"The insurance industry yesterday warned that firms could withdraw flood cover from hundreds of thousands of homes if the government "backslides" on commitments over spending on flood defences.
It has emerged there is growing concern among insurers that the government may cut planned spending on flood-related measures, which is set to reach £564m in 2005-06, as part of the Treasury's spending review due to be published within weeks. The head of the Association of British Insurers has written to Paul Boateng, the chief secretary to the Treasury, voicing its concerns.
Following the floods of 2000, spending on defences was stepped up by the government, and, in response, insurers promised to continue providing cover to about 1.8m of the 2m homes and businesses in at-risk areas.
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The source said the industry was also concerned that the government may be considering not ringfencing any special funds for flood-related measures but might simply require the Department for Environment, Food and Rural Affairs to pay for this out of its overall pot of money."
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http://money.guardian.co.uk/insurance_/story/0,1456,1245269,00.html