Threat to flood insurance risks two tier society

Commenting on this morning's news that insurers may refuse to provide insurance cover for future flood damage, Debra Williams, Managing Director of Confused.com, the UK's leading insurance price comparison service said: "The Government's failure to invest further in flood protection could perversely leave homeowners 'high and dry' without sufficient flooding cover from their existing insurer.

"We've already seen insurance companies reassess what they consider to be flood-prone areas by increasing premiums, however without significant investment from the Government, the insurance industry could potentially refuse to insure homeowners in high-risk areas.

"This in turn could force millions of households to either run the gauntlet of living without cover, or face the prospect of forking out huge additional premiums to specialist insurers willing to take on higher risks.

"While this is potentially desperate news for the owners of up to 2.2 million* properties currently residing in flood prone areas, the flip-side could be lower premiums for people living in 'dry' areas, as those insurers free from the burden of flood claims, reflect this in more competitive pricing.

"This raises the prospect of a two tier insurance society: those with affordable insurance in low-risk areas, compared to those with insufficient cover or cover at exorbitant levels. In line with the rest of the insurance industry, we hope the Government will backtrack on its position by investing more heavily in flood defences, thereby removing this potential scenario."