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Flood Cover Talks At Crisis Point

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Government Says There Is No Deadlock

Talks about flood insurance are at "crisis point" and could leave 200,000 homes without cover, according to an insurers' body. Many thousands more householders could see premiums rise if no deal is struck between insurers and the government.

The Association Of British Insurers (ABI) is discussing how to provide affordable premiums in high-risk areas, but says talks are at an impasse. But the government says there is no deadlock and discussions are on-going. The row comes as the Environment Agency says some 800 homes have been flooded in the latest storms to hit the UK.


An existing agreement, reached in 2008, obliges insurers to provide cover for high-risk properties while the government continues to improve flood defences. Discussions have been taking place for months to try to make sure the arrangement continues after June 2013. The ABI wants the government to share the risk for the areas with the most homes at significant flood risk - defined as a greater than one in 75 chance of flooding in any given year. Nick Starling, director of general insurance at the ABI, said that the government had turned down its "elegant" solution. "Our members are out there looking after people who have been affected by these tragic floods and this means that we want a solution even more now after the difficult events of the weekend," he said.

"The talks have reached a crisis point. We have had two years to sort this out, during that time the insurance industry's put a massive amount of work and money into coming up with an insurance-led solution and we seem to have reached an impasse." Insurers want householders to pay an extra �8 to �10 on top of their premiums which would go into a �100m pool used by insurers to cover flood affecting their homes. Mr Starling said ministers had rejected the proposal of a temporary, interest-free, overdraft for the industry, to help it meet the cost of emergencies in the first few years of the scheme while the fund builds up.

Environment minister Richard Benyon criticised the ABI's timing by raising the argument when people were suffering from the effects of flooding. But he added that 5.2 million properties were potentially at flood risk and the government was working hard to find an affordable solution to the issue.

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