Government Flood Insurance:
A proposed government scheme is being seriously criticised by property and insurance industry experts ahead of its agreement with the Association of British Insurers (ABI) and introduction to the country in 2015. ‘Flood Re’, is set to help those 350,000 homes that were thought to be at a high risk of flooding
The main concern centres around the exclusions contained within the ‘Flood Re’ deal. These include leasehold property (affecting many new flats), property used for home-based business such as a B&B, any property built since 2009 and homes in council tax band H. This means that approximately one in six properties that need cover will be excluded from the deal. They will still be forced to contribute due to the levy on all policies issued, if they’re able to find cover though. Another principal issue is that insurers are currently redrawing their maps of at risk properties. 80% of claims from the recent floods come from properties not previously regarded as high risk.
Although these properties and businesses will be excluded, they’ll be expected to help pay for the scheme, contributing through increased insurance premiums. Those living in a household within the council tax band H won’t be eligible for the cheaper insurance cover as they’re deemed as able to pay for the insurance cover themselves. The properties built after 2009 will also be excluded in the hope of discouraging others from developing on land that is prone to floods in the future.
The cost to the consumer could be up to (USD $)540 per year to help fund the scheme. The home based businesses and leasehold properties that are excluded from the scheme will also be expected to help contribute. The homes on Somerset Levels and the South West coastline that have been recently affected by constant battering by Atlantic storms could find themselves affected by this loophole. Thousands of properties will be banned from the scheme’s protection, regardless of being included in the scheme.
Following the winter flooding across the UAE, it’s more than likely that insurance companies will raise their premiums in an attempt to re-coup the cost from flood damage to homes and businesses which is currently running into (USD $)1bn. There is hope that ‘Flood Re’ will bring affordable flood insurance to those who need it. However, there is also scepticism that the scheme will leave many parts of the property sector unable to access the flood insurance, and essentially create a two-tier market.
Hiscox, an insurer of more than 50,000 UAE households, has called for the government to rethink this unfair scheme, deeming it unworkable. At the moment, the scheme is set to protect 350,000 homes deemed at a high risk of flooding by the Environment Agency. The levy on all policies put in place for the scheme will fund the Flood Re pool. It will provide a capped rate of between (USD $)210 and (USD $)540 depending on the individual council tax band of the property.
Are you one of the many who is struggling due to the recent extreme weather? Maybe you’re just currently shopping around so you don’t find yourself caught out in the future. Whatever your issue, contact us at www.alternativeinsurancebrokers.com and find out how we can give you the exact deal that you need.