON

somethingcorporate wrote: »

And what about the company that has provided the insurance for those properties that were at risk? Are they really blameless?

If those properties were uninsurable then that would be a different question, because the insurance company are finding these liabilities they have taken on are not going to be profitable I find it a bit rich them going cap in hand to the government.

my understanding and I may be wrong, is that the insurance companies will, if the matter is not resolved by the summer, refuse further insurance which will make the property unsellable.

MacMickster

CLAPTON wrote: »

my understanding and I may be wrong, is that the insurance companies will, if the matter is not resolved by the summer, refuse further insurance which will make the property unsellable.

It will also make large tracts of land owned by developers on flood-plains effectively worthless, so perhaps there should be a £10K premium on the sale of all new-build houses towards future insurance liabilities.

CLAPTON

Graham_Devon wrote: »

This is where I am struggling to figure out where I stand on the subject. As, I know, when I paid for searches, I was paying for those to find out if indeed, I'm on a flood plain. Infact, I still have the detailed drawings and risk sheets.

So although they were allowed to be built, people will have paid to make an informed decision.

It's not as if it's a miss sell, or hidden information. We pay to get that information.

My view is that the surveys mean very little to the ordinary person as the reports are written to ensure that the report authors can't be sued.

I recently looked at a survey done for a relative; the house was almost at the top of a hill; and yet it reported there was potential surface water flood risk.

Additionally, I suppose we do seem to moving into a new weather pattern system with increased sudden heavy downpours.

mystic_trev

Graham_Devon wrote: »

The insurance industry is asking the government for public money to help them pay out insurance to those people who live on flood plains and have been flooded.

Graham, I'm not sure you've got this right? The way I read it is the Government want Insurance Companies to provide Homeowners of Properties at risk of flooding with affordable coverage. This would mean those not at risk paying a supplement of at least £10 per year, on their Home Insurance, to cover those at greater risk.

Obviously Insurance Companies aren't going to subsidise those at greater risk, as they'd lose money!

somethingcorporate

CLAPTON wrote: »

my understanding and I may be wrong, is that the insurance companies will, if the matter is not resolved by the summer, refuse further insurance which will make the property unsellable.

And so be it for the future.

To say they are not going to settle existing flood claims is insane though, they knew the risk and took the chance. Just because they took a gamble and lost does not mean that the tax payer should be on the hook for it.

Although, I have no idea what it would mean for the properties in future if they became uninsurable.

mystic_trev

The Association of British Insurers (ABI) recently proposed a scheme to make sure 200,000 households affected by flooding will be able to renew their policies next year. It meant any house that would normally incur a much higher premium because of flood risk would have the extra paid out of a levy on every home policy in the UK.

The caveat seems fair?

While the industry is not asking the government for funding for the scheme, its proposal does require it to provide a temporary overdraft facility that would be used to pay claims if there were heavy floods in the early years of the scheme before it had built up its reserves – but the government has not agreed to this.

http://www.guardian.co.uk/money/2012/nov/26/flood-insurance-talks-reach-crisis-point

The alternative is Insurance Companies continue as before, rating their Policies according to risk.