THORESEN WANTS ALL UK PROPERTY INSURERS TAKING PART IN FLOOD RE

Insurers that write property insurance in the UK should be compelled to participate in the Flood Re scheme proposed by the Association of British Insurers, the ABI's director-general Otto Thoresen has told a parliamentary committee. Speaking ahead of the expiry at the end of June of the five-year "statement of principles", Mr Thoresen said that one of the disadvantages of that agreement – often referred to by the ABI as a "sticking plaster" rather than a long-term cure – was that participation was voluntary, which permitted some insurers to operate only in low-risk areas. Mr Thoresen said the nub of the proposal was whether 98% of policyholders were willing to subsidize the 2% in the highest-risk properties. Mr Thoresen said he had a sense public understanding was now at a level where "this socialisation of the model might just make sense to everybody". The ABI is proposing a levy on the insurance industry to give Flood Re enough start-up capital. The reinsurer would be not-for-profit and would be overseen by the government. He suggested a cap of £2bn, which is higher than any loss yet experienced by the UK property sector. Mr Thoresen said that talks had ground to a halt around last October, but that, since January, talks with Oliver Letwin had moved forward positively.