After seeing the devastation from the recent floods in the North of England and Scotland it is clear further steps need to be taken to prevent damage like this occurring again. It certainly appears with global weather phenomenon’s, like El Nino and climate change these extreme weather events will become more frequent. Various media outlets are predicting the scale of the flood damage from winter storms could top £5 billion, and of that total amount the insurance industry picking up around £1.5 billion and uninsured losses thought to be over £1 billion.
Insurers have always been reluctant to offer flood cover widely, especially in known areas and where flood defences are weak or inadequate. For many years insurers have been tied to the Statement of Principles to offer homeowners affordable insurance cover, but with this ending and Flood Re not yet finalised, homeowners and business are facing a challenging time to cover damage from flood.
Despite the UK having one of the most sophisticated flood mapping systems in the world and being one of the only countries to openly cover this peril, cover is restricted in flood risk areas for most commercial premises and now, until Flood Re kicks in, households as well.
Flood Re is a Government backed reinsurance scheme aiming to provide cover for homes in the worse affected flood areas; this was intended to start in 2015 but delays have pushed it back to spring 2016. From what has been discussed Flood Re is limited as it only applies to domestic premises and excludes any commercial activity, including; commercial premises, blocks of flats, mixed use buildings, B&B’s and houses in higher bands of council tax (G & H). So although it should be a solution for many people, the restrictions will still mean that losses will be high for many people.
The main solutions seem to be, increased investment from the government on various flood defence schemes and restrictions on property development on flood plains; currently as many as 10,000 new homes per year are built in flood risk areas.
Without intervention from government and local authority, the insurance industry will be forced to restrict cover further in order to protect their business. If action isn’t taking to restrict damage where possible, many areas could face total exclusion from insurance and therefore additional problems in the future.
If you’d like to find out more about insuring your property against flood, give us a call on 0207 199 3258 or email firstname.lastname@example.org