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MPs back flood insurance boost

7/1/14

By Simon O'Hare

New laws to make flood insurance for high risk households more affordable have cleared the House of Commons.

The government's Water Bill, which will also seeks to inject greater competition into the water industry, was largely unopposed and received its third reading without a vote.

One of the main aims of the bill is to increase affordability and availability of flood insurance for households at a high risk of flooding.

Fund for people at a high risk of flooding

Under plans agreed with the insurance industry in June household insurers will pay a levy into a fund for claims made by people at a high risk of flooding.

Environment Minister Dan Rogerson said the proposals would also target the benefits of more affordable flood insurance at low-income households and that the levy would be "balanced".

He told the Commons: "The bill will address the availability and affordability of flood insurance for those households at high risk of flooding.

"This was the most significant change made to the bill during its passage through this House.

"We added flood insurance clauses to the bill at committee stage and I'm greatly encouraged by the support for our proposed approach."

Greater competition for the water industry

Mr Rogerson said the scheme would also bring household bills down by introducing greater competition to the water industry and therefore greater efficiencies and innovation.

He said Ofwat's upcoming price review could also greatly reduce pressure on bills.

The Lib Dem minister said: "Let us not forget that this is a sector subject to price cap regulation.

"This means that Ofwat scrutinises and challenges the business plans of all water companies to secure a fair deal for customers.

"By taking account of lower financing cost Ofwat estimate that the next price review could significantly reduce pressure on bills from 2015 by between £120 million to £750 million a year.

Plans to make bills more affordable

"This will contribute to the affordability of bills for all.

"Greater competition will drive more efficiency and innovation in the water sector.

"All customers and the environment will benefit from an industry that is incentivised to find the most efficient ways to meet future demand."


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