Morpeth flood victims hit by higher insurance premiums

Sep 8 2010 by David Black, The Journal

A TOWN devastated by flooding two years ago is calling for the creation of a national fund to tackle the creeping threat of “insurance blight” affecting flood-risk communities.

Campaigners in Morpeth – whose town centre was left under water in September 2008 – say homeowners and businesses have subsequently been hit by big increases in the cost of insuring themselves against a repeat of the catastrophe.

In some instances, premiums are said to have doubled or trebled, and there have been cases of insurance policy excesses of more than £5,000 being demanded. It is feared the town is suffering from increasing insurance blight, with cover becoming more and more unaffordable and potentially affecting house sales and business prospects.

Now a potential solution has been put forward by a working group – involving Morpeth Town Council, the Morpeth Flood Action Group and the town’s chamber of trade – to create a special national fund which would ensure that flood insurance was available to all and at a reasonably affordable cost.

The fund, which would be paid for by a levy on annual household insurance premiums collected by insurance companies, would be run by a new Flood Reinsurance Agency, guaranteed by the Government. The fund would handle liability for flood insurance, meaning that private insurance companies wouldn’t have to differentiate between properties based on flood risk when assessing premiums and excesses.

The Morpeth group’s proposals are expected to be raised by the National Flood Forum at a Government summit on flooding issues in London next week.

They come amid claims that 5.2 million properties in England are at now risk of flooding, and that the cost of flood damage in 2007 alone was £3bn.

Yesterday Morpeth town councillor David Parker, who chairs the working group, said: “Earlier this year we were being told that people were facing quite steep increases in their insurance premiums and excesses. Feedback from other flood-risk areas around the country showed this is a national problem.”

Morpeth Flood Action Group chairman Alan Bell, whose home was flooded two years ago and has seen an increase in his insurance costs, said action was needed.

He said: “This is just a concept at present. The worry here is that if we are flooded again, people will have to find thousands of pounds for insurance excesses and might not be able to pay.”

The working group’s proposal can be viewed in full at www.morpethfloodaction.org.uk/html/proposal.html