Simon says:
“I believe that it would take a very severe winter to reverse the downward trend in the short term,” he says. “We are in a competitive market and rate reductions are still being made but in the longer term, major flooding for example could lead to sharp premium rises, particularly for buildings cover. This is what happened after the 2007 floods. Otherwise, I believe that home premiums will continue to offer good value for money.”
Mr Douglas points out that flooding remains a concern for insurers. “Consultation on the Flood Re solution arrived at by the Government and the Association of British Insurers, which aims to protect homes at greatest risk of flooding, ended on 20 September.
“However, the measures proposed appear complex and onerous for insurers. There are also controversial exclusions such as small businesses (including bed and breakfast premises which, after all, are also homes for their owners) and properties built after 2009.
“Flood Re will protect half-a-million homes in the worst-affected parts of Britain but will exclude many others that are at reduced, but still very real, risk of flooding. They will find it more difficult to find insurers willing to quote and, ironically, they may be asked to pay more than those that fall within the Floor Re provisions and are at higher risk, because they won’t benefit from subsidies from the market as a whole.”
“Already this month we are seeing some localised extremes of weather causing flooding in places with no previous record of flooding.
“Flood Re will do nothing for them.”
Mr Douglas pointed out that many organisations made submissions during the consultation, noting that uncertainty remains on the scope of the measures proposed.
“Ultimately, because Flood Re will require cross-subsidy from the home insurance market as a whole, premiums for everyone are bound to be affected.”
