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KINSEY MP: Proper flood insurance reform

Matty Bradford

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Standing in front of a podium set up outside of a school in Dorking.


Just a few months ago, thousands of Britons endured incredibly severe flooding. Let's talk about some of these experiences

Perhaps someone renting a flat managed to get out in time by fleeing to a nearby town and then had to shell out a significant amount of pounds in order to stay in a motel. And, when they returned to their flat, they found that their refrigerator no longer worked and furniture needed to get tossed out and replaced.

All of that costs money.

Or for those folks who do own their homes and have insurance -- so many of them had to spend hours on the phone trying to contact a representative from their insurance company while trying to keep an eye on the kids, only to be told there was a problem and their claim might not get paid.

And, what's worse, right now the insurer who made people jump through hoops to get what they were entitled to are out there sending out their teams of adjusters and underwriters who are going to increase how much it takes to by a flood insurance policy. After all, this is what happens after floods and major incidents with large amounts of insurance claims. It becomes an excuse to raise costs to customers.

This is why this government's recently announced flooding policy falls short. Their plans related to flood insurance are simply, "We'll advise you on how to do better next time. And, on top of it, we're going to work with you to tell the general public how badly they need to buy your services that you struggled to deliver and now cost more money.

We now have two proposals that, unlike this government, actually address the financial hits regular people face when a river knocks on their front door.

First, for renters and the uninsured, we will create an Emergency Support Fund for areas prone to flooding. This fund will help people pay for things they need to live and get their lives back together.

And, secondly, we are also announcing a major structural reform for flood insurance via the creation of a National Flood Reinsurance Prorgamme that will reduce costs for homeowners.

Here is how this work.

A homeowner buys a homeowners' policy from an insurance company. And every insurance company that offers homewoners insurance will play a levy to the government to build a pot of money. If you suffer damages from flood insurance, you then ask the insurance company for your claim. And then the government goes and reimburses the insurance company for these claims they have paid out.

This reduces the risk to insurers, which means that this will reduce the costs of insurance premiums actual people actually pay. We will also put in place a cap on how much an insurer can raise premium costs on an annual basis. And we will also increase oversight over the insurance industry's methods in determining what they charge homeowners for insurance, as we all have regulatory oversight to ensure the claims processes run better than they did just a few months ago.

This levy and giant pool of money is called reinsurance, and is a common practice in many parts of the insurance world.

Now, while I am certain the government will criticise this plan for having excessive regulations, I will counter by stating that the insurers in this country failed the British public well beyond just once CEO absconding with money.

Lives were upended by these floods. Lives will continue to be upended in the future as floods only increase in frequency and ferocity due to climate change -- an issue, by the way, this government literally yawned at.

Our proposals will help people manage through the financial burdens that will come in the years ahead as opposed to simply helping the insurance industry make more money.

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