MINISTERS are refusing to take action against an insurance company which is denying cover to properties at risk of flooding.

The news is a blow to householders in Worcestershire and Herefordshire who have suffered the agony of flooding in the past two years.

The announcement by Esure that it would deny cover to any prospective new customers living in the 10 per cent of postcodes most susceptible to flooding provoked anger last week.

Residents fear other firms may follow suit - leaving them without any affordable protection.

MPs called on the Department of Environment, Food and Rural Affairs to step in.

But, in a written Parliamentary answer, Floods Minister Elliot Morley said the Government would not be attempting to change Esure's mind.

He added: "The insurance industry is a competitive one.

"Government has no plans to intervene in the market either generally or with individual companies."

Mr Morley said he recognised Esure's announcement had caused "concern" among householders at risk of flooding.

But he stressed the company had not broken an agreement hammered out between DEFRA and the Association of British Insurers following the devastating floods of Autumn 2000.

This guaranteed existing customers insurance cover for the duration of 2002, except in "exceptional circumstances".

Mr Morley said he was, however, keen to ensure some form of cover was available to flood risk properties.

Significant impact

He added: "While no formal assessment has been made, I am aware that there could be a significant impact if insurers were to withdraw cover for households and businesses at risk of flooding.

"The Government, is, therefore working hard with the industry to try to ensure the continued, widespread availability of affordable flood cover beyond the end of 2002.

"There have been regular meetings with the insurance industry, at both ministerial and official level, to consider their calls for increased investment in flood and coastal defence, controls on development in areas at risk of flooding, simplified arrangements for implementing flood defences and better information on real flood risk.

"I expect to meet again with the industry later in the summer."

Esure has said that its policy of excluding "high risk" homes will save other homeowners around £40 a year on their premiums.

But it has said that any existing customers in "high risk" areas will continue to be covered, even when their policy comes up for renewal.

Peter Graham, chief executive at Esure, said: "We are sympathetic to homeowners who live in flood risk areas but they have been badly let down by years of Government failure to improve the UK's flood funding, planning and defences.

Extensive cover

"The strategic change does not remove or alter the extensive flooding cover that our policies include, neither will it affect the small number of existing customers in flood risk areas."

Worcester Action Against Floods chairwoman Mary Dhonau said the move was worrying for all people living in the flood plain.

"The withdrawal of insurance is not just targeted at those who have been flooded, it affects everyone in the flood plain," she said.

"What concerns me greatly is that a lot of people are unaware their home is in the flood plain."