EMBARGO: Immediate

With more heavy rain causing flooding across the UK and still no agreement between the insurance industry and the Government on who should shoulder the risk, Cornwall-based firm, Richfords Fire & Flood, has been acknowledged at the highest level for providing a solution.

200,000 UK properties could find insurance cover unaffordable if a new deal isn’t agreed when the protective insurance deal called the ‘statement of principles’ goes out of date at the end of June. So, a series of select committees is being held to work out a way forward to give householders insurance cover. Political commentators have called them ‘crisis talks’ and claim that a solution is still far away.

Another select committee session was held on 20th March where representations were made by organisations such as Aon and Marsh. Questions were then asked by MPs on suggestions for a new deal.

One solution is called the ‘Flood-Re’ model which suggests major events are covered by re-insurance. The challenge with this is that it has been designed to cover up to a 1 in 200 year eventuality. Questions were asked about what would happen in larger scale disasters of the magnitude of 1 in 300 years? A reply was given by Aon that these would normally be covered by the Government stepping in.

Another solution proposed is the ‘Flood-Mu’ model as suggested by Marsh’s managing director, Mark Weil: In this model the cost of flood claims would be divided between insurers after claims have occurred. This model would therefore pool some of the flood risk between insurers. However this would result in some insurers paying out for risk they have not chosen to cover.

Cornish MP George Eustice raised Richfords Fire & Flood’s solution in the session. This is a compromise between the Flood Re and Flood Mu models, allowing a pot of money to be built up in advance from a levy on property insurance, and then accessed at the claims stage. This ‘Flood-Re-Mu’ model would mean that people’s risk is reduced by the fund, but kept comparative to their size of risk. It would also mean that the tax-payer would not have to step in as the last resort.

Now that this model has been mentioned at the highest level, Richfords Fire & Flood are organising further meetings with insurers, MPs and ministers to give the full details on their solution.

Richfords Fire & Flood owner, Steven Richford, said: “Time is getting short now on finding an answer that can be agreed by the ABI as well as the Government. We believe that our compromise will give a good level of protection to the public, whilst meaning that the risk is shared to some degree. What we are keen to avoid is a situation where the current deal goes out of date and home-owners are left without any cover at all.”


For interviews and images, please contact: Michael Cooper 01209 722522 / 07968 175455