The future of UK flood insurance remains uncertain after insurers and the Government failed to reach a new agreement in last-minute talks.

The current statement of principles on flood cover, which was introduced in 2000, expires on June 30.

A transitional agreement will need to be put in place while talks – which are “at a crucial and intensive stage” – continue, according to an Association of British Insurers (ABI) spokesman.

Under the current arrangement, insurers provide flood cover to homes and businesses in high-risk areas on the condition the Government invests in mitigation. 

Neither side wants this arrangement to continue.

The ABI backs a flood reinsurance system, with at-risk properties pooled, an agreed entry premium and insurers able to submit risks to the pool, funded by a government levy. 

Any solution must ensure “the availability and affordability of flood insurance for those at flood risk, but [must] not place unsustainable costs on wider policyholders and the taxpayer”, Environment Department Minister Richard Benyon says.