May, 2015

New scheme promises to increase access to flood insurance

New scheme promises to increase access to flood insurance

Flooding is a significant problem in the United Kingdom. There are four main forms of flooding, all of which the UK experienced during a two-month period last year; these include groundwater (when the earth becomes saturated and cannot retain any more water), fluvial (when the banks of a river break), flash (when drainage systems cannot cope with surface-level water), and finally tidal (flooding from tidal rivers and the sea). This natural disaster is particularly common in England; currently, more than five million English properties are at risk of flooding. Firms like Hamilton King Management, whose business information is available here, are perhaps more aware of this issue than most, as these kind of companies often provide buildings and contents insurance for the properties they manage, and are regularly tasked with initiating claims on behalf of those whose homes have been damaged by floods. The most problematic aspect of this particular type of natural disaster is the cost associated with managing flood risk and dealing with the aftermath of it. On average, these two expenses cost the UK about £2.2 billion annually; approximately £1.4 million of this is allocated to damages, with the remaining £800 million being spent on coastal and flood defences. Furthermore, the level of flood protection we currently have can only be maintained over the next two decades if the government’s spending on flood defences increases by £10-£30 million each year. By 2080, the total amount spent on flooding could rise to £27 billion. In a bid to address the expense of flood damage, the government has announced plans to launch an initiative called ‘Flood Re’. Flood Re was first recommended by the insurance industry in 2011, with insurers declaring it to be the best long-term solution to the current problems associated with flood insurance. After much debate, an agreement between the Government and the industry was reached two years later. When launched, it will operate as a not-for-profit, and serve as a reinsurance fund which will be both managed and owned by the insurance industry. The purpose of this fund is to ensure that residential properties located in the areas of the UK which are most prone to flooding will be able to secure reasonably-priced flood insurance, as part of their buildings and contents policies. Additionally, it is hoped that Flood Re will also help insurers, by protecting themselves from large scale losses during natural disasters....

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