The British Property Federation (BPF) has warned that under the current government flood insurance proposals thousands of small and medium sized enterprises (SMEs) may not have access to affordable cover.
Earlier this year, the Association of British Insurers and the UK government agreed on the implementation of Flood Re—a not-for-profit insurance scheme to ensure that flood insurance remains widely affordable and available for residential property owners.
Flood Re works by providing a fund to offer homes at high flood risk who might otherwise struggle to find affordable insurance with cover at a set price. To fund this all home insurers are subject to a levy of an average of £10.50 a year.
While the BPF welcome the proposed Flood Re agreement, it believes that excluding SMEs from the proposals could lead to “large hikes in insurance premiums and even some premises becoming uninsurable”.
According to the BPF, SMEs are generally more vulnerable to the effects of flooding compared to larger businesses that will have contingency plans and the negotiating strength to secure affordable insurance.
Liz Peace, chief executive of the BPF, said: “We appreciate priority has been given to ensuring the availability and affordability of flood insurance to the millions of homes across the country, but we are concerned SMEs find themselves excluded from the proposals.”
“SMEs employ over 14 million people in the UK, and have already seen a marked increase in their property insurance premiums and excesses. Those in high risk areas will see the cost of their insurance increase considerably, and in some cases they may not be able to secure it at all unless the government extends Flood Re.”
