Flooded Morpeth in September 2008
Published Date: 28 January 2010
By ANNA SMITHN
INSURANCE excesses of up to £10,000 are being slapped on flooded
Morpeth households, while some have had cover withdrawn altogether.
The Morpeth Flood Action Group (MFAG) says companies are getting
tough with the town as policies come up for renewal.
A survey in the year after the disaster showed that a quarter of
respondents were facing high excess increases.
But now the problem is widespread, with more cases reported by the
week.
And MFAG has warned that if a flood hits again, dozens of homes will
be left damaged.
MFAG member John Best said: "The questionnaire results for the first
12 months after the flood were reassuring in the main — 25 per cent
of people experienced high excess increases, but for the bulk of
people they stayed the same.
"The major problem is with the second renewal. Excesses of £8,000,
£9,000 and £10,000 are sweeping through the town.
"Nobody wants a flood again, but a cause for concern is how would
the houses be fixed if it did happen because people don't have
£10,000 in the bank?
"Instead of just a few properties that haven't been fixed, the town
will be dotted with 40 to 60 more wrecked properties that will never
get fixed."
The group is also concerned that Environment Agency proposals for an
alleviation scheme offering protection from a 1-in-115-year flood
will also cause problems.
"The higher the standard of protection, the more the insurance
companies relax," said Mr Best.
"If the scheme was to a 1-in-200-year standard the insurance
companies would relax to normal terms, but a 1-in-115-year scheme
doesn't give us any reassurance on insurance."
MFAG Chairman Alan Bell said that some companies are refusing to
stick to the Statement of Principles on flood cover that was agreed
with the Government.
"We have heard of a couple of people who have had cover withdrawn by
their existing insurance companies, but it tends to be the companies
that aren't in the Government agreement.
"However, we have heard of others who want to transfer policies to
other people, which is part of the agreement, and the insurance
companies are saying they can't do it. That is a problem," he said.
"The difficulty is finding someone else to insure you, it is
virtually impossible.
"There are a lot of companies being fairly reasonable about this,
but there are also a lot that aren't."
Morpeth Town Council's Finance and General Purposes Committee has
called for urgent talks with MFAG, local businesses and the National
Flood Forum to discuss the problem.
Chairman David Parker said: "This is a general issue affecting not
just Morpeth, but places up and down the country.
"If the worst came to the worst, people could borrow the money, but
I think it is a political issue.
"For example, we might be able to persuade the Government to act in
terms of a preferential rate of interest on loans.
"The way politics works is that the bigger the noise, the more
likely we are to get something done about it.
We have got to build some alliances across the country to start the ball
moving and put pressure on the Government to start thinking outside the
box on this issue.”
A spokesman for the Association of British Insurers said hikes in
excess and premiums are necessary to protect companies from risk.
“Insurers will have to set premiums and excesses to cover the risk, but
most are not raised to this degree,” he said.
“It may be where there has been a particular bad flood claim and the
risk is ongoing that the only way for insurers to continue cover is to
raise the excesses.
“As far as the Statement of Principles goes, insurance companies will
continue to issue flood cover to existing customers provided that the
flood risk is being adequately managed. It may be that the flood risk is
not being adequately managed.
“No insurance company wants to raise excesses, no insurance company
wants to raise premiums and no insurance company wants to decline to
renew cover.”
