Minister flags up fair flood policies

MORPETH’S proposals for fair flood insurance have been highlighted by a Government minister, but the clock is ticking for a solution to be agreed.

A Statement of Principles (SoP) is currently in place between the Association of British Insurers (ABI) and the Government to provide reassurance about the continued availability of flood insurance for victims.

However, it is due to end on June 30 next year and there are fears that many householders in Morpeth and other flood-risk areas may not be able to renew their policies.

The Morpeth Flood Action Group (MFAG) agrees that a better system is needed and has submitted a pooling plan that would involve a combination of subsidy from the insurance industry and householders in low-risk areas, with contributions from those in high-risk zones.

At ABI’s property conference in London Environment Secretary Caroline Spelman highlighted the Morpeth proposal.

She said: “Risk-based insurance pricing provides an incentive for households, businesses and communities to reduce their flood risk. In the long-term this will save everyone money, but risk-reflective insurance pricing needs to be introduced gradually, allowing markets to adjust steadily, while supporting those unable to bear the true cost of flood risk to their homes.

“I am grateful to the National Flood Forum for the continued engagement and active contribution of their members in developing ideas, in particular those from the Morpeth Flood Action Group. Similarly, insurance brokers have come forward with helpful, innovative proposals.

“We are in intensive discussions with the ABI and others and we are looking carefully at the models that have been proposed. We want to do everything we can in partnership with the industry to address the needs of householders.

“We want to see a solution that benefits those households living with flood risk, particularly ones on lower incomes.”

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“We must also create transparency for customers as they will need help and guidance about what they can do to limit the scope for future price rises.”

Under the MFAG proposal, residents in high risk areas would be guaranteed flooding cover and would pay a percentage of the risk-related premium above a threshold to be determined by council tax bands.

The pool would have funding from a Community Flood Levy paid by all householders, and the insurance industry as a whole would decide whether it would be charged across the board as a flat rate or as a percentage of the complete household insurance premium.

Group Chairman Alan Bell, who attended the conference, said: “Various models have been presented and it was good to hear that our proposal was mentioned specifically by the Minister, which means it is still being looked at as a potential solution.

“It was slightly encouraging that many of the politicians and business leaders present recognised the need for some form of cross-subsidy and pooling solution, but one of our major concerns going away from the conference is the Government does not seem to want to take the lead on the issue and is hoping for the insurance industry to sort something out.

“This would be unacceptable as it would then be up to the insurance industry to decide upon social justice, which we feel is the role of the Government.

“If nothing is agreed by the end of June next year, there’s a great danger that the industry will move totally to risk-based premiums and many individuals in high risk areas will find it very difficult to get insurance cover. Even if they do, it’s unlikely to be at an affordable price.

“We’re hearing that some companies are already refusing renewals or increasing premiums by a large amount in anticipation of 2013 and we would like anyone who is experiencing this to get in touch with us as we would like to find out the extent of the problem. All information given to us will be kept confidential.”

For more information call Mr Bell on 01670 518609 or visit