This is an extract from the speech given by John Dye, Chair of the Association of British Insurers, at the ABI dinner in London last night.
As we gather tonight in these splendid surroundings, I am very conscious that many thousands of our customers are in very different circumstances, with their homes or businesses affected by the recent storms and floods.
I know I can speak for all the firms represented by the ABI when I say that we remain absolutely committed to working round the clock with our partners to help those affected – including with the Environment Agency, whose chair Emma Howard Boyd has joined us this evening.
Successive Governments have failed to keep pace with the levels of flood defence spending that we need. We need to significantly accelerate investment in the budget and spending review, and take a multi decade approach.
Today we are calling to increase flood defence investment to at least £1.2billion a year for the next spending review and potentially significantly beyond. This could halve the number of properties at high and medium risk. Every £1 spent can save £9 in property damage and disruption. It’s a false economy not to act now.
But building bigger flood defences isn’t enough on its own. We also need to ensure there is no further inappropriate development in flood risk areas and that properties become resilient for the future by installing property level resilience where they are able. Although there is a clear need for more affordable homes, it is short-sighted to build these in areas of high flood risk or where they may cause flooding problems for neighbouring properties.
It is also vital that insurance cover is affordable for households and businesses – which is why the ABI has called on the Government to reduce the rate of Insurance Premium Tax in next month’s Budget.
The insurance industry remains committed to this through subsidising the FloodRe scheme that has helped an extra 300,000 households access more affordable flood insurance.
Our current focus of course is on tackling the immediate aftermath of the storms, but the impact they have had across the country reinforces the need to invest in flood defences and to take seriously the need for sustained action on climate change.
While flooding is our immediate focus, it is not the only key issue we face. The EU is finalising its negotiating mandate for talks on the future economic relationship. The ABI Board has met twice this year already to consider in detail the priorities for the UK insurance and long-term savings sector.
We will always want a close and constructive partnership with European insurance markets – especially on reinsurance and for the effective operation of the London Market – but this must come alongside ensuring our regulatory framework is designed to maximise investment and innovation across the industry.
So, as the Government works with the EU on the shape of the different equivalence frameworks that operate across financial services, the ABI Board has identified specific areas on which to focus in establishing the UK’s post-Brexit regime to maximise our potential – including addressing the Risk Margin in Solvency II, reducing the volume of reporting and reviewing the FCA rulebook.
For both of these issues, flooding and our future trading relationships, working with Strength Through Association within the ABI will be vital to addressing them.
As chair, I am delighted to report that the ABI has its highest ever member satisfaction ratings which are the result of constructive relationships with policymakers, regulators and stakeholders here in the UK and internationally.
The ABI Board remains fully committed to our industry playing a central role in protecting households and businesses and helping people be financially resilient.