Following the ABI announcement on new principles for flood insurance, Money Box contacted four of the largest household insurers to ask if they would be reviewing their insurance policies.

Summary responses and full statements are listed below but please contact providers directly with individual enquiries.

Summary Responses

Axa:

Have failed to respond to our questions.

Direct Line

Our position regarding renewal terms is such that even in cases where a customer's property has been affected by flooding on two or more occasions, we do not automatically raise premiums.

Instead we look at people's experience on a case by case basis and depending on the number and size of the claims made, we may propose the introduction of a higher compulsory excess - ranging from �250 - �1,000, for future flood claims.

In really exceptional circumstances, a premium loading of around 30% may also be applied.

Norwich Union

There are no hard and fast rules about the level of premiums or excesses that are applied and we consider each property on an individual basis.

When considering flood, we will look at:

1. The frequency and number of previous flood claims.

2. The value of these claims.

3. The total amount of cover for both buildings and contents and the value of claims against total cover.

5. The level of flood defences in place (if there are any).

6. The height of the property.

7. Any other measures that the homeowner may have taken to reduce the flood risk.

Properties will be subject to a premium to reflect the level of risk present, so the higher the flooding probability, the higher the premium.

There is no intention to charge a premium greater than that appropriate for the risk.

The average household property premium is about �250 with the average flood claim �10,000 to �20,000.

Royal & Sun Alliance

I can say for clarification that we will, in all likelihood, be reviewing terms and premiums for existing customers in areas high in risk of flooding.

Additionally, we are not looking to provide cover for new customers in known flood risk areas.

The industry message here is really to stick with your current insurer who should be able to provide you with renewal terms post 1 January 2003.

Full Statements

Direct Line Group

Direct Line has always been open about its commitment towards continuing to provide flood cover for existing customers, even prior to Thursday's announcement by the ABI regarding the industry's position over providing flood cover at the end of the two year moratorium.

We have also been clear about continuing to offer cover on properties which have been subject to a flood claim, even where they may subsequently be sold to new owners.

Our aim, as ever, is to strike a balance between providing cover on reasonable terms and managing costs in order to make sure premiums generally remain competitive.

In our experience, for most people the chances of their home being damaged by flooding in any one year is 1 in 2000, whereas the chance of someone's home being damaged by storms, heavy rain or high winds is far greater, approximately one in 30.

Furthermore, the chances of repeat flooding are even smaller: fewer than 0.01% (actually 0.007%) of our 1m home insurance customers have experienced repeat flooding over the past five years.

Clearly, the damage caused by the floods of Autumn 2000 was significant but to put things into perspective, during that period we received over 18,000 storm claims and just 800 flood claims of which only 15% related to homes in recognised flood risk areas.

Due to the exceptional circumstances of the 2000 floods, however, we felt it was unfair for individual customers to be penalised for events outside of their control, by raising individual premiums.

Our position regarding renewal terms is such that even in cases where a customer's property has been affected by flooding on two or more occasions, we do not automatically raise premiums.

Instead we look at people's experience on a case by case basis and depending on the number and size of the claims made, we may propose the introduction of a higher compulsory excess - ranging from �250 - �1,000 - for future flood claims.

In really exceptional circumstances, a premium loading of around 30% may also be applied.

Generally speaking, in order to enable us to make a more informed assessment when reviewing our terms, we try to work with customers to find out more about the measures that are either in place or being planned locally to limit the damage further flooding might cause.

We have also produced a new flood advice guide, providing information on the risks that severe weather and flooding represent as well as tips on what people can do to limit the damage to their property.

A free copy of the guide "Storms and Floods - helping to turn the tide" can be obtained by calling 01473 824447.

Direct Line does not automatically refuse cover in any area of the country.

Our aim is to quote extremely competitively in all areas - even those regarded as higher risk.

Only where potential new customers advise us that there has been flooding locally, will we want to know more about the local situation before we can determine the terms under which we may be able to provide flood cover.

In these situations, people calling for quotes are assessed on a case by case basis and are asked to provide more information about their property, for example in respect of its topography, the impact of past floods on their home and the existence of flood defences.

Norwich Union

Norwich Union supports the new Statement of Principles for flood insurance, announced by the Association of British Insurers, (ABI).

The insurer also believes that these new principles will bring increased confidence to homeowners and small businesses affected by flooding.

The statement sets out a number of principles, including:

a commitment to insure properties, wherever possible, which are protected to at least the Government's own minimum standards of flood defence

a commitment to continue to cover existing customers for whom flood defences will be in place by 2007 and includes new provisions to insure the property if a customer sells their home

for those in high-risk areas where no improvements in flood defences are planned - a commitment to work with existing customers, local authorities and the Environment Agency to see if action can be taken to make the property insurable

To support these principles, Norwich Union is calling for the government to make its flood defence database available by the end of 2002.

This database will provide consistent information to insurers about the postcodes at risk from river or coastal flooding, as well as what level of flood defences are available at these locations.

Commenting on the new principles, Nick Pierson, head of public affairs, Norwich Union said:

"These new principles bring much needed confidence to those homeowners and small businesses affected by flooding.

"They also address the concerns of those in high-risk areas, who wish to sell their properties. "Flooding remains a key issue for homeowners, small businesses and insurers, with a ten-fold increase in the risk of flood predicted over the next century.

"We'll continue to work with the Government in tackling flooding to ensure that as many properties as possible are protected in future."

There are no hard and fast rules about the level of premiums or excesses that are applied and we consider each property on an individual basis.

When considering flood, we will look at: 1. The frequency and number of previous flood claims.

2. The value of these claims.

3. The total amount of cover for both buildings and contents and the value of claims against total cover.

4. The level of flood defences in place (if there are any).

5. The height of the property.

6. Any other measures that the homeowner may have taken to reduce the flood risk.

Properties will be subject to a premium to reflect the level of risk present, so the higher the flooding probability the higher the premium.

There is no intention to charge a premium greater than that appropriate for the risk.

For information, the average household property premium is about �250 with the average flood claim �10,000 to �20,000.

R & SA

Royal & Sun Alliance (R&SA) welcomes Thursday's announcement that ABI member companies will continue to provide flood insurance to the majority of homes and small businesses in areas at risk of flooding.

Running from 1 January 2003, a new Statement of Principles, which will bring about stability for some 2m or so property owners in flood-affected areas, replaces the Industry moratorium which runs out at the end of the year.

The majority of these properties will either be adequately protected by flood defences currently in place, or protected once the government improves its existing flood defence system or builds new ones.

For properties where improvements in flood defences are not planned, R&SA will look at individual circumstances and write the terms accordingly.

Insurers are currently waiting for a report from the Department for the Environment, Food & Rural Affairs on how the additional money, already allocated, will be distributed and the release of the Environment Agency's flood-asset database.

In response to the specific question you had re existing customers, I can say for clarification that we will, in all likelihood, be reviewing terms and premiums for existing customers in areas high in risk of flooding.

Additionally, we are not looking to provide cover for new customers in known flood risk areas.

The industry message here is really to stick with your current insurer who should be able to provide you with renewal terms post 1 Jan 2003.