Spelman raises expectations on flood insurance deal

One of the most striking features of yesterday's emergency statement in the House of Commons on the weekend's flooding by Caroline Spelman, the Environment Secretary, was her unequivocal promises on the replacement for the Statement of Principles.

The statement is the time-limited bargain between the insurance industry and government which expires in June next year to ensure that householders in flood-prone areas have been able to obtain insurance. Discussions have been going on for months and a range of varying solutions have been canvassed but, as yet, nothing has been decided.

The minister was questioned by several MPs yesterday on flood insurance and her answers left her with very little room for manoeuvre:

Responding to shadow minister Mary Creagh: "On flood insurance, we are at an advanced stage in intensive and constructive negotiations with the insurance industry on alternative arrangements for when the statement of principles expires this time next year. As the Hon Lady will be aware, in 2008 the insurance industry notified her party, when in government, that the statement of principles would come to an end. Her party in government did not find a successor to the principles but, as she will have heard me say, we are well on our way to doing so. The average insurance premium is roughly £300 a year, while the average estimated claim in this regard is so far estimated to be £15,000. That shows the benefit of households being insured."

Responding to Labour MP Ian Lavery: "I am confident of that because we have reached an advanced stage of negotiation with the insurance industry to secure universal and affordable flood insurance. It is often misunderstood, but the statement of principles was no guarantee of the affordability of insurance. We understand how important that is, and will make a statement shortly."

Responding to the Labour MP for Hull, Diana Johnson, who said: "I am sure the Secretary of State knows that today is the fifth anniversary of the dreadful flooding in Hull. In the light of that and Hull residents’ experience of getting insurance at a reasonable cost, without excessive premiums or excesses, can the Secretary of State assure me that the new agreement will open up the insurance market in areas such as Hull?"
Mrs Spelman: " Yes, I can give the Hon Lady that assurance; details will follow shortly. As I said, however, having inherited a situation in which the previous Government failed to come up with a successor to the statement of principles, I am proud that we have found a way forward with the insurance industry that, above all, guarantees that universal and affordable insurance remains available to all, including her constituents."

Mrs Spelman must be very confident that she has a viable solution almost ready to go. If she does announce something that meets these high expectations then it will be a feather in her cap and should also reflect well on the insurance industry.

The full statement and debate can be found in Hansard