THE ISSUE
It is reported that 300,000 home and business owners were affected recent floods with the repair costs running into billions of pounds
There are still major insurance issues faced by an estimated, 10 million UK, and Northern Ireland residents who have either been flooded or live in the revised Environment Agency flood risk zones.
Mainstream Insurers are either refusing them Insurance cover or applying vast unaffordable premiums with unjustifiable flood excesses. This is a direct disregard and abuse of the ABI pledge to help those affected by flood. That promise is failing to hold any water and would appear to be just a blatant lie.
If affordable cover and excesses and are not offered along with the promise to transfer the insurance cover when the property is sold whole areas of the country will become ghost towns like parts of the southern USA, property will become worthless, mortgages will default businesses will fail and residents will leave.
With Insurance becoming an automated process either being bought via the internet or at call centres manned by staff that may not have vast experience there is very little chance of solving this issue as true underwriting of each risk is not possible so that the vast premiums charged will increase.
The fact that the Internet type policies were offered at unrealistically low rates without checking the EA risk factors of the area did cause severe implications with insurers after Boscastle. This type of insurance sale was never truly underwritten but was based on a cut throat assault to acquire numbers of the policyholders with the potential profits to be made by cross selling insurance products. In short there was never enough premium in the kitty to cover major catastrophes of flood.
We have already seen major banking/insurance institutions crash and have to be bailed out by tax payer’s funds which have severe long term implications to the UK economy.
It has been proven by a number of flood support organisations and specialist insurance providers who actually fight to help flood victims and those in flood zones that ABI insurers will try any trick in the book and are working on a premium cartel basis so there is now hope for the policyholder to get affordable cover.
CASE STUDIES/EXAMPLES
Q What are the problems faced by flood victims looking for insurance?
ABI insurers will not offer any consistency premiums do vary by house to house or business to business in the same street so spreading fear and illusion so that people find no solution in getting premiums they can afford thus they have to utilise money that would be spent on purchases that will benefit the economy
FLOOD INSURANCE REFUSAL –, MORPETH.
My house at Bennetts Walk, Morpeth was flooded on September 6, 2008 in exceptionally prolonged torrential rainfall. I had only changed my insurers to CXXXX, underwritten by AXXX GXXs, in January of that year. The claim for restoration came to £96,000. Though I felt this was high, I had little control over it & was on the whole very satisfied with the service given by the Loss Adjuster, Surveyor & the builders.
My cover was renewed on 16 January 2009, with the premium for house & contents increased from £216 (this should have been higher – I'll spare the details) to £398, including an excess of £2500 for flooding. The tone of the letter was reassuring, though I realised they had no option as the claim was ongoing at renewal date.
I was therefore shocked when I received a letter of 10/12/09 saying they would not be renewing my cover as “the value of the claim no longer comes within the underwriting criteria for our low risk policy – apologies for any inconvenience caused”.
I contacted a local solicitor who advised me to check whether my insurer was a member of The Association of British Insurers & if so, to ask why they had withdrawn cover when the Statement of Principles agreed between the ABI & the Government says it should not be. Unfortunately, neither CXXXX nor the underwriters are listed as members.
I obtained a report from the Environment Agency giving flood risk information for the area in which my house lies, which classified it as “Significant – greater than 1 in 75 chance in any year”. Since then, they have announced measures to reduce the risk to 1:115, to be implemented between 2011 & 2013.
Armed with this, I contacted my bank HSBC, where I am a “Premium” customer and obtained a quote from AXXX – cover would cost £1443 per annum with no mention yet how much the excess would be. I had to provide further information such as the EA report, before they could confirm cover. The reaction of the bank’s customer service manager speaks for itself - “disgusting”. I own a modest 2 Bedroom terraced house.
I received a telephone call from a company called HXXXXX – Web MXXXX who said CXXXX had told them about me. I gave them full details of the house, flooding history, claim etc. & they asked me to state how far was my property from the river, it’s height above the river level and to give details of the existing flood defences (there is a wall approx. 4 metres high). I heard nothing further – I felt uneasy as they had contacted me – and didn’t pursue it.
The Christmas holidays were approaching, when businesses would close down & I was panicking – it would soon be January 16th and would I even be able to get insurance, or sell the house in the future? I felt really distressed; it was all happening again.
I rang the National Flood Forum, who referred me to Neil Cook, head of specialist risks at Equity & General, who is actively campaigning for people like myself who are having difficulties obtaining flood cover. To cut a long story short, he has found me affordable cover, £643 pa. with a flooding excess of £2500, on condition that I take steps to protect areas where water got into the house. I have had installed “Smart” airbricks, which keep water out and 2 good quality steel flood barriers for front & back door, which can be put in place in a short time – I had by this time intended to do this anyway.
The door frames had to be modified to accommodate the barriers but a reliable local builder who had done my neighbour’s restoration did this. It cost well over £1000 altogether but has given me peace of mind – well, as much as can be expected.
The whole episode has been extremely stressful – I suffer from intermittent anxiety & depression & have had to resume drug treatment. I realise that I choose to live in an area with a more than average flood risk but what are people living in such areas to do? They cannot all move lock stock and barrel to a lesser risk area - someone has to live in these properties. I appreciate it may cost more but feel it is unreasonable for insurance companies to hold people to ransom & am grateful to specialist insurance broker Neil Cook and others who are fighting to remove the stigma existing at present with flood victims. That is what we are - we’ve done nothing wrong.
CURRENT PRACTISES AND THE FAULTS
Due to these insurers relying on high volume sales they have adopted, rather than the traditional policy method of actual underwriting to ensure sufficient premium reserves they are struggling and forcing vast premiums on flood victims are making retrospective excuses that the EA are now reassessing flood areas as justification to quickly collect more premium from those that have not actually been flooded.
. The problem this causes is that it compounds the confusion of the policyholder by making false promises that they will help flood victims a better solution would be that they pass the flooded or flood affected risks they obviously do not desire and trying to dispose of by pricing the premiums at unjustifiable premiums and excesses to a pool of specialist providers who will offer affordable solutions. It is appreciated that the ABI insurers will be if required remunerated for these leads
Source: Neil Cook
If You are looking for insurance for a property in a flood affected area - Click Here to Contact Neil Cook of Equity and General Insurance services
