Financial News

  • 17 February 2014, 10:47

Govt Flood Insurance Plan 'Will Not Work'

A leading insurance firm has slammed the Government's plans for flood insurance.

Hiscox said loopholes in the 'Flood Re' scheme, which is due to come into effect next summer, will see around 17% of households being excluded.

The global insurer added that many of the properties currently under water in Somerset and the Thames Valley would be caught in the loophole and lack flood protection.

Chief executive Bronek Masojada said: "This week's events show that the Government's proposed flood insurance scheme would leave many homeowners in a desperate situation.

"That cannot be right. What made sense in the heat of negotiation just won't work in the real world."

Although Hiscox believes the concept has a solid concept, implementation of the proposals would highlight shortfalls.

As a result, it has urged for an "urgent rethink".

Mr Masojada added: "It is unreasonable to exclude new homes, buy-to-let properties, and higher value properties from Flood Re protection.

"We absolutely support a sustainable, mutualised solution to the problem of insurance, but the Government must listen to growing concern from insurers and the public."

The Government announced the deal with the insurance industry to cap premiums for flood-threatened areas in June 2013.

Ministers said they were determined to come up with an affordable solution that did not put an unjustifiable burden on the taxpayer.

At the time, Richard Benyon, a minister at the Department for Environment, Food and Rural Affairs, said: "The ABI has assured ministers that their proposal can be introduced without impacting customer bills in general."

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