Flood Insurance – deep waters ahead


The Scottish Government today announced plans to identify the areas of Scotland at risk from flooding and publish guidance on flood risk management.

All very well and good. However, it leaves a huge piece of the puzzle empty – insurance.

I don’t have a figure for Scotland, but in England and Wales alone there are more than half a million homes at risk from flooding. The increased risks that accompany climate change may mean increased premium costs for some, and the loss of insurance altogether for others, leaving home owners in risk areas out of pocket and vulnerable.

At present, the Association of British Insurers (ABI) has in place with both the UK and Scottish Government an agreement entitled “Statement of Principles on the Provision of Flood Insurance“, with the most recent ‘Revised’ draft published in 2008. The agreement basically states that the insurance industry will continue to provide floor insurance to homes as widely as possible, so long as the Government in turn invests in flood defences.

The agreement runs out in summer 2013, and the noises coming from the direction of the ABI are not positive. The ABI apparently has no intention of renewing the agreement when it expires and has expressed concern that Government (at Westminster at least) is not keeping its end of the bargain, with flood defence spending taking an 8% cut.

A spokesperson for ABI has stated recently: “We are exploring possibilities of doing more with less money. But it cannot be denied that some people might receive letters informing them that flood cover has been withdrawn after 2013.”

The whole debate raises issues about who is going to ‘pay’ for climate change, and in some ways mirrors the general economic challenge that the Scottish Greens put forward during the election – do we simply pass on the cuts to the poorest, or do we protect our services through progressive taxation?

In this case, do we allow the the risks and costs of climate change to be passed on to ordinary home owners, or will we find another collective agreement to provide protection? I hope we don’t have to wait until summer 2013 for a reassuring answer.


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