Insurers ‘close to deal’ over flood-prone homes

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Insurers claim they’re close to agreeing a deal with the government to guarantee flood-risk households access to affordable home insurance.

The current agreement, under which insurers must offer cover to homes at risk of flooding or whose owners have made claims for flood damage, expires on 30 June. Under the arrangement, the government commits to investing in flood defences provided insurers guarantee to offer cover to flood-risk homes.

Months of negotiations between the government and the insurance industry on replacing or extending the agreement, known as the statement of principles, have come to nothing. That failure has sparked fears that homeowners in flood risk or flood-hit properties, including some 5,000 in Scotland, face a hike in premiums that could make home insurance unaffordable for many.

However, the Association of British Insurers said yesterday that negotiations with the government had reached an advanced stage, raising hopes of a compromise. It added that insurers will continue to offer cover to flood-hit homes for an extra month after the statement of principles expires, although it was not clear whether premiums would be kept down.