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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