Policy paper

Government response to the independent review of flood insurance in Doncaster

Published 29 July 2021

Following the severe November 2019 flooding in South Yorkshire, the government commissioned an independent review of the reasons why some residents in Doncaster did not have sufficient insurance cover and what action might improve protection against future events. The review, by Amanda Blanc, was published on 5 November 2020. It signalled disparity in affordability and access to suitable insurance policies for homeowners and tenants, and that some residents in high-flood-risk areas are being sold cover that excludes flooding.

The report identified that 95% of homeowners were able to confirm that they had both buildings and contents insurance, compared with 94% of households at risk of flooding in Defra’s national survey in 2018 which looked at the availability and affordability of flood insurance. This shows the sustained availability of home insurance for households.

However, the report also highlighted that, amongst homeowners who had insurance, 6% of buildings insurance policies and 7% of contents insurance policies did not cover flooding. The report also found that there were significant differences between the insurance cover held by homeowners and tenants, the evidence showing that only 25% of tenants confirmed they had contents insurance that covered flood damage (50% did not know).

Amanda Blanc made 12 recommendations. The government fully accepts 9, and accepts 3 in part, and will take forward a body of work with wider government, industry and flood risk management stakeholders to progress them. The government’s full response to the independent review of flood insurance in Doncaster follows.

Recommendations

The recommendations come under 6 themes.

Theme 1: Defra research and consideration of Financial Conduct Authority regulations to reduce policies with flood exclusions

The government accepts these recommendations and is taking a 2-pronged approach to tackle this issue, which takes a proactive stance with industry and ensures the government galvanises the insurance industry on addressing the issues of exclusions. This will help to maintain consumer confidence in the insurance industry and the Flood Re scheme.

Firstly, the government will seek better evidence to understand the scale and drivers of flood exclusions through repeat Defra research into flood insurance over the next 12 months. The government will write to the Association of British Insurers (ABI) to ask them to work with insurers to provide data as soon as possible on the current number of household policies with flood exclusions. Insurers are best placed to provide this data to inform any future policy.

Theme 2: Industry led actions to address concerns raised in the report about policies with flood exclusions and take up of Flood Re

The government accepts these recommendations. The insurance industry has a vital role to play in encouraging uptake of flood insurance. The recommendations challenge the ABI and British Insurance Brokers’ Association (BIBA) to improve communication and awareness between industry and consumers to ensure Flood Re is being utilised where applicable and drive-up best practice. This will help consumers become more aware of their insurance options and may decrease the number of policies sold with flood exclusions.

BIBA, with ABI and Flood Re, are already developing a code of practice and a new specialist directory of firms who can offer flood insurance for household building and contents cover. The government will write to industry to ensure there is a clear timetable for delivery within the next 12 months, and that industry regularly provides sufficient data to help assess the impact of these interventions.

Theme 3: Landlord responsibilities for at-risk tenants

We partially accept the recommendations calling for landlord responsibilities toward at-risk tenants to be re-evaluated and made clearer. The focus will be on the private rented sector only, as the social housing sector is already highly regulated, with registered social landlords obliged to meet the Regulator of Social Housing’s economic and consumer standards. The review findings were insufficient to suggest legislation is a necessary action at this stage. However, the government will be reviewing the evidence base, assessing current provisions and considering whether these need strengthening.

Theme 4: Raising awareness and improving communication with tenants, households and businesses in high-risk flood areas to improve understanding of flood insurance and how to access it

The government accepts these recommendations. It is important for those at flood risk to have the information they need to take informed decisions. There is already guidance available to communities at flood risk, however evidence suggests individuals are more likely to act on advice if it is from a trusted source. Defra will be engaging with key stakeholders to ensure their guidance is up to date and re-circulated. Further, the government will also be commissioning research to examine the ‘trusted voices’ in a customer’s journey to inform future policy to ensure communications have impact.

Theme 5: Increasing floods contents cover amongst tenants

The government accepts this recommendation and will explore a range of options to promote uptake of contents cover. This includes having consulted on reducing Flood Re’s lowest premium as part of the wider consultation on Flood Re.

Theme 6: Immediately after a flood event, local authorities should review the demographics and tenancy rates of the affected area to ensure an appropriate response mechanism is put in place

We partially accept this recommendation, as existing non-statutory guidance, issued by the Cabinet Office, sets out the role of local resilience forums, including local authorities. Presently, it is not necessary to place additional duties on local authorities. Future work is being undertaken across government on the commitments made in the Integrated Review to strengthen resilience levels and LRFs over the medium to long-term future.