Insurers threaten to stop flood protection

LONDON (Reuters) - Insurers warned on Wednesday they might not be able to provide cover in flood-prone areas unless the government puts more money into defences.

The Association of British Insurers (ABI) said the government had let down millions of homeowners and businesses after failing to commit sufficient money to flood defences in its comprehensive spending review this week.

Environment Secretary Hilary Benn said on Tuesday that spending on flood management would increase to a minimum of 650 million pounds in 2008/9 and a minimum of 700 million pounds a year later, rising to 800 million pounds by 2010/11.

But Stephen Haddrill, the ABI's director general, told BBC radio: "We really want to carry on being able to provide this service. It's almost unique in the world and we think it is a very important contribution to the protection of our customers.

"But obviously we can't keep providing it at significant loss.

"So what we are going to be looking for from the government is a recognition of what happened this summer and an increase on the level they've announced today to reflect the lessons learnt and to reflect the results of their own reviews which they are now conducting."

He said the amount of government spending for the next three years was less than the ABI had been asking for, even before the floods.

"It does not begin to address the major issues, including drainage, which were highlighted this summer," he said in a statement.

He said that before the floods, the ABI had called for 2.25 billion pounds to be spent over three years but that the government had announced just 2.15 billion.