Hansard

I thank the minister for that. I do not know what the intentions of the committee are, but it might be helpful if the minister could respond to the committee in a more formal way about where we expect to be by July.

On the issue of moving away from the statement of principles, it is right to reflect that, whether or not the new development is a positive one and whether or not the statement has delivered for home owners, it has been claimed that it secured the availability of flood insurance to communities that are at risk of flooding and that it ensured that the Scottish Government invested in flood risk management measures. It is of concern, however, that the evidence from COSLA said anecdotally that

“even for those areas which have adequate flood defence schemes in situ, access to insurance can be an issue in some communities due to the unwillingness of the insurance industry to provide cover.”

The forthcoming change presents challenges for the Scottish Government, which need to be resolved urgently. It is only two months until the statement of principles expires. The report to which Chic Brodie referred, “Flood Insurance Provision and Affordability” from CREW—the centre of expertise for waters—found that

“lower income and non-homeowner groups were also the most likely to have no insurance”.

The report went on to suggest that, after July, insurance rates will move closer to the market rate, which would place a heavier burden on people who live in high-risk areas.

Concerns have been raised about the availability of accurate information on the risks in Scotland. As other members have said, the CREW report highlighted a particular area of concern that had been expressed by the insurance industry: the

“difficulty to date in accessing information on improvements which may substantially reduce the flood risk for individual properties”.

Surely that can be resolved. I welcome the minister’s assurances on that issue this afternoon.

Another concern is about quantifying the risk of surface water flooding. No map is available for surface water flood risk. The situation might soon change, with the planned update of SEPA’s indicative river and coastal flood map and the development of local flood risk management plans by 2016. That would still leave an information gap, however, while the system for calculating insurance is set to change.

The CREW report found that, although they are underrepresented in high-risk areas, 41,000 people on very low incomes are identified as being “at risk”. There are further concerns that changes to the insurance market could have an impact on people who are just outside the most income-deprived groups, and the survey that was undertaken suggests that that might be the case.

It is estimated that one in 22 households is at risk, and there is a further risk for people who only require contents insurance: if costs go up more than they are able or willing to pay, they might stop having any insurance. Evidence to the committee from the insurer Adrian Webb highlights the possibility that that could be an issue, as

“The worst cases that insurers see involve people who believe that they will never be flooded but who are suddenly hit by a catastrophic flash flood. Those people are the ones for whom the Government becomes the insurer of last resort.” [Official Report, Public Petitions Committee, 2 October 2012; c 788.]

In those circumstances, it should be asked which Government would be able to provide that level of security for home owners.

The petition raised the issue of cross-subsidy, and suggested that a separate flood insurance pool would be appropriate for Scotland. That is becoming less of an issue, however, as the insurance providers want to move to a system that recognises higher levels of risk. Once that becomes the practice, the issue of cross-subsidy becomes less noticeable—although the extent of it has been questioned by some commentators.

In addition, future predictions suggest a greater, not smaller, risk for Scotland. Although a changed system might suit some customers—although it is unlikely to lead to a reduction in premiums—it has the potential to impact more heavily on low-income and high-risk households across the UK.

The petition has focused minds on the immediate problem that faces home insurance, as well as highlighting on-going challenges. The Stop Climate Chaos Scotland briefing highlights the fact that

“SEPA have estimated average annual losses of between £720 million to £850 million from flooding of buildings and agricultural land ... Work by the Joseph Rowntree Foundation has shown that coastal communities are on the front line from increased flooding”.

The foundation has also highlighted the need for “socially just adaptation” to predicted climate change impacts such as flooding.

Preparation of Scotland for future climate challenges is important. For many households, how they protect themselves will change in a matter of weeks. The Scottish Government has heard the arguments. It now needs to be clear about the consequences and solutions for Scottish households.