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Last
autumn was the wettest since 1766, the insurance industry said yesterday
as more torrential rain, snow and flooding threatened to take the
country's weather bill to more than £1 billion. The Association
of British Insurers (ABI) said that the effects of global warming
could swamp the industry and force it to refuse cover to millions
of homeowners. It estimated the cost of recent floods has risen
to £750 million, much more than the £500 million first feared. People
living in areas of high flood risk could lose their present cover
within two years, it said, if the government failed to strengthen
water defences and walls. CGNU, Britain's biggest insurer, said
that autumn and winter floods had cost it £285 million. The worst
affected areas were Kent, Sussex and the Midlands, where some people
were still living in temporary accommodation. A spokesman for the
ABI said "We want to be in a position to provide flood insurance
but there has to be a review of flood defences. Often the Environment
Agency not to develop but the planning authorities do not take heed.
That is not fair on the insurers who are asked to provide cover,
or on homebuyers who inadvertently buy houses in these areas." But
the spokesman said that while most householders and small businesses
would still be able to get cover under the moratorium, insurers
would still reserve the right to deny it in extreme circumstances.
It means that some people living in arrears persistently affected
by floods could still find themselves unable to find cover next
year. The industry will review what action has been take to improve
flood defences and tighten planning rules after the two-year period.
The ABI said that it feared that snow in Scotland and the North
of England could cause more floods - imposing further heavy costs
on insurers and increasing the need for action on flood defences.
CGNU said that its costs came from 50,000 claims. It insures five
million householders, almost a quarter of the country's homes. A
spokesman said that the rise in compensation culture across Europe
meant that CGNU had no choice but to increase motorists' costs.
He also blamed the Government's changes to personal injury law,
such as forcing insurers to meet accident victim's medical expenses,
for the increases. "The Government has shifted costs on to insurers.
We have had no option but to increase premium rates," he said. CGNU's
storm damage costs were part of a list of exceptional charges that
pushed it into a pre-tax loss of £1.3 billion, compared with a profit
of £3 billion the year before.
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