Flooding levy is golden opportunity for brokers
Kevin Paterson is sales and marketing director at Assurant Intermediary
Apparently we’ve had the wettest summer for over 100 years. Industry sources state that more than 3,000 properties suffered water damage between May and August this year alone.
This could result in higher house insurance bills for all homeowners in order to cover the costs of flood damage in high risk areas.
The Government and the insurance industry are continuing to debate the issue of flooding in order to come to an agreement on how best to provide ‘affordable’ cover to high-risk homes that’s fair for both homeowners and insurers.
It has been estimated by those within the insurance sector that the proposed new scheme could add 10% to the average home insurance premium.
Currently, under an agreement called the Statement of Principles, most homes pay a ‘small sum’ on the cost of their premiums to subsidise part of the insurance of high-risk homes so that insurance cover remains available for all.
This agreement is due to expire next year, at the same time when most insurers are expected to redress the shortfall through premium hikes for all policyholders.
If no solution is found, homeowners living in risky areas could find themselves without insurance and unable to sell or remortgage their homes.
The most likely solution to make buildings and contents cover available and affordable for everyone post 2013 will be for all insurers across the board to introduce a levy on everyone’s insurance policy.
For those who have never suffered flooding and are unlikely to, and for those whose incomes are already stretched, this will not be a welcome decision.
Whilst not great news for policyholders, these changes do provide brokers with a golden opportunity to get back in touch with their database to renew cover and assess clients’ changing circumstances.
It sounds obvious, but it’s important to stay on top of renewals and remain proactive year after year, either by revisiting clients to let them know of significant changes in legislation or generally to re-assess customers’ changing circumstances and insurance needs.