Context
An independent review was commissioned by the government following the severe flooding of South Yorkshire in November 2019. The review sought to identify the reasons why some residents in Doncaster did not have sufficient insurance cover and what action might improve protection against future events.
The review undertaken by Amanda Blanc was published on 5th November 2020. It signalled disparity in affordability and access to suitable insurance policies for homeowners and tenants, and that some residents in high-flood-risk areas are being sold cover that excludes flooding.
12 recommendations were made by Amanda. The government wholly accepted 9 of them and accepted 3 in part.
Key points to note
- The report highlighted that, amongst homeowners who had insurance, 6% of buildings insurance policies and 7% of contents insurance policies did not cover flooding.
- It also found that there were significant differences between the insurance cover held by homeowners and tenants; the evidence showing that only 25% of tenants confirmed they had contents insurance that covered flood damage (50% did not know).
The recommendations are categorised under six themes:
Theme 1- Defra research and consideration of Financial Conduct Authority regulations to reduce policies with flood exclusions
- Both recommendations have been accepted by the government.
- To deal with these issues, the government will first of all seek better evidence to understand the scale and drivers of flood exclusions through repeat Defra research into flood insurance over the next 12 months.
- The Association of British Insurers (ABI) will be asked to work with insurers to provide data as soon as possible on the current number of household policies with flood exclusions.
Theme 2- Industry led actions to address concerns raised in the report about policies with flood exclusions and take up of Flood Re
- This recommendation has been accepted by the government.
- BIBA, ABI and Flood Re are already developing a code of practice and a new specialist directory of firms who can offer flood insurance for household building and contents cover.
- The government will write to industry to ensure there is a clear timetable for delivery within the next 12 months, and that industry regularly provides sufficient data to help assess the impact of these interventions.
Theme 3- Landlord responsibilities for at-risk tenants
- These recommendations have been partially accepted by the government.
Theme 4- Raising awareness and improving communication with tenants, households and businesses in high-risk flood areas to improve understanding of flood insurance and how to access it
- These recommendations have been accepted by the government.
- There is already guidance available to communities at flood risk, however evidence suggests individuals are more likely to act on advice if it is from a trusted source. Defra will be engaging with key stakeholders to ensure their guidance is up to date and re-circulated.
Theme 5- Increasing floods contents cover amongst tenants
- The government has accepted this recommendation.
- A range of options will be explored to promote uptake of contents cover. This includes having consulted on reducing Flood Re’s lowest premium as part of the wider consultation on Flood Re.
Theme 6- Immediately after a flood event, local authorities should review the demographics and tenancy rates of the affected area to ensure an appropriate response mechanism is put in place
- This recommendation has been partially accepted by the government.
The ABI responded that they welcomed the update on the governments work to tackle flood risk. The full statement can be found here.
Next actions
None – for information and awareness. We will advise on any forthcoming developments as and when they are published.