Floods minister to meet All Party Group

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Richard Benyon

The floods minister, Richard Benyon, is to meet the All Party Parliamentary Group on Insurance & Financial Services on Tuesday 12 March.

The talks between the insurance industry and the government on flood insurance and a replacement for the decade-long stand-off called the Statement of Principles may resemble a chaotic battlefield but an eleventh-hour resolution to the conflict is in sight. Richard Benyon, Parliamentary Under-Secretray for Natural Environment, Water and Rural Affairs, will be speaking to the All Party Group on Tuesday 12 March. It is very hard to believe that he would have agreed to do this if the environment department (DEFRA) was not confident that it would have something firm to announce by then.

What isn't very clear is just how much consultation there will be with the insurance industry before this announcement as the smoke of battle still seems as thick as ever. Only this morning the Association of British Insurers' Nick Starling was speaking at a Labour Party flood summit and was unable to cast much light on where the talks that crumbled into disarry and acrimony at the end of last year now stand. Both Labour and Tory MPs fear that the talks are stuck at the stand-off stage.

What we do know is that the ABI chairman, Otto Thoresen, has been discussing the issue with the Cabinet Officer minister Oliver Letwin to try to find a way forward. How far this means the ABI are going to be a party to any replacement scheme is unclear but it is very hard to see how this issue will be resolved without the industry's involvement. The one option that could cut out the industry – a totally state-sponosred and Treasury-funded scheme – would surely be politically unacceptable to a Tory-led Coalition government.

We shall see what emerges from DEFRA between now and 12 March.

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The inclusion of the meeting with Richard Benyon in the APPG programme has necessitated a re-jigging of some of the other planned meetings in this session.

Revised programme

 

07 Feb 2013

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Flood Insurance

FLOODING & INSURERS STATEMENT OF PRINCIPLES For over a decade, year on year, flood defence/resilience have been the buzzwords... all very well and good as it can and does help and is necessary to many....but it DOES NOT and WILL NOT stop all the surge flooding events which continue to cause damage. We see the same trauma and destruction year after year resulting from primary damage and more to the point, the untold secondary damage due to poor reinstatement, drying and damage mitigation practices led by Insurers and their representatives. This untold secondary damage and the runaway costs associated with the recovery process have a large impact on those at flood risk. I’ll refer to the insurers’ Statement of Principles later. Trade Associations do not appear to be moving quickly enough to whistle blow on the poor recovery practices observed and can even be seen to endorse such practices. Hopefully the revised BS PAS 64 about to be published will go some way to beginning to address some of the significant wastage and fraudulent practices which are practiced. A major contributor to water damage events over the last two years is the damage caused by burst pipes during the winter months. Surges due to burst frozen pipes in lofts - have caused just as much devastation as regional storm water surges - which will always play a part in the annual tale of woe Year after year we hear the same emphasis on flood defences and resilience. This can lead to positive actions which of course have benefits BUT we don't appear to be seeing anything meaningful about reducing the overall impact to those actually flooded. There is general guidance for victims of severe flooding to contact their insurer first (if covered). This can be the beginning of the flood victims nightmare as insurers will often start a process of procurement-led recovery that includes inappropriate, budget-led drying and reinstatement programmes, extending time out of the property through slow or ineffective drying, unnecessary and wholesale strip out. These actions do not take into account the significant negative environmental impacts, elevated overall costs, dissatisfaction and stress that such actions result in. We see the insurers’ Statement of Principles on flood insurance about to expire and those at significant risk are under threat of not being able to obtain a fair or reasonably priced insurance cover. This is scandalous as evidence points to the fact that the fraudulent and inappropriate insurance-led reinstatement practices leads to an overall elevation of the claim cost, arguably by as much as 60% – this is accepted by some insurers and such wastage is easily evidenced. Apply such a saving to the several £100m paid out on major water damage claims annually and one can begin to understand the scale of malpractice and waste. Such savings could be put toward reducing the impact to those at risk or actually flooded and of course to those who‘s insurance cover is at risk. In short I believe insurers must shoulder a large part of the blame for the position they now find themselves in and seek Government (taxpayer) involvement on. What is being done by the Government to address this appalling situation? Why should I pay taxes to support insurance companies’ incompetence? Insurers are, of course, profit seeking-private companies? We need to see a change to recovery processes that are based purely on the insurers and their preferred suppliers commercial agendas, allowing clear information to the victim that they have a choice in choosing their recovery partner without intimidation or the fear that insurers will repudiate all or part of their claim. What I see is an industry being driven by those in control whose market share is likely to be affected if the status quo is changed. We see “respected and established ” names voice and publish tripe! Regrettably, due to their standing, their opinion is acted on without meaningful validation or question. For sure, current information does not appear to address the problem on how to improve or regulate the existing agendas of those who would not currently benefit from positive changes. We see trade associations promoting usage of their membership as a sign of competence when in fact, most of the repudiations and issues regularly revolve around their membership. Let me give you a couple of examples: The CIRIA document on reinstateing a flooded. This published document - which local government and others follow was an unfinished project, rushed out to fulfil timelines and budgets, gives out information that is misleading and inaccurate. The damage management Industry’s association promoting standards that have been shown to be inaccurate – now having to be re written. A university professor well known for his research into the built environment who suggests sand blasting to kill germs or that thermal imagers will detect moisture. Rubbish! The Pitt report – one paragraph on the most important part for the victim of severe flooding – the damage mitigation process. BUT two pages on sandbags! The insurers own publication, “The Investigation and Repair of Flood damaged Domestic Properties” – primarily put together by a number of preferred insurer suppliers with a vested interest and who only mention the antiquated drying processes that suit their agendas. Today, we see the same themes, studies, conferences for flood defence and resilience measures, the “could have, would have, should” have brigade I call them, because little appears to be changing at any speed. Still, it’s a day out of the office for those attending such events and extra points on their CPD! Insurers, to cover their own supplier deficiencies, would have you believe there are not enough resources at times of surge - RUBBISH! The truth is they only want to work with, in the main, around half a dozen national suppliers whose resources are geared to the managed down, often unsustainable price structures which insurers have lured the supplier into on the promise of volume! Please refer to a recent Plimsoll report on the damage mitigation industry where a large proportion of the listed companies are suggested to be trading insolvently and at risk of failure! It is also pertinent to note that insurers were and probably still are guilty of working with many insolvent companies – evidenced by demises such as Rok and more recently Merlin. It appears that little is being done to protect victims from the malpractice that is rife. Not enough resources! What a blatant misconception. There are numerous professional, albeit smaller, independent contractors with substantial resources out there who could be pre vetted if needed and called in to reduce the impact during surge events. This is not done on any worthwhile or meaningful scale. It is time that this malpractice by insurers is exposed and dealt with. Why are severely damaged homes being stripped out to their shells causing significant overall cost uplift, environmental impacts and trauma to the victim?

Posted by: a habbershaw, 11 Feb 2013 | 23:26

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