Agenda item

(1)       Max Tant gave a presentation. The slides are contained with the electronic agenda papers on the KCC website.

(2)       Mr Tant said that the Government had been concerned to ensure that residential homes had access to affordable insurance against flood risk.  Following discussions, the Government and the Insurance industry produced a statement of principles which meant that any Insurance Company that had a policy holder who had been a victim of flooding was obliged to continue to offer insurance to that customer.  As this principle did not apply to any other Insurance Company, this meant that the customer had to rely on the original insurer, and the statement of principles had not set out what terms the Company had to offer.   

(3)       The Insurance Companies had believed that the Government would invest more in flood defences, thus reducing their exposure to the risks.  After 13 years, the Insurance industry did not feel that these expectations had been met and they had become unhappy with this continuing.  Instead, the insurance industry had developed Flood Re which was a re-insurance scheme for Insurance Companies, enabling them to get insurance for themselves against the risk of flooding carried by domestic home insurance policies.  The policy holders were unaffected except for the premium for Flood Re which was set according to their Council Tax band.  They continued to take out a policy and the Insurance Company took out its own policy with Flood Re.  This applied in cases where the flood risk was at a 1 in 75 year annual return period or higher.

(4)       Mr Tant said that the intention was that the Flood Re pot would build up to £180m through premiums paid by all companies that offered home insurance. Flood Re did not apply to properties that had been built after 2009, nor did it apply to businesses.  There were also other exemptions which could be seen on the website www.floodre.co.uk. 

(5)       Mr Tant said that Flood Re was making a difference and that people who would otherwise have found the terms of their policies to be prohibitive were certainly seeing the benefit and accessing affordable cover.

(6)       Mrs Brown said that as a result of Flood Re, the premium for her property in Yalding had reduced to £1,300 from £4,000 and the excess from £5,000 to £250.  Many people in the Yalding were now able to afford an insurance policy when they had not been able to do so before, particularly as the local insurance broker had become an expert in this field.

(7)       Mr Vye described the circumstances in one part of the Lower Nailbourne and drew attention to the lack of information held by Insurance Companies in respect of the actual locations where flooding had occurred.  This had partly been the result of the Environment Agency’s maps which indicated that a village had been affected by flooding, rather than explaining that this had occurred in particular parts of it.  He suggested that this might be an area of work that the Parish Councils could undertake with the Environment Agency, and possibly with the insurance industry as well.

(8)       Mr Tant said that the Flood Re website was particularly informative and worth reading by anyone who had concerns about the impact of flood risk on their ability to afford an insurance policy. 

(9)       Mr Tant responded to comments and questions by saying that buildings that had been flooded and then rebuilt after 2009 were covered by Flood Re.  Individual Insurance Companies had also adopted different approaches to the way in which they assessed the risk of flooding. Some saw the development of expertise as a means of gaining an advantage in the market. Others took a more risk averse approach to flood risk and concentrated on other areas. Not all insurance companies were aware of or were using Flood Re. It was therefore important for potential customers to shop around and not treat the insurance industry as a homogeneous entity.

(10)     RESOLVED that the report be noted.