By Tim Spencer
It hasn?t been a happy summer for the insurance industry?s UK business. Not only has it been hit by massive claims for flood and storm damage, it has also been abandoned by legislators in its hour of need.
I refer of course to parliament?s failure to announce details of the new flood risk model that will replace the Statement of Principles before breaking up for the summer recess. Consequently an announcement will be delayed until at least September at which point there will be well under a year left before the existing agreement expires.
Significant losses due to unforeseen weather conditions are unfortunately one of those things that insurers have to deal with. However, we shouldn?t have to say the same thing about far-reaching government policy decisions.
The expiry of the Statement of Principles presents a major problem as, since the majority of commercial and home insurance policies are renewed annually, it leaves at least a three month window in which insurers are being asked to provide cover without understanding the precise level of risk they will be taking on board.
As a result many customers that are identified as living in high risk zones may find they are unable to insure their property or that the price and excess they are asked to pay on their policy undergoes a dramatic rise.
Will positive sentiment be washed away by government delays?
This situation hasn?t been created by the insurance industry and yet if it is not urgently addressed it could cause major damage to its reputation. It would be a real shame if the impact of these delays were to cloud customers? perceptions of their insurer. Especially as, despite taking heavy losses, the majority of insurers have worked hard to respond to this summer?s floods in a manner that improves their image and shows customers they care.
For example, the insurer RSA has announced it has already settled more than 40% of the 6,500 claims it received for flood and storm damage in June. And, despite suffering substantial losses, the industry as a whole was last month responsible for helping 68,000 flood-affected customers to replace treasured possessions and return to their homes.
How can insurers protect their reputation if a lack of clarity means the cost of flood insurance has to rise? Share your thoughts via the comments or join the discussion in our LinkedIn group
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