Select Committee on Environment, Food and Rural Affairs Minutes of Evidence


Examination of Witnesses (Questions 20-39)

MR NICK STARLING, MS JANE MILNE AND MR DAVID PITT

14 DECEMBER 2005

  Q20  Chairman: Does that reflect, in your judgment, a lack of foresightedness in the strategic approach of the Environment Agency towards flooding matters?

  Ms Milne: I think in the past it has been a question of everybody looking after their own responsibilities and not being as joined up as they should be.

  Q21  Chairman: When you say "everybody" I presume you are talking about all the agencies. Do you see any sign that that is going to improve, because you make mention of that in paragraph 13 of your written evidence. You say: "In taking these policies forward there needs to be a clear vision of the respective roles of the Agency and of local authorities in delivering and deploying these risk management measures."[2] Do you think the Environment Agency is not aiding that cohesiveness under the present arrangements, and if so why?

  Ms Milne: I think they are making steps in that direction as they pull together their catchment management plans and they are looking at these more intensive local drainage plans, which are being piloted under Making Space for Water. I do not think we have quite got there yet. I think they have been thinking about how they might go about it, but they have not quite got there yet.

  Q22  Chairman: As the recipient of the bills when things go wrong, do you think you ought to have a seat at the table to help give a perspective from your standpoint in terms of developing future policies?

  Ms Milne: I think we are very pleased that both Defra and the Environment Agency do involve us in discussions and do treat us as a stakeholder who often speaks on behalf of customers as well as our member companies.

  Q23  Chairman: I think I was looking at perhaps a more localised involvement than at a strategic level.

  Ms Milne: Yes, we do tend to operate on a more strategic level.

  Q24  David Taylor: If I can pick up one point. You quoted that, Chairman, on the point which Ms Milne made about the Agency only acting when there is a crisis, paraphrasing. Is that not a fairly predictable method of prioritising work in an organisation which may be short of resources, that it can fire-fight okay but it has not got adequate knowledge or the people to look ahead much further than the next fire-fighting or flood draining?

  Ms Milne: Just to correct the impression, I think that was the situation some years ago and the Agency has been improving on that over time. What we want to see is more actual results on the ground, but I suppose it is inevitable for any organisation that they deal with the immediate more readily.

  Q25  Chairman: So it is a question of, "has made progress but could do better"?

  Ms Milne: Yes.

  Mr Starling: May I just say, there is another point here. We all know when events happen perspectives change and the Environment Agency is operating in an area where lots of other agencies' interests are operating and quite often a voice which any organisation has expressed before an event suddenly becomes heard with greater clarity after it and people start to re-think. That is often the case with floods and you will find that people have been warning of the risk for some time before, but it takes the event to happen for action to actually take place. That is fairly common in a lot of areas.

  Q26  Chairman: In a way that is discounting the old phrase "prevention is better than cure"?

  Mr Starling: Indeed, but I am just saying that in practical terms rather than the Environment Agency not doing its job, it is a voice among many which quite often is heard more clearly once the event has happened. That is what happens.

  Q27  Chairman: The reason I posed my earlier question was because the industry has a pattern of claims and Mr Pitt observed in the context of the first question that there was a reduction in risk as a result of action taken. You can spot where claims continue to be made, therefore almost by definition that is an area which needs attention, and that is what I wondered whether you were feeding back into the planning process as a way of trying to move the agenda forward from, "Let's wait and see what happens and then do something," to, "Oh, yes, here is a demonstration of un-met need. We can now prioritise and do something." Do you use your information in that way to advise the Environment Agency?

  Ms Milne: We do not collect data on an industry-wide basis on exactly where claims fall, companies hold that information themselves.

  Q28  Chairman: Why not? You told me earlier on you are a high-level strategic partner. You are giving advice to Government and the Agency and here is something which indicates whether problems are occurring (ie the claims records of your members), but you have not got access to it to advise Government about what is happening on the ground.

  Ms Milne: We collect overall the totals of claims. If members tell us that they have problems in particular areas, then we would follow up on that.

  Q29  Chairman: Do they tell you?

  Ms Milne: Yes, but very often you know as well as we do where they are because they are in the news.

  Q30  Chairman: I think I am just a little confused there, because you have indicated how you would like to see policy develop and you have at your disposal a hard record of where problems are occurring because people make claims. Therefore, it would seem, Q.E.D., that if you want to help the Environment Agency move forward beyond, "Let's react when it happens," what you have by way of a claims record could be rather important?

  Ms Milne: It certainly is good in telling you where there have been floods; it does not predict where there will be floods.

  Q31  Chairman: No, but if you take a series of data going back over time—that is why I asked the first question about what has been happening over time—in the spatial sense that information would focus on where the serious problems were and if there were still claims coming in, it is a question of un-met need? Mr Pitt, you are nodding in my direction. I find that comforting! Tell me why you are nodding.

  Mr Pitt: From an industry point of view, we comply obviously with the Statement of Principles and within the Statement of Principles there is a period of time for that protection to be afforded to a particular address or area and I think you will see in our submission that we are requesting more awareness of where defences are going to be built in the future and also the timescales against those defences being prepared and built so that we can understand the timescale for properties which are going to be protected and therefore understand that the risk is going to be controlled by a particular defence which is going to be built. We are encouraged by the Environment Agency's interest in our own flood mapping tool and we have taken them through our mapping system. So we are encouraged by the dialogue, but we would like to see more evidence of timescales for defences being built and maintained.

  Q32  Patrick Hall: Could I just follow up that point? That is still being reactive rather taking the initiative and the Chairman's point was that you are in a position as an industry to know what has happened in the past and what is happening and therefore to draw conclusions from that to try and proactively influence the Environment Agency and Defra to take action to minimise those areas of claim?

  Mr Pitt: As a company we are being proactive by producing our own mapping tool, so we understand risk right down to the individual address level rather than at postcode level. For example, we had numerous examples where other member companies might not be able to provide cover but where because of our mapping tool and greater understanding of the risk of flooding we are able to provide cover.

  Q33  Mr Drew: Presumably the very fact that you had to do your maps means that you are dissatisfied with the Environment Agency's initial stab at their maps?

  Mr Pitt: I think the Environment Agency map was originally set up for a different purpose and then added flood risk on to it. Certainly from our own evidence, as I say, we have our own in-house engineers and we have taken publicly available information and adding to that as we find out more details—the example of the demountable defences. We have other examples where maybe local authorities have taken action, maybe dredging brooks or whatever to reduce the risk of flood, and what we do with our map is then update our mapping system to the relevant risk that we feel is available and is appropriate for that particular postcode or that particular address.

  Q34  Mr Drew: So what legal status have your maps got?

  Mr Pitt: Our maps are publicly available information with our intellectual property and also they are reflective of our claims experience built into a mapping tool to understand the potential for flooding risk in the future.

  Q35  Mr Drew: So can someone who is not a customer use your maps as a justification for building an extension on their property or seeking to get insurance from another company?

  Mr Pitt: Someone who is not a customer of ours, if they phone us for a quotation, our mapping system is used on our front-line systems to assess the risk of flood, but it is not used for the basis you are referring to.

  Q36  Mr Drew: So how many people do you turn down for business on the basis of your maps?

  Mr Pitt: From our commercial point of view, we want to provide as much flood risk cover as we can and insure as many people as we can. We do not record the many particular inquiries that we do not insure. However, as I referred to earlier, we do comply with the ABI Statement of Principles in continued cover for existing properties.

  Q37  Mr Drew: I will ask the ABI about this, but roughly what sort of number, percentage or figures in the round are we talking about of people who subsequent to the maps being available either from the Environment Agency, Norwich Union or Royal SunAlliance are now uninsurable because of the maps putting a blot on their property or on their community?

  Ms Milne: I think what we have found is that the availability of better information has allowed insurers to stay on cover in situations where if they had been uncertain of the risk they might have wished to withdraw cover. So under our monitoring under the Statement of Principles to see that members are complying with the terms of that, we have had in the past two years literally 10 or 12 people refused renewal of cover by the entire market over that period.

  Q38  Mr Drew: That is across the whole of the insurance industry?

  Ms Milne: Yes, of the existing customers refused renewal.

  Mr Starling: We do not have any figures on people being turned down for new cover: new customers with new cover. We have no way of collecting that data. The Statement of Principles is about continuation of cover.

  Q39  Mr Drew: You would not keep a record of that. That is quite interesting. In talking about strategic vision, it would be quite interesting for us to know how many people are not insurable once they have sought your advice initially and then the fact that you have not offered them collectively a policy.

  Mr Pitt: I would like to pick up two points there. Firstly, just to re-emphasise, our mapping tool is about understanding to a greater degree the risk, so therefore the principle is about being able to provide cover where potentially other insurers could not provide cover because we have a greater understanding of the risk. The second point is the Statement of Principles applies to existing customers and we will continue to comply with those principles and provide cover. Where the issue arises is with new properties which previously have not been insured. Therefore, within our evidence we were calling for the Environment Agency (and it is backed up by PPS25) to become that statutory consultee so that in new builds we have a real understanding from an insurance point of view of the risk and the fact that the Environment Agency has been informed and is satisfied with the actions being taken.


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