18 April 2008
Some housing associations are facing hefty increases in insurance premiums in the aftermath of last summer's floods.
They include Pickering and Ferens Homes, a small association in Hull, which was initially quoted £300,000 – six times what it paid in 2007/08. After moving to a new broker, it found an insurer that was willing to accept £180,000.
About 200 of the association's 1,100 homes were flooded last year. Head of finance Lish Harris said the association is absorbing the cost – equivalent to charging tenants an extra £3 per week in rent – and hoping its new insurer will eventually reduce the premium. 'We would seriously struggle if it happened again,' he said. 'Nobody would touch us.'
South Yorkshire Housing Association, which owns about 6,000 homes, has seen its buildings insurance rise by £54,000 or 44% – although about 10% of this is due to an increase in stock. Just 30 of its homes – mostly in Doncaster - flooded.
Chief executive Tony Stacey said the new premium represents a significant increase in costs but added. 'It could have been worse. The insurance company could have red-lined some properties and refused to insure them.'
Severn Vale Housing, which had 95 homes flooded in Tewkesbury, is still negotiating a new policy after its existing insurer more than doubled its premiums.
'Anyone with a GL20 postcode is going to be hit,' said a spokeswoman. The association argues that the floods were due to excessive rainfall rather than the proximity of homes to rivers.
The National Housing Federation is urging insurers to take a long-term view. Derek Long, who heads the federation in the North, said: 'The industry should be aware that associations bring a lot of clients into the insurance portfolio that wouldn't otherwise be there.'
Larry Stokes, property underwriting manager at Zurich Municipal, said housing associations made larger claims than local authorities last year because they tended to pay smaller excesses and were less likely to self-insure.
But he stressed that insurers were not trying to recoup all the money they paid out in claims.
'If there is one big claim, then we will spread that cost over a long-term period,' he said.