Steve Gilbert MP writes…Government must wake up to the flood insurance risk

In 1952 a flood ripped through the Devon village of Lynmouth wrecking scores of homes, taking the lives of dozens of people and costing millions in rebuilding work. In 2010 Cornwall was hit by flash-flooding with hundreds of homes and businesses devastated across the south of my constituency.

In the 50-odd years between the two events most parts of our country were hit by floods at some point. Over five million people in the UK are now at risk of flooding from rivers or the sea in the UK, and severe weather events such as freak storms can cause flash floods that devastate communities (such as Boscastle in 2004) within a few hours, making many more of us vulnerable. Furthermore, the risk of flooding is set to increase in the coming years, as climate change takes hold.

Where flooding does strike, it’s only when the devastating flood waters recede that the full impact becomes clear, both in terms of the damage to lives, homes and livelihoods, and in terms of the financial impact. The 2007 floods alone cost the UK economy £3 billion. One thing that gives us some peace of mind, however, is our household insurance. Of course, we can never replace the people, the memories or the mementos that the flood waters wash away; but insurance gives us the comfort that buildings and furniture can be replaced and lives can be slowly rebuilt. 135,000 householders and 35,000 businesses claimed on their insurance following the 2007 floods. Now imagine a world in which large numbers of people living in flood risk areas can’t access or afford to pay for flood insurance: that’s precisely the scenario facing many parts of Britain, notably Devon and Cornwall.

Next year the ‘Statement of Principles’ – the agreement between the Government and the insurance industry that means insurance firms must offer cover for flood risk areas – runs out. The Government and insurance industry argue that the Statement of Principles is unsustainable, saying that it distorts the market and doesn’t reflect the risk that some areas face. The ending of this agreement means that the country is likely to move to a market-based insurance system for flooding, where people and businesses will have to pay higher premiums which more accurately reflect their risk of flooding.

While renewing the Statement of Principles isn’t an option, the reality of leaving it all up to market forces is that hundreds of thousands of low-income families in high-risk postcodes will struggle to find or to afford flood cover, leaving them in the horrible situation of being at high risk of flooding but unable to take the responsible approach and make sure they’re insured.

We know that there is a link between flooding and deprivation. Without a workable solution agreed and in place within the next year, insurance prices will rise, pricing families on low incomes, like many in my constituency, out of the market and leaving them worrying every time heavy rain is forecast.

Since it’s virtually impossible to sell an uninsurable house, house prices in the worst affected areas would plummet, trapping the vulnerable and those on low incomes in new areas which are likely to emerge as what the Environment Agency calls “deprivation hotspots”. And, in the event of a flood hitting, lives will be utterly destroyed as families and businesses lose everything without the recourse to funds for rebuilding.

This is not acceptable, but we are running out of time to make sure that it doesn’t happen.

We need to find a mechanism which continues to ensure that flood insurance is available, affordable and fair. That’s why I am arguing for an insurance premium cap – a limit to the amount homeowners and businesses are expected to pay for flood insurance. Put simply, this would act as a safety net for the people and communities who need it. If the cost of insuring a property is above the cap then the insurance industry and Government would work together to pool the risk and target support.

The key question is how to set the threshold for such a pool: if it’s too high, it will still price those on lower incomes out of the market; if it’s too low, it will both make it less attractive for insurers to offer cover outside the pool. That would result in the pool being too large and act as a disincentive for property owners and communities from investing in flood resilience and prevention in their own properties.

One thing I am clear about is that it’s not acceptable for us as a society to pull the ladder-up from those who could be hardest hit. We must ensure that flood insurance is both widely available and affordable and that any new flood insurance regime protects the most vulnerable.

* Stephen Gilbert is Liberal Democrat MP for St Austell and Newquay and chairs the Regional Aviation All Party Parliamentary Group

Read more by or more about .
This entry was posted in Op-eds.


  • Richard Dean 2nd Apr '12 - 12:02pm

    This looks like an ideal opportunity for civil engineering works to protect against floods, and the money involved might also stimulate the economy and get people back to work.. Perhaps a word with Goerge Osborne could stimulate him into doing something effective, even popular for a change? And he might not want toose the 2015 election because flood damage in early 2015 is blamed on an unprepared government.

  • Richard Dean 2nd Apr '12 - 7:22pm

    Stephen. The Institution of Civl Engineers ( would be happy to advise on civil engineering aspects.

  • Simon McGrath 2nd Apr '12 - 10:56pm

    @Stephen – cant really see the Government wanting to take on such an unknown risk and cost.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

Please complete the name of this site, Liberal Democrat ...?


Recent Comments

  • User AvatarRichard Underhill 22nd Oct - 9:54pm
    Usain Bolt supports Lewis Hamilton, who also gets a handshake from Bill Clinton. At the end of a Formula race they play the national anthem....
  • User AvatarPalehorse 22nd Oct - 9:31pm
    Caron, But what if the result of #referendum 2 is only very slightly remain? Say 1%?
  • User AvatarMike MacSween 22nd Oct - 9:30pm
    Tony Greaves is right, except the 'when' should be replaced with 'if'.
  • User AvatarFacts 22nd Oct - 9:18pm
    "If the referendum on the deal produces an accept the deal vote, that’s how it will have to be. But we should give the people...
  • User AvatarCaron Lindsay 22nd Oct - 9:09pm
    If the referendum on the deal produces an accept the deal vote, that's how it will have to be. But we should give the people...
  • User AvatarAlex Macfie 22nd Oct - 9:05pm
    expats: "democracy" is that you can dissent from the "will of the people".