Now 2012 – the UK's wettest year on record – is behind us more organisations are waking up to the stark reality that a crisis is rapidly gathering momentum over a new deal in place to ensure the continued availability of affordable flood insurance for homes and businesses. With the government continuing to play for time – that's the charitable way of putting it – those staring into a rain-drenched void are beginning to panic.
Latest into the fray is the National Farmers' Union which wants the Department of the Environment, Food and Rural Affairs (DEFRA) to put a subsidised insurance scheme in place for farms affected by flooding. It has signalled that it expects this topic to feature on the agenda of its national conference at the end of February.
With homeowners, residents groups and mortgage lenders becoming increasingly strident in their demands for action to find a viable alternative to the free market that will come back into operation in June after its decade-long suspension, the pressure is mounting on DEFRA. For up to a quarter of a million households a free market will effectively mean no market as flood cover will be withdrawn or become unaffordable. We know the insurance industry doesn't want this to happen and has become hugely frustrated in its attempts to propose a viable alternative because of DEFRA's u-turn after Owen Paterson (pictured) replaced Caroline Spelman as Secretary of State.
The Christmas deluge reminded just about everyone of how pressing a problem this is, yet the government remained tight-lipped as the flood waters rose across the country. DEFRA probably decided to keep its head down in case anyone started asking difficult questions about insurance.
Where will this end?
It might be worth casting our minds back 20 years to the aftermath of the IRA bombings in the City of London and the insurance industry's withdrawal of cover for terrorist incidents from commercial property policies. The negotiations with government over support for a pooled insurance scheme went to the wire, with it only finally agreeing to act as insurer of last resort for Pool Re the day before cover was due to be withdrawn. Perhaps we can expect the same at the end of May.
I do not believe the government can walk away from this for the simple political expediency that a very high proportion of the areas most affected by increased flood risk and lack of spending on flood defences are represented by Conservative and Liberal Democrat MPs. I am sure this hasn't escaped the public affairs people at the Association of British Insurers who will be keeping very close to them over the coming months.
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