Weathering the storm
Following the Met Offic';s recent announcement that the UK is facing a winter that will rival the major storms of 2013, it is worth looking at how the insurance industry and the government are working to protect homebuyers from flood risk
According to Landmark Information Group, 5.2 million homes are at risk from either surface water flooding or ?river or coastal flooding. ?The consequences of ?flooding are devastating ?for homeowners, and for many this has been compounded ?by insurance premiums skyrocketing or, worse, ?being unable to insure their property against the risk ?of flood.
However, the insurance industry and the government have been collaborating to address the risks, and much progress has been made. ?Last month, the affordable ?flood insurance scheme ?for residential homes, ?Flood Re, was approved by the government, resulting in the UK floods minister, Rory Stewart, signing regulations to enact Flood Re. The scheme, which is scheduled to come into force ?in April 2016, will ensure that at-risk homeowners across ?the UK are provided with affordable flood insurance.
The new Flood Re system will impose a fixed premium geared to council tax bands, limit the excess, and cover content and buildings insurance. Despite some residential properties not being eligible for Flood Re, such as homes built after 1 January 2009, buy-to-let properties, blocks of residential flats, and housing association residential properties, many thousands ?of homeowners are set to significantly benefit from the more accessible and affordable insurance.
In addition, there has been ?a growing focus within the industry on improving the transparency and quality of information for homebuyers prior to their purchase. Last month, the Association of British Insurers (ABI) called for more upfront information on areas of risk such as flooding ?to be provided on property search websites. There is ?clearly a demand for this information, with the ABI revealing that nine out of ten homebuyers support the idea.
However, the information would not be a definitive risk assessment. Regardless of whether flood risk information is made available on property details from the outset, the ABI stressed that it recommends ?all solicitors and licensed conveyancers follow the Law Society’s guidance to conduct specific searches for flood risk and arrange for an in-depth assessment by a technical expert if there is any flood risk ?to the property.
In its flood risk practice ?note, the Law Society states ?that solicitors are not qualified ?to give advice on flood risk ?or interpret technical flood reports. However, it states that failing to accurately express ?the level of flood risk to a client ?can not only have negative implications on a firm’s reputation but could expose ?the practice to litigation, ?with a subsequent effect ?on professional indemnity insurance premiums.
Reflecting the innovative change in the home insurance market and the increased focus on improving the information available to homebuyers, the conveyancing search industry ?is undergoing substantial change in product innovation, developing products that not only help mitigate risk for conveyancers but also ?support the drive to improve transparency for homebuyers. ?It is against this backdrop ?that the conveyancing ?industry is in the best shape ever to help homebuyers weather all storms.
Maud Rousseau is the marketing and communications director of conveyancing search provider SearchFlow @SearchFlow www.searchflow.co.uk