The Environment, Food and Rural Affairs Committee will hold a further oral evidence session on flood defence funding and related issues on Tuesday 26 February. The session will examine the provision of affordable flood insurance to households and businesses.
The three witnesses who will appear before the Committee are all from the insurance sector:
- Otto Thorensen, Director General, Association of British Insurers
- Angus Milgate, Managing Director UK and Ireland, Aon Benfield
- Hutton Swinglehurst, Senior Vice President, Marsh Ltd
Next week’s session will be the third oral evidence session in February held by the Committee on flood defence funding and related issues since the inquiry was first announced on 23 January.The first evidence session, on 6th February, focussed on the ability of local communities to respond to the threat of flooding and effectiveness of Government flood management policies and programmes.The second evidence session, on 13th February, considered the role and performance of the Environment Agency in managing flood protection.
The Committee expressed its concerns about flood insurance in its Sixth Report published on 23rd January on the Government’s Draft Water Bill which is currently making its way through Parliament. On the same day the Committee also announced its decision to look in detail at spending on flood defences and insurance provision, in view of the importance of minimising flood risk to communities across the country and ensuring affordable flood insurance cover is maintained.
The Government is currently still involved in discussions with insurance companies about ongoing provision of affordable flood insurance when the current Statement of Principles agreed between the Association of British Insurers (ABI) and the Government expires at the end of June 2013. In the Report, the MPs said that they understood the Minister's reluctance to provide a running commentary on negotiations with the Association for British Insurers and the possible solutions that are being considered, commenting:
"The Minister was reluctant to discuss the progress of negotiations in any detail when he appeared before us, but said that the Department was "working really hard to achieve" affordable and freely available cover. On the specific issue of whether legislation would be needed, officials told us that "The structure that might emerge is not clear, but if it involved either financial or regulatory structures or a combination that would probably require further legislation". In addition, the Government has not yet fully implemented 'insurance with rent schemes' that were recommended in the Pitt Review. We will explore these issues with the insurance industry when we take evidence from them shortly."
The Draft Bill does not include any specific clauses relating to flood insurance, although the introductory section on "Taking the Draft Bill forward" notes that "the UK and Welsh Governments may also need to consider legislation to help manage the financial risk of flooding".
The Committee said in its Report:
"We are conscious that the current Statement of Principles will expire in less than six months, well before Royal Assent to a Water Act can reasonably be expected. We therefore wish to establish more details of the legislative solution(s) that are being considered should it prove necessary to go down that route; and in particular what consideration has been given to the basis on which flood insurance would be provided during the period between the expiry of the Statement of Principles and Royal Assent to a Water Act."