Will you be adequately covered by flood risk insurance? –
maybe. Under the old model the government paid to build flood defences while
insisting that insurers cover most properties in flood risk areas. Now a new scheme
known as Flood Re is being introduced. All householders taking out insurance
will pay a £10.50 levy to Flood Re, the new not-for-profit fund to subsidise
premiums for 500 000 homes in flood prone areas.
But there are constraints. Houses in the top council tax
band and business will not be allowed to join the scheme. Houses with a risk
higher than 1-in-75 are excluded and all new houses built after 2009 will not
be covered. The assumption being that new houses must have adequate flood
defences before they are built but in 2011 28 000 were planned to be built on
flood plains alone.
There are two big problems. Firstly while spending on flood
defence increased from the 1970’s to 2010 it is now decreasing. Secondly the
risk of flooding is increasing due to:
- · Climate change would could lead to rising sea levels and changes in rainfall
- · Ageing drainage and flood defence infrastructure
- · More buildings in flood-prone areas
- · More paving, which increases the volume of water running off
The concern is that the Flood Re scheme will run out of
money to cover the insurance bill as the risk increases and flood defence
spending lags behind. The Environment Agency estimates that flood damage costs
£1.1 billion a year of which only part will be covered by Flood Re (its annual
income is set at £180m pa). Perhaps householders in flood risk areas should put
sandbags and wellingtons on their Christmas list.
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