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Mark Leftly: Floodgates soon to open on insurance prices

 

Mark Leftly
Wednesday 31 October 2012 01:00 GMT
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Outlook Images of seawater bursting through New York subway defences and Manhattan Islanders fleeing their homes in search of dry land will hopefully serve as a wake-up call to one of the great follies of this Government. Hurricane Sandy is a horrific, unique event, but flooding is not, particularly if you live in areas like Hull, Tyne and Wear or Tewkesbury. Not if you own one of the 200,000 homes that are considered highly at risk of being washed out as the weather grows increasingly volatile.

For 12 years the insurance industry has kept cover for these households at artificially low levels in exchange for an unfulfilled government promise to build proper flood defences. The deal expires on 30 June.

Former environment secretary Caroline Spelman claimed to have been close to an alternative agreement over the summer, but lost her job in David Cameron's September reshuffle. Though it's understandable that her replacement, Owen Paterson, would want to take a fresh look at the issue, it seems that a lack of progress is down to him being distracted by the argument over badger culling.

With no solution in sight, big insurers are forced to choose between massively hiking prices, or even refusing cover, for those living on floodplains. Housing markets and local economies face being destroyed in an instant.

With excess likely to be as high as £30,000, 1 July 2013 will be Cameron's Black Wednesday if the Government doesn't act fast.

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