Members of the Association of British Insurers (ABI) have agreed to extend the flood insurance statement of principles for one month after it expires on 30 June 2013.
Both the government and ABI have said they want flood insurance to remain widely available and affordable in the future. The ABI say they will need some support to ensure this happens.
Currently insurers provide flood insurance to existing customers, providing the flood risk is adequately managed. The agreement was set up in 2000, intended to be a temporary measure but one that is now unsustainable.
The Environment Agency has predicted 350,000 properties will be at significant risk of flood risk in 2035.
The ABI have said discussions are at an advanced stage and it hopes they will conclude by 31 July.
If no agreement is reached then there would be an open market for flood insurance, with insurers free to decide who they offer flood insurance to and at what price.
The ABI proposes a flood insurance fund (‘Flood Re’) be available to those at high flood risk, with the premiums set at an agreed amount. It is likely the cost for this fund would be passed on to consumers.