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Insurers demand action over floods

By Yvette Essen
Last Updated: 12:15am BST 21/08/2007

Insurers have called for a shake-up of the Environment Agency after claiming that inadequate maintenance of watercourses and drains were partly responsible for the summer's floods.

  • Letter from Stephen Haddrilll to Hilary Benn [pdf download]


    Insurers demand action over floods
    ABI's Stephen Haddrill warns that the insurance industry is bracing itself for further floods this year


    In a strongly worded letter to Hilary Benn, the Environment Secretary, the trade body for UK insurers also called for an increase in spending on flood defences.

    And in what appeared to be a thinly veiled threat, Stephen Haddrill, director general of the Association of British Insurers (ABI), pointed out that in most other European countries the bill for the recent floods would have been borne largely by the Government, not the insurance industry.

    "It is worth noting that in other countries this cost would have fallen on the state, as the UK is almost unique in covering flood risk through insurance.

    "The Government's contribution would have been far in excess of the 15m so far committed."

    He also detailed the huge cost of the floods. "The cost to the industry of over 60,000 claims is approaching 3bn and more claims continue to come in," he wrote. He warns that the insurance industry is bracing itself for further floods this year. "We are told that in some areas the flood plain is so saturated that even normal rainfall could lead to further flooding."

    The ABI called on Mr Benn to reassess the Government's housing plans, arguing "that a long-term strategy for flood defence should look again at the question of new developments on the flood plain".

    It warns that "insurers will in future scrutinise new developments more closely and warn of potential uninsurability more robustly".

    The ABI welcomed Mr Benn's announcement last month that spending on flood defences will increase to 800m in 2010-11, but it added: "The crisis has shown that this on its own will not go far enough.

    "Our most immediate concern is that the long period of neglect before 2002 has not yet been made good."

    It argues that new statutory duties should to be given to the Environment Agency to help prevent further flooding disasters and suggests a radical change to the way money is spent - with a long-term view of 25 years being taken. The ABI has identified 8bn that needs to be spent over 25 years on defences along the east coast.

    It said inadequate maintenance of drains and watercourses was "a situation we take very seriously". It meant that some flooding took place that was not predicted by the Environment Agency's flood-risk maps.

    The ABI said: "Insurers will in future expect to receive more information than we do at present about the exact nature of the risks in each flood catchment and the precise plans for investment by both the Environmental Agency and other authorities."

    The insurance industry has a long-standing agreement to maintain flood insurance cover for the majority of domestic and small business properties at risk provided the Government makes certain commitments on flood risk management. The ABI represents 94pc of the UK insurance market.


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