Insurers agree a flood cover deal with government

Millions of homes will continue to get flood cover under a deal struck by the government and the insurance industry. The Association of British Insurers (ABI) had threatened to stop offering flood damage protection unless ministers put more cash into defences.

The industry said it would still offer cover to people at moderate risk and existing customers at significant risk.

The deal depends on the government delivering improvements to flood defences due within five years.

Under a new plan of action, the government has promised a long-term investment strategy in defences.

It says it will also ensure that the planning system will stop inappropriate development in flood-risk areas.

The ABI's Justin Jacobs said: "What we've agreed with the government is that if they can make sure as many people as possible are protected, we'll be able to make sure we can offer affordable insurance to all our customers who want it.

"The pressure remains on the government because they must deliver those defences to people in order make sure we can offer affordable insurance."

The ABI had been highly critical of the amount of money ministers had pledged for flood defence work.

It said 517,000 homes were at significant risk of being flooded.

Previously, the ABI's director general Stephen Hadrill had accused the government of "completely failing to grasp the importance of improving Britain's flood defences in the wake of the devastating floods across the UK".

During 2007, flooding cost the ABI's members £3bn in claims.

Insurers were confronted with four years' worth of claims in just two months, with 180,000 claims for homes, businesses and cars.