Should the taxpayer fund insurance for those on flood plains?

Thrugelmir

CLAPTON wrote: »

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.

Natural springs are everywhere. So being on a hillside means little.

CLAPTON

Thrugelmir wrote: »

Natural springs are everywhere. So being on a hillside means little.

do you mean all houses have equal flood risk?

Graham_Devon

mystic_trev wrote: »

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!

It seems I did initially read a more hysterical article on the subject.

The crux is, The ABI want the government to invest in a flood insurance pool to prevent 200,000 homes becoming uninsurable.

Under these plans, looking to the future, every policy would attract a £10 payment to cover those in areas prone to flooding, however, that £10 hasn't been given the green light, therefore, they are asking the government to stump up initially.

The insurance industry is suggesting that they will pull cover to homes they already cover (when cover comes up for renwal) due to the risk of flooding unless this scheme is put in place.

The ABI state that it's NOT their intention to move to a free market situation whereby risk assessment would mean someone finds themselves uninsurable. However, these are private companies, so this leaves a strange scenario where they wish to stay private, protect the profits of the low risks, but take a nationalised approach to the high risks.

However, it appears that the taxpayer would be on the hook if the flood fund didn't have enough funds at any given time to cover a situation as seen in the 2007 floodings. When you consider the companies ABI represent made profit of £50bn+ in the year across all income streams, the £3bn cost of the floods of 2007 looks small fry. However, they want those risks nationalised in effect....profit will then increase.

http://www.ft.com/cms/s/0/18f41db4-37e7-11e2-b8d3-00144feabdc0.html#axzz2DS4gL3e5

CLAPTON

I suppose an alternative is a state insurance company
they could add subsidence insurance too for people who have had the property underpinned

chewmylegoff

The government should intervene if the insurer goes bust and cannot make good all the claims from the people it has insured. Otherwise no.

It's ludicrous to suggest that because the govt allowed houses to be built in place X it is responsible for underwriting insurance policies on those properties for ever more. By the logic the government allowed Wonga.com to have a consumer credit licence so it should pay off all of the pay day loans people have taken out.

CLAPTON

chewmylegoff wrote: »

The government should intervene if the insurer goes bust and cannot make good all the claims from the people it has insured. Otherwise no.

It's ludicrous to suggest that because the govt allowed houses to be built in place X it is responsible for underwriting insurance policies on those properties for ever more. By the logic the government allowed Wonga.com to have a consumer credit licence so it should pay off all of the pay day loans people have taken out.

I see no comparison with about 1 million houses becoming uninsurable and hence unsellable and wonga loan going bankrupt.

chewmylegoff

Similarly I see no comparison between an insurer asking the government to fund the insurer to pay out on actual insurance policies which exist and have been triggered (see opening post) and whatever it is you're talking about.

Edit: although it might have helped if I had read the rest of the thread

CLAPTON

chewmylegoff wrote: »

Similarly I see no comparison between an insurer asking the government to fund the insurer to pay out on actual insurance policies which exist and have been triggered (see opening post) and whatever it is you're talking about.

Edit: although it might have helped if I had read the rest of the thread

the threat is to future insurability

vivatifosi

mystic_trev wrote: »

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!

Sorry Graham, but I'm not sure either. I heard this discussed at midday on Radio 4 a week or so ago and also yesterday morning and both times they said that there was an existing scheme in place (has been since approx 2008) and that the new scheme is due to come in next Summer to replace but they have been unable to reach agreement.

So there was a scheme in existence already, what they now need to do is iron out the details for its replacement. From the conversation I heard, the insurance industry is saying that there is no plan B, whatever the government thinks. However the government has already said no to the industry proposals. This is how the situation has arisen where no cover may be available from next year.

Channel 4 has done an interesting piece which gives additional info:
http://www.channel4.com/news/flood-insurance-cover-dispute-key-questions

chewmylegoff

I still don't agree though; flood insurance is not a human right. No insurance is a human right. We don't expect the govt to step in and provide car insurance for people who the insurance companies won't insure, for instance.

Besides, the industry is just scaremongering. It's not as if there haven't been floods before. As anyone with an underpinned house knows you can actually get insurance.