Water Bill strikes insurance compromise to protect flood-prone properties
The Government has agreed a deal with the insurance industry that will cap flood insurance premiums, linking them to council tax bands and ensuring people know the maximum they will have to pay.
After negotiations with the Association of British Insurers (ABI), the Government brokered a deal which replaces the current Statement of Principles that runs out at the end of July.
To fund this, a new industry-backed levy will enable insurance companies to cover those at most risk of flooding. All UK household insurers will have to pay into this pool, creating a fund that can be used to pay claims for people in high-risk homes.
Environment Secretary Owen Paterson said: "Flooding is terrible for anyone affected by it. We have worked extremely hard with the industry to reach an agreement on the future of flood insurance.
"There are still areas to work through but this announcement means that people no longer need to live in fear of being uninsurable and that those at most risk can get protection, now and in the future."
The proposals were given legal backing through the Water Bill, published yesterday, and will last for at least the next 20 years.
Defra says it will also keep flood insurance affordable in the long-term, by investing £370m of capital investment in flood defences in 2015/16.
According to Defra, the investment will ensure more than 300,000 households will be better protected by 2021, bringing the overall risk down and helping to secure affordable insurance for people long-term.
ABI director general Otto Thoresen said: "Getting to this stage has required compromise by both sides and there remain issues that need to be overcome. Insurers and the Government are now working towards a shared vision."