Flood-hit Scots face loss of home insurance THOUSANDS of Scots property owners in flood-hit areas could find it impossible to buy home insurance unless the UK government underwrites claims, insurers are warning. According to Scottish Environment Protection Agency (Sepa) figures, 125,000 properties in Scotland - one in 22 residential properties - are at risk of flooding from rivers, the sea or heavy rainfall. But unless there's a fresh agreement with Westminster, premiums on properties that have suffered multiple floods could rise so much they are effectively uninsurable. Talks between the Association of British Insurers (ABI) and the government broke down in November without agreement on how to fund a new scheme to protect householders at risk of flooding. Insurers plan to introduce a levy of £8 per year on all household insurance to build a fund which can be used to pay for the cost of increasingly regular exceptional flood events. However, the industry is concerned that it will take time to accumulate a big enough fund and wants the UK government to supply a bridging loan in the event of flooding next year. It says the UK is the only country in which the government does not underwrite some form of flood insurance but ministers have yet to sign up to covering the period between the setting up of the levy and the accumulation of sufficient funds to make it work. Parts of Tayside, Angus, Aberdeenshire, the Lothians, Fife, the Scottish Borders and Argyll and Bute have all been affected by severe flooding over the past 12 months, in what is likely to prove to have been the wettest on record. Hundreds of people had to be evacuated shortly before Christmas when heavy rain flooded the Stonehaven area in the North-east. Aidan Kerr, head of property at the ABI, said: "Insurers want to bring much-needed clarity on the future of flood insurance to customers who have recently seen the devastation flooding brings. Flooding is the biggest natural risk we face, and events that used to be seen as exceptional are now becoming more frequent. The insurance industry has developed the only workable model to safeguard both the availability and affordability of flood cover, and the ball is now in the UK government's court to commit to this model and provide certainty to those at high flood risk. "We continue in our discussions with the UK government but are frustrated with the current impasse we have hit around their reluctance to accept the industry's "not-for- profit" scheme. No country in the world has a free market for flood insurance with affordable cover for those at high risk without some form of government involvement, so it is vital that the UK government works with the industry to tackle this issue together. Gareth Kloet, an insurance expert from confused.com, said the lack of a working agreement was a matter of huge concern: "I think there will come a time when insurers find it hard to offer cover unless an agreement can be reached." Ian Crowder, an insurance expert from the AA, said time was running out. "There is a chorus from all sorts of organisations such as flood forums, local government organisations, trade bodies, and even the Environment Agency, pressing the government and the ABI to keep talking," he said. It's hard to think of any more pressing issue at present, because it potentially affects so many homes and businesses. It is vital that agreement is reached - otherwise there is a real risk that insurers will start withdrawing cover for affected properties, with all the consequences that such a move might make. A Defra spokesperson said: "We want to find a lasting solution that secures the affordability and availability of flood insurance for the first time, without placing unsustainable costs on wider policyholders or taxpayers. We remain committed to ongoing discussions with the ABI and others. A range of options is on the table but no final decisions have been taken. Government's primary role is to prevent flooding in the first place. Due to the success of our partnership funding model, and the extra £120 million announced in the Autumn Statement, more will be spent on flood and coastal risk management than any other spending period.