Insurance: Insurers hit out at flood 'failures'

Insurers launched a savage attack on the Government yesterday, accusing ministers of "letting down millions of homeowners and businesses" over flood defences.

In a strongly worded statement, the director general of the Association of British Insurers, Stephen Haddrill, said: "The insurance industry is helping tens of thousands of people affected by flooding this summer, but the Government has now failed to play its part. Millions of homeowners and businesses around the country have been let down by the Government's failure to commit sufficient money to new and improved flood defences."

The ABI was infuriated after it emerged that the Government's repeatedly announced promise to increase spending to £800m by 2011 would see most of the extra money coming in the later years rather than now, when the ABI believes it is needed.

Its statement is significant because the organisation has long attempted to work with ministers and has for many years sought to avoid public confrontation. However, patience is wearing thin, with the industry paying out more than £2bn to cover the summer's floods. Cover against floods has to be bought separately on the Continent and houses on flood plains are often not covered at all.

A spokesman for the ABI said the industry would "fight to retain" its agreement with the Government that gives people living on flood plains in Britain cover as long as defences are adequate. But he pointed to a recent National Audit Office report which found that half of the country's defences are in need of repair, and warned that people could lose cover if defences were inadequate.

The ABI added that ministers had "failed to grasp the importance of improving Britain's flood defences in the wake of the devastating floods across the UK".