You are here: Home - News -

Weathering the storm

by:
  • 29/07/2002
  • 0
Victims of the widespread flooding that hit the UK during the autumn of 2000 will have by now repair...

Victims of the widespread flooding that hit the UK during the autumn of 2000 will have by now repaired their homes and replaced possessions lost, but the problems drag on.

Through gritted teeth, insurers paid out in excess of £1.4bn in claims and it seems they are unwilling to do so again. Insurers are currently bound by a moratorium agreed by the Government and the Association of British Insurers (ABI), that does not permit them to amend cover for existing policyholders until January 2003. From then on, they are at liberty to restrict cover as they see fit, whether that be by increased premiums, excesses or refusing cover altogether.

Of course it is unclear what actions insurers will take, however, Halifax subsidiary Esure has already announced it is no longer offering flood cover to any homeowners, irrespective of their address.

Insurers’ refusal to cover certain properties from the risk of flooding could cause untold damage to the property market by making some properties unsaleable as lenders will not offer a mortgage on an uninsured property. Property prices would fall and existing homeowners could be left with negative equity.

Insurers are not expected to pull out of the market en masse, but policyholders could still see massive hikes on their excesses ‘ one industry expert estimated excesses could rise to a massive £8,000, but this too could put off potential buyers.

It is ultimately the Government’s responsibility to improve the UK’s flood defences. Fortunately, this is a problem it is taking seriously and Chancellor Gordon Brown has announced the Government will stump up £150m over the next four years.

But as ever it is too little too late. The Government has 10 years to implement improved flood defences, but the insurers’ moratorium runs out in less than six months.

Come January we can expect to see a huge outcry if insurers do look to limit cover in flood risk areas ‘ but we have to remember that insurers are not responsible for this problem, they are simply providing financial support to the victims of flooding. The UK is already facing a housing shortage and it is time for the Government to put this investment to good use to improve protection for homes in flood risk areas ‘ and fast.


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
third party administrators

Xit2 Xit2, the provider of outsourced process management for lenders, has named Paul Duckworth as ...

Close