Even before some people had their drinking water reconnected, insurers were warning that premiums would be on the rise and I read in the paper that Norwich Union is set to hike premiums by 10 per cent.
But this is just the tip of the iceberg and as advisers, we must be aware of the shifting sands so that our clients are not caught out. I know a number of lenders have guarantees in place which promise to maintain cover on property while the present occupier remains there. However, these guarantees will be looked at in the coming months as insurers look to mitigate the risk they are taking on board in the aftermath of what has happened this Summer.
Halifax, for example, has promised a review next year on the guarantee it provided in the aftermath of the 2002 floods. It won’t be the only one to do this and plenty of people could find themselves unable to gain cover on their property.
This would have serious consequences for thousands in high-risk areas, with properties being uninsurable and house prices taking a hit. I know providers have a duty to make a profit and they are running businesses after all, but advisers need to act now to try and stop clients falling into an insurance black hole.
This is why the government’s attitude to building on flood plains seems so blindingly stupid. Yes, as a small island, we only have a limited amount of land to build on. But if scientists keep warning that sea levels will rise and severe weather will become the norm as global warming kicks in, it seems very short-sighted. If this is the policy it chooses to follow, it must work with insurers so that properties aren’t uninsurable before the first people have moved in.
Otherwise, we’ll be well on our way to a two-tier housing market; with expensive, insurable property on one side and uninsurable, cheaper property on the other.
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