LONDON, May 16 (Reuters) - Britain's insurers will continue to cover homes at risk of flooding under a government-backed agreement after it expires at the end of June, allowing them more time to hammer out a new deal.
Otto Thoresen, director general of the Association of British Insurers (ABI), whose members account for about 90 percent of premiums in the UK market, said on Thursday a new deal was imminent but important issues were still unresolved.
'No deal has been reached but negotiations are advanced and we will bring negotiations to a conclusion as soon as practicable,' he said.
The owners of about 200,000 British homes at risk of flooding can only afford insurance because of the current arrangement, under which insurers cover them at a loss in return for a government pledge to boost spending on flood defences.
The ABI is pushing for a new accord that would introduce a cap on premiums for homes in areas at risk and an industry levy that would effectively recoup the lost premium revenue from customers in less risky areas.
One sticking point is government reluctance to provide an overdraft facility to fund the scheme in the event of a major flood before the scheme has accumulated enough money from premiums to make it self-sufficient.
Britain has been hit by several severe floods over the past ten years, with one in the summer of 2007 costing insurers about 3 billion pounds ($4.57 billion).
British insurers, which include blue-chip companies including Aviva, RSA and Legal & General , paid out around 1 billion pounds in 2012, a year of record rainfall. ($1 = 0.6568 British pounds)
(Reporting by Chris Vellacott; Editing by Tom Pfeiffer) Keywords: INSURERS/FLOODS
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