Like millions of people, Jeanette Shipp spent years paying hundreds of pounds in home insurance in the belief that she’d be covered if the worst happened.
So she put in an insurance claim after her Surrey home was flooded over Christmas.
Jeanette expected that repair work could begin within weeks after the water began to subside.
But like so many others, she found that home insurance isn’t a safety net there to help people in bad times.
Instead it is a racket designed to make rich people richer.
Jeanette stacked up more than £2,000 in emergency repairs and hotel bills—but multinational insurance firm Ocaso is refusing to pay up.
It claims Jeanette’s insurance policy isn’t valid because she lives within 200 metres of a river.
Apparently they failed to notice that during the 28 years she had been paying them.
Insurance bosses plead that they can’t compensate everyone. They have talked up the millions of pounds that they expect to pay to flood victims.
Some try to present themselves as charities that need special tax breaks just to survive.
But the top firms are awash with cash. Profits at some of the biggest have swollen, and share prices have continued to rise as the water levels peaked.
Prudential’s shares have gone up by 6 percent since the storm surge on 6 December.
Aviva and Esure rose by 10 percent, and Admiral shot up by a massive 21 percent.
Ocaso, the firm refusing to pay Jeanette, raked in net profits of just under £89 million in the last financial year.
The insurance market is so buoyant precisely because bosses are already plotting ways to take advantage of Britain’s changing weather.
They hope footage of the devastating impact of floods on people’s homes will persuade more to buy insurance—even if the policies might be worthless. Early estimates suggest that insurance premiums for some households will rise by £1,000 a year.
Most banks are making their mortgages conditional on borrowers having buildings insurance at the very least.
So the markets hope that homebuyers will be a captive market—regardless of the cost of insurance policies.
Investors know that floods mean fear, and fear means money.
But for Jeanette, the thousands she spent on home insurance is money down the drain.
“We’re living upstairs in two rooms now,” she said. “I am having to go to work every day and I’m trying to fit all this around it as well.
“It feels like we are having to fight for our survival.”
Millions of ‘uninsurable’ homes could cause a crisis
Up to ten million homes in Britain could become uninsurable due to the risk of flooding.
That’s the shocking conclusion of a report that chartered surveyor Philip Wilbourn prepared for peers currently discussing the Water Bill in the House of Lords.
The Environment Agency has said that six million homes could face flooding.
But Wilbourn pointed out that this is an underestimate because it doesn’t include all the ways in which flooding can occur.
For the Tories, the problem isn’t so much the risk to people’s homes.
It is that a massive chunk of the housing market could become unsellable—and fuel an economic crisis.
The cost of insuring homes at risk of flooding could wipe up to £4.3 trillion off their value.
This could lead to “flood zones” where houses can only be sold at rock bottom prices. In that situation, owners are likely to opt for bankruptcy rather than continue paying their mortages.
This would raise the prospect of spiralling bad debts and an economic crisis.
Wilbourn said, “There is a giant bomb about to detonate under the Conservative Party.
“It was said that George Osborne decided there were no votes in flooding when he cut the budget for flooding, but he is now discovering there are a lot of Conservative seats suffering.”
The government has unveiled its new Flood Re scheme. This is supposed to keep premiums down in the 2 percent of homes that are most at risk of flooding.
But the Tories have refused to force insurance firms to keep prices stable by cutting profits.
Instead they want to cover the cost of the scheme by pushing up the cost of every household insurance policy in Britain.
Ministers shun major meeting
The media hailed meetings of ministers and insurance bosses last week.
It was meant to show that “something is being done” about rocketing premiums following floods.
But not one cabinet-level minister attended.
Perhaps they were too busy polishing their wellies for a photo opportunity?
Your claim is important to us
Insurance TV ads love to tell us how quickly they will deal with claims should there be an accident in the home.
But bosses have rushed to tell flood victims not to expect them to act too quickly.
“Making claims in these situations can be a long and sometimes difficult process,” said a spokesperson for the industry body ABI.
“It’s pointless to give false hope.”
There’s profit in phone lines
House flooded? Home phone under water? Need to make an insurance claim?
Why not phone your company’s 0845 number from your mobile?
Insurance bosses last week resisted pressure to cheapen their 41p a minute claim lines as they feared for profits.