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Flood and Water Management Bill

Amendment 107 would insert a new clause setting up a scheme of affordable charges. To a certain degree, this is a reprise of the debate that took place in the House of Commons but I have one or two questions to add. Forming the background to this amendment are the 2007 floods, which cost homeowners and businesses more than £2 billion. The average cost per flooded home was between £23,000 and £30,000, and one-quarter of homeowners were not fully covered by insurance. Thirty per cent of householders were forced to relocate to temporary accommodation, one-third of whom had to stay there for more than a year, and the average cost per flooded business was between £75,000 and £112,000, with 95 per cent covered by insurance. Those figures are well known but, as I said, they are the background to the amendment. In the aftermath of those floods, many people found that large insurance companies in particular were extremely helpful, but some found that some of the smaller companies hiked up premiums, introducing excessive excess charges for homes that had never previously flooded, and the postcode nature of the charge calculation was so broad that even owners of homes that were not flooded experienced problems in finding an affordable premium. Many of us are aware that many insurance companies do not have sufficiently detailed local knowledge to be able to exclude all the homes that are not at risk of flooding. One example that my honourable friend Martin Horwood raised was a household in his constituency of Cheltenham faced with an excess charge of £20,000 in the event of a flood. As he pointed out, that is not insurance and it is not an amount that people can generally afford to pay. The Association of British Insurers, the ABI, has said that one-third of the 3 million new homes that the Government want to see by 2020—a target that will not now be met but nevertheless is still in place—will be built on flood plains. Whether or not those particular houses are at real risk of flooding, the fact that they are on flood plains will raise alarm bells with many insurance companies and will affect the premiums that they charge. Therefore, the amendment puts forward a scheme for affordable charging so that customers are protected from the whims of insurers, who obviously, and not unreasonably from their point of view, are acting in the interests of their companies and shareholders. This is essentially the same amendment that my honourable friends moved in the House of Commons. I think that it is slightly more elegantly worded, although whether other people will agree I do not know. It was debated substantially and put to the vote, which was lost, on Report in the House of Commons. In private meetings with my honourable friends, the Minister, Huw Irranca-Davies, was receptive to discussing the idea but thought that the existing arrangements with insurance companies were sufficient. However, he did say that on the back of the Bill he would look to meeting the ABI and the National Flood Forum to deal with the insurers’ and their customers’ issues. My specific questions are: have any such meetings already taken place; what was their outcome; and can the Minister give us more information and assurances that discussions are taking place to ensure that insurance for people affected by flooding, while reasonable from the insurers’ point of view, is possible and practicable from the point of view of the people who need to be insured? If a large number of people in the country cannot get affordable insurance for their properties, that makes the prospects for those areas rather dire. I look forward to hearing the Minister’s comments.