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ABI demands Government increases investment in flood defences

The Association of British Insurers has criticised the Government’s investment in flood defences in a letter to Environment Secretary Hilary Benn.

ABI director general Stephen Haddrill wrote that the ABI wanted to continue providing cover for people in flood risk areas but felt the Government was not adhering to the statement of principles which requires it to maintain defences.

Haddrill said the cost to insurers of the summer flooding is nearing £3bn and wrote that the industry is bracing for further floods.

He also highlighted that in other countries this cost would have fallen on the state rather than the insurance industry, effectively stating the Government has been let off lightly with its £15m bill.

In the letter Haddrill asked Benn to reconsider building new houses on known flood plains and warned that “insurers will in future scrutinise new developments more closely and warn of potential insurability more robustly.”

He wrote that the £800m the Government has committed to flood defences in 2010-11 is welcome but a longer-term view, of 25 years, should be taken. He also suggested the Environment Agency should be given new statutory duties.

The ABI predicts, over this 25 year period, £8bn will need to be spent on bringing defences up to scratch.

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