Around 200,000 homes at a high risk of flooding could be priced out of insurance when a Government guarantee runs out in 2013, it has been warned.
MPs from the Public Accounts Committee (PAC) have raised concerns over whether there will be enough money to maintain and improve flood defences in the future.
And the Association of British Insurers (ABI) urged the Government to renew its current agreement with the insurance industry to provide cover to households in flooding hotspots before the deal’s 2013 expiry.
According to analysis by the ABI, 92 constituencies around England and Wales have more than 1,000 homes at significant risk of flooding.
And the group has echoed PAC in calling on the Department for Environment, Food and Rural Affairs (Defra) to secure a new agreement urgently.
Otto Thoresen, ABI’s director-general, said: “We are running out of time to make sure that people in high-risk areas are properly protected from the devastation flooding can cause and the ball is now in the Government’s court.
“Insurers want to make sure that every home has access to affordable insurance, should the worst happen, and we’re concerned that those people most at risk will lose out unless the Government considers a safety net.
“We are frustrated with the progress of our talks with the Government on this issue and want it to look urgently at a model that would allow flood cover to remain widely available and competitively priced.
“No country in the world has an entirely free market providing universal affordable flood insurance, and action is needed now to avoid 200,000 high-risk homes struggling to afford cover.”
It comes as PAC warned it was unclear “where the buck stops” for managing the risk of flooding because Defra has said it is not ultimately responsible for the issue.
Defra says it shares responsibility for flooding with the Environment Agency and local bodies, but the MPs have warned the department has no way of knowing if local flood management is adequate and when it should step in.
A report by the parliamentary committee said the costs of flood damage stand at around £1.1bn a year – and are likely to rise steadily with climate change.
A climate change assessment for the Government warned the annual costs of flooding could increase to between £1.5bn and £3.5bn by the 2020s, and £2.1bn to £12bn by the 2080s for England and Wales.
And despite the Environment Agency’s prediction in 2009 that its flooding budget needed to increase by 9% during the current spending period to maintain levels of flood protection, funding is being reduced by 10% over that time, PAC said.
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