EA/Defra Stakeholder Forum – one page summary
Date: 10-07-13
Minister Richard Benyon gave a key note speech on the future of flood insurance and the spending review announcement. Ian Barrett (Defra) provided a more detailed flood insurance presentation covering the options, proposals, and an overview of how Flood Re and the Flood Insurance Obligation would work.
This was followed by a breakout session and panel discussion session with Dan Osgood (Defra) and Matt Cullen (Association of British Insurers).
The following issues were raised by stakeholders during the flood insurance session.
Policy objective and approach
There was broad support for Flood Re across the range of stakeholder groups. A few attendees questioned the feasibility and aim to move towards risk reflective pricing over the next 20-25 years. There was also a wide agreement that Flood Re and the Obligation should apply to both buildings and contents insurance.
Policy options
The vast majority of stakeholders agreed that Flood Re should be the preferred option with the Obligation as the fallback approach. A main issue raised by a fewattendees from the business sector was the transition to a free market approach beyond the lifetime of Flood Re.
Eligibility for support under Flood Re
There was broad agreement that the use of Council Tax Bands and Rateable Value as eligibility thresholds is an appropriate, but not perfect, approach. A main issue raised among conservation groups, Local Authorities and policy holders was there should be a greater difference in eligibility thresholds between lower and higher Council Tax Bands, and that Council Tax band A and B should have different thresholds prices.
Exemptions and funding under Flood Re
There was a general agreement that Council Tax Band H properties and properties built after 2009 should be excluded from Flood Re.However, a number of Local Authority and conservation representativesfelt thatrecent development and surface water flooding should be taken into account in our understanding of flood risk. In contrast, there was a divergence of opinion on whether genuinely uninsurable properties should be excluded.Amajor concern was that there is no clear definition of genuinely uninsurable. There was overall support for setting the levy at £10.50, with a few of attendees suggesting a slight change in the levy.
Flood Insurance Obligation
The majority of stakeholders supported the need for the obligation as a secondary option to Flood Re. This received the most varied and polarised comments. The insurance industry feltthat the obligation would not support the market and insurers may leave the sector. A few issues on the technical aspects of how the obligation would work were also raised by flood risk experts and business representatives. Attendees broadly supported the creation of a UK-wide register of domestic properties at high flood risk, with comments emphasising that it has to be accurate and reviewed regularly.
Planning decisions in high flood risk areas
A significant number of attendees felt development in high flood risk areas could be an unintended consequence of the proposed approach. Some attendees questioned the effectiveness of the National Planning Policy.
Incentives for resilience measures
Many attendees were keen to understand the effect of the proposed approaches on incentives for reducing flood risk at a household and local authority level. Questions were also raised about the insurance industries role to incentivise Property Level Protection measures and whether these would be accounted for insurance premiums.