Households in some of the most at-risk flood areas of the Westcountry may have their right to insurance protected by a levy placed on the home policies of every householder in Britain.
The proposed levy is one solution put forward ahead of a June deadline for the insurance industry and government to secure a new agreement on flood insurance for high-risk homes and businesses.
The Association of British Insurers (ABI) and the Government have been in talks over a new agreement which would provide a pot of money raised from insurance premiums for paying claims in the event of serious flooding.
This pot would be funded by a levy on all household policies – estimated to be about £8 per policy.
However, talks have stalled over ABI requests for a government 'overdraft' to tide the fund over in its early years, to which Whitehall has refused to agree.
Alan Goddard, managing director of Cornish Mutual, said it is important a new national arrangement is reached.
He said: "There is a live debate within the insurance industry as to whether successive governments have kept up their side of the previous bargain by investing sufficiently in the building and maintenance of flood defences and water management infrastructure.
"Either way, it is quite clear that this time round the Government is looking to the market to find a solution to providing flood insurance.
"In these circumstances the idea of creating a pot of money, similar to that used for motorists involved in accidents where the other driver is uninsured, appears to be a sensible approach providing the details can be agreed."
The South West has been hit by a number of floods in recent years, including major incidents in Lostwithiel, St Blazey and Mevagissey in 2010.
Mr Goddard added: "The pattern of flooding incidents that we are seeing has changed away from the more usual coastal and river flooding to often very localised incidents of severe flash flooding and storm damage which can be difficult to forecast.
"While many people will not welcome the prospect of a levy on their policies to help cover flood risks elsewhere, we believe there is a broader social and economic requirement for people and businesses in higher-risk areas to be able to have access to insurance.
"The nature of more recent flooding incidents means that homes which people had thought not to be at risk have been inundated – and in those circumstances householders will want to have the reassurance that they will not be refused access to flood cover in future."
