Apparently, our climate is warming up. Perhaps more believably at present, there is also a related risk of more severe and frequent flooding across the land.
Quite understandably, the insurance industry has been getting jumpy about this for some time, but it agreed with the government to continue insuring all properties until June 2013 while seeking a longer-term solution.
So we have a year to go before we really have to worry, right? I’m afraid not. There is already evidence of unwillingness to renew policies that are ending now on riskier property, if by doing so a policy extends past this deadline.
With annual policies the norm, that means the problem could start to hit from June this year.
The industry needs to think about this carefully. No insurance means no mortgage in most instances. In a worst-case scenario, property in the wrong area could become unsellable apart from to cash buyers, pushing prices down as a further unwelcome by-product.
Home owners could find moving from a risk zone impossible unless they are prepared to take a lower cash offer.
It’s no surprise that we are seeing an increased appetite from lenders for data on flood plains and propensity for flooding in relation to mortgage applications and back books.
Without a renewed agreement, it will increasingly be necessary for interested parties, including brokers to use a combination of local valuers and data analytics.