With the wave upon wave of storms we’ve had recently, particularly the south west and the Thames Valley, it is estimated that so far the flood insurance companies have been hit with over £400million in claims, although the true cost will not be known for the foreseeable future but, is it fair that insurers should take the brunt of something which is essentially not their fault?
Take the water companies for example. Most of the sewerage systems throughout the UK were constructed in the Victorian era and still remain essentially the same over 100 years on, even though towns, cities and population have increased dramatically. Due to the effects of an enormous increase in road surfacing and paving, together with the intensity of the storms which we have had over the last few years, whenever it rains the surface water going into the drainage systems can sometimes be too much for the sewers to cope with, meaning the drainage systems can back up causing peoples’ homes to be flooded with what is essentially raw sewerage.
I have some quite disturbing figures in respect of these water companies and some facts that could be construed as pure complacency on their part.
The water industry was privatised in 1989 to encourage private investment which in essence is fair enough. However, since then there has been a 50% increase in water bills and on average we pay £388 per annum of which approximately half is supposed to go towards sewerage. We have no choice of which water company we have to use as opposed to the rest of the utilities industries which we do.
With the 50% increase in bills has come a 50% increase in complaints to OFWAT about sewerage, and that’s just in 2013. Examples include 906 complaints about United Utilities (serving the North West) up from 500, and 1196 complaints about Northumbrian Water, a 4 fold increase.
Rob Wesley, Water UK’s Head of Policy is quoted as saying “One household suffering from sewerage problems is one too many, it’s not something that’s going to be fixed overnight.” Well surely Mr. Wesley, these companies have had 25 years since privatisation to fix a problem which is essentially getting worse?
The water companies have made £11billion in profits over the last 5 years, and whilst reinvestment to infrastructure has stayed roughly the same in real terms, dividends to shareholders have risen by 40%.
Let’s have a look at a case study: A local fishing tackle shop in Ilfracombe, Devon (served by South West Water), has been flooded by backed up sewerage every year for the last 12 years. The couple who run the shop are looking to retire in the not too distant future, however their business is nigh on unsaleable. South West Water have done nothing about the problem but say they’ve invested £42million in the last 5 years to alleviate sewerage problems, a figure which is clearly not enough, especially when you take into consideration that they made £133million after tax in the last year alone. The business, along with many others in the area, has never had a penny in compensation!
What do you think? Should flood insurance companies, and ultimately the consumer, carry the burden for something which is essentially the fault of greedy water companies?
Unlike these companies we at Comparecrazy are dedicated to keeping the prices of flood insurance down for you, the customer, so you know our thoughts! Comparecrazy.com. The business insurance comparison site!