It’s been a little frustrating over the last few weeks to hear on the radio or TV, time and again, discussions over Flood Re. This is something we’ve been writing about for the last four years, but it has received very little headline coverage in the national media – until now. And the key reason it’s suddenly being talked about is that, because it’s taken such a long time to implement, there are now people hit by the recent floods who are not covered by insurance.
The Daily Mail wrote recently about flood victims who hadn’t been able to afford insurance – or were refused it completely – because they live in flood-risk areas. They cited one householder whose annual insurance premium rose from £375 to £3000, and another which rose from £100 to £5000. Both decided not to pay these huge hikes and were left uncovered – and now they face a huge personal bill for reinstating their homes.
Flood Re is the result of four years of negotiations between the government and insurers. This was prompted by the ending of the previous agreement through which insurers provided flood insurance for high-risk properties in return for extra state investment in flood defences. The agreement ran out in 2009 and since then there’s been a tortuous and extremely lengthy process to reach a new deal. It looked at one point as if it would be implemented last year, but after numerous delays it finally goes live this April. For many this is too late.
And even when it’s implemented, Flood Re isn’t comprehensive in its scope. In particular, it doesn’t cover businesses, and the recent flooding in the north of the country has hit a huge number of small businesses.
When asked about this, a spokesman from the Association of British Insurers was quoted in the Guardian recently as saying: “We have not been presented with any evidence of large-scale problems in the commercial sector. Most businesses should be able to arrange competitively priced flood insurance through a broker.” But there have been numerous examples of businesses hit by the floods who face a significant financial impact, with accountants KPMG saying that ‘many businesses will have insufficient insurance to cover the damages’ (SME Insider).
There are now even more calls to reconsider and to extend Flood Re to cover small businesses, and the Chief Executive of Flood Re has offered a glimmer of hope when he apparently conceded that it is ‘self-evident’ that businesses are suffering in the wake of the recent flooding.
So on it goes. We will, as always, keep you posted on any developments.