UK Insurers Threaten Flood Protection Cuts To 220,000 Homes - Guardian

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"British insurers are threatening they will withdraw flooding cover from about 220,000 homes if the government cuts the spending on flood defences as part of Treasury economies. Britain is unique in Europe in offering universal flood insurance but companies, having paid out £5bn in the last five years - twice as much as in the previous five - believe it may be no longer be viable to do so.

Following the disastrous floods of 2000, the worst event in 300 years, spending on defences was stepped up by the government to cope with decades of neglect. Many of those affected were new houses built on flood plains without adequate defences which would be rendered unsaleable by withdrawal of insurance. Without insurance, most banks and building societies will not agree a mortgage, so only cash buyers would be able to purchase.

After the 2000 floods the insurance industry agreed with the government that it would continue to insure all properties for at least two years until the long-term intentions of the government on repairing and creating new flood defences became apparent. The government solved the problem by stepping up expenditure but is threatening to cut it again, now that there have been no serious floods for 18 months.

Jane Milne, head of household and property insurance for the Association of British Insurers (ABI) said "The average home in Britain spends £295 on household insurance including flooding. The average cost of a flooding claim is between £15,000 and £30,000. You do not need many flooding claims to eat up a lot of insurance premiums."

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http://www.guardian.co.uk/uk_news/story/0,3604,1195495,00.html