This is to allow discussions with the UK government on the future of flood insurance to continue which have become bogged down and the move has been welcomed by the property industry.
But the industry urged the two sides to get a move on as a matter of urgency or homes could be left uninsured.
‘The government and the ABI continue in constructive discussions on the future of flood insurance, specifically on how the components of the ABI's Flood Re proposal can be designed to best meet the objectives of the government, the insurance industry and, most importantly, the needs of those at risk of flooding,’ said ABI director general Otto Thoresen.
‘There are still important issues to resolve and no deal has been reached, but negotiations are advanced and we will bring negotiations to a conclusion as soon as practicable. After the Statement of Principles expires on 30th June, ABI members have agreed that they will continue to meet their commitments voluntarily for one additional month until July 31st, to ensure that their customers across the UK can continue to access insurance while discussions are concluded,’ he explained.
Alan Cripps, Royal Institution of Chartered Surveyors associate director for the built environment, said that it is critical that the government and insurance industry reach an agreement during this period.
‘The implications for the property sector of the Statement running out, even with this voluntary extension, are simply staggering. First and foremost there are of course those people at risk of flooding,’ he explained.
‘However, this has much wider ramifications for all property owners. Surveyors are responsible for the valuations that underpin insurance agreements and without that insurance it will be nigh on impossible to get a mortgage and without a mortgage many people will be unable to purchase property. If properties are not insurable or mortgageable there will be a dramatic impact on their value,’ he pointed out.
‘This has the potential to rule out existing residential stock at a time when we're desperately trying to close a housing deficit; and it will also drive commercial businesses away from flood risk zones, deterring investment and provision of services,’ he added.
‘The lack of clarity regarding the provision of flood insurance has reached crisis point, according to Cluttons partner, Ian Paton. ‘The government is fully aware of the threat floods present to the UK and it is unclear why it is not addressing the issue,’ he said.
‘The cost to the taxpayer to introduce robust defences is significantly less than the cost of dealing with the devastating damage flooding can cause. It is time for talks between the government and the Association of British Insurers to reach agreement now,’ he added.
