Supplementary memorandum submitted by
Royal and SunAlliance
1. Thank you for inviting me on behalf of
Royal & SunAlliance (R&SA) to give evidence to the Committee
on the work of the Environment Agency. I attach here a copy of
the transcript of the evidence session with a few changes marked
using the Track Changes function.
2. I also attach a separate Private and
Confidential statement[7]
to the Committee on the cost of developing and maintaining Royal
& SunAlliance's Geographical Risk Analysis mapping tool. This
was requested by the Committee at the meeting on 14 December and
I am happy to provide it here, on the understanding that this
is commercially sensitive information and will be treated in confidence.
3. I would just like to support the statements
I made on the day with some additional comments which may help
clarify the evidence I gave and assist the Committee with its
enquiry going forward. These comments may be treated as part of
our public submissions.
Royal & SunAlliance Geographical Risk Assessment
(GRA) Mapping Tool
4. We built our GRA digital mapping tool
because we wanted to assess flood risk at individual address level
and not just at postcode or postal sector level. We have been
using it for over two years, and it is continually updated as
we learn of new information. It is based on the company's own
geological engineering risk techniques, combined with digital
terrain mapping and address verification information from Ordnance
Survey and a Geographical Information System supplied by ESRI
(UK) Ltd. R&SA is therefore able to assess the flood risk
on an individual risk address basis where necessary. Far from
preventing people from getting insurance, we believe that our
GRA tool enables us to insure as many people as possible because
of its accuracy.
How the R&SA Tool is used
5. Although much of the information we used
for building this tool is readily available, it takes considerable
time and resource to build it and keep it continually updated,
and we employ an expert team to do so at a significant cost to
ourselves. For this reason, we would not be able to share the
tool with our competitors or with public bodies, although there
is nothing to prevent such organisations from using the same information
to build their own mapping tool. MORE TH>N and R&SA customers
and potential customers are able to take advantage of the tool
when we set premiums and give quotes to potential customers. We
therefore consider that the GRA tool is as accessible as could
reasonably expected in the light of the fact that it informs our
commercially-available products.
Differences between the R&SA GRA Tool and
the Environment Agency Map
6. Another issue which came up in discussion
and which I should perhaps clarify is how R&SA uses the information
on flooding published by the Environment Agency (EA). We find
the EA's National Flood Risk Assessment Database a very useful
source of information about the whereabouts of flood defences.
As I mentioned to the Committee and in our submission, we would
welcome more regular publication on flood defences and the level
of protection they provide as it would enable us to update our
GRA tool to take account of new flood defences as they are built
which might help some customers to reduce their premiums. We need
information on flood defences—both new ones and the standard
of existing ones—so that we can keep our flood map up to
date. It is for this reason that we have been calling for the
EA to complete its National Flood and Coastal Defence Database
and for insurers to have access to it.
7. We have a different view on the Environment
Agency's map. We do not see the EA map and the R&SA GRA tool
as being mutually exclusive, but rather as pieces of information
with different uses which are equally valuable to their different
users. I would support here the comment made to this effect by
Ms Milne from the ABI in her answer to Question 49. R&SA's
GRA tool was specifically built for us as an insurer to calculate
risk and premiums for property insurance products. The EA's map
has a more general purpose of providing information for planning
authorities and the public on a number of factors, ranging from
flood risk calculated by postcode to the whereabouts of landfill
sites and the cleanliness of local rivers. It was therefore built
with different requirements in mind to those behind our GRA tool.
Both the EA Map and the R&SA GRA tool should therefore continue
to be used for their differing purposes. We do not envisage a
scenario where one could replace the other.
8. On a minor point, I note in the transcript
that I seem to have misheard Question 46 from Mr Hall, where I
seem to agree with his comment that the ABI Statement of Principles
does not apply to transferring insurance to new customers who
would like to buy a property from an existing customer. In fact,
as I pointed out in my answer to Question 47, normally under the
Statement of Principles, the existing insurer would continue with
cover for that property under its new ownership. I apologise for
any confusion I may have created here, but I hope that I corrected
this in my later answer.
9. Finally, could I just clarify that since
our merger in 1996 our official company name is now Royal &
SunAlliance (not "Sun Alliance" as we were sometimes
referred to which was the name of one of the companies in the
merger).
10. I do hope that this information helps
the Committee's work. Please do contact my colleague if you require
further information or briefings, which we would be happy to supply.
11. Thanks once again for giving us the
opportunity to contribute to the Enquiry, and we look forward
to reading the Committee's report in due course.
David Pitt
Head of Product, MORE TH>N, Royal & SunAlliance
UK
January 2006
7 Not printed. Back
| 
