People in Scotland could lose their coverage after extensive flooding hit their areas.
British insurers are cautioning that thousands of people living in Scotland may suddenly find that it is impossible to purchase homeowners insurance for their properties unless the U.K. government is willing to underwrite the claims.
At the moment, one in every 22 Scottish residential properties is at a flooding risk.
According to data that has been released by the Scottish Environmental Protection Agency (SEPA), there are 125,000 properties in the country that could lose their ability to be covered by homeowners insurance due to their risk of flooding from the sea, rivers, or severe rainfall. Unless a new agreement can be reached with Westminster, then there will be such a dramatic increase on the premiums for properties that have experienced several instances of flooding, that they will be considered to be essentially uninsurable.
The homeowners insurance talks between the U.K. government and the ABI have broken down.
The Association of British Insurers and the federal government have not been at the bargaining table since November and they were nowhere near an agreement for funding a new program that would protect at-risk property owners against flooding.
_________________________Random Success Quotes to Remember ~ "Take up one idea. Make that one idea your life -- think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body be full of that idea, and just leave every other idea alone. This is the way to success." -- Swami Vivekananda
It is the intention of insurers to bring in a £8 per year homeowners insurance levy in order to help to pay into a fund that will assist in covering the growing cost associated with regular large flooding events. At the same time, though, the industry has expressed its worries that this fund will not become large enough right away. It is calling for the U.K. government to provide a loan to bridge the gap to cover the flooding that will occur in 2013.
The industry has stated that the United Kingdom is the only country in which the government does not provide some level of underwriting for homeowners insurance for flooding. However, the country’s federal ministers have not yet agreed to provide coverage for the period between the establishment of the levy and the time at which the funds have become sufficient to make it effective. If this is not done in time, the industry will not be able to come up with a workable model and will not be able to cover those with the greatest risk.