Homes in areas at risk of flooding are having their household insurance subsidised by the rest of the country, but they may soon find they cannot insure their home at all, claims Axa .
According to research by the insurer, households in high-risk flood areas are paying artificially low premiums and are being subsidised to the amount of £511 each year. However, this could come to an end in 2013.
The issue has arisen because of a deal struck between the Government and insurers, known as the Statement of Principles, that ensures all homes are given access to home and buildings insurance by insurance companies. In return the Government must keep promises on investment in flood defences .
The agreement requires existing insurers to provide cover as long as the Government continues to invest in flood defence programmes. But there is unease among the insurers bound by the agreement because they are having to raise prices for other customers in order to support those at risk of flooding .
