Broker says replacement to Statement of Principles is a priority to avert ‘economic chaos’
JLT Specialty has warned that the adverse effect of the breakdown in talks between insurers and the government could spill over from residential and small and medium-sized business into other commercial areas.
The broker said that a replacement for the Statement of Principles, which expires on 1 July 2013, was needed to prevent the lack of flood insurance becoming the ‘catalyst’ for economic chaos in many areas of the UK.
Speaking at an RICS flood seminar in York today, JLT’s European real estate partner Bill Gloyn said: “The inability to get cover will then have repercussions for the local economies of affected areas, where businesses will not be able to function, as well as putting a blight on the housing market.
“Ironically, although many areas have had historic problems - Tewksbury, for example - many have been created by new developments on flood plains. This has been allowed by the planning regime, despite the serious misgivings of insurers. Those misgivings were countered by the government’s assurance that there would be adequate investment in flood defences.”
Since the 2010 Comprehensive Spending Review, which cut spending by 8% year-on-year, many of the anticipated schemes have not gone ahead.
Gloyn said: “It is unclear why the government is failing to support the ABI scheme, which is designed to be cost-neutral over time - just allowing the proposed Flood Re to build up reserves until it can be self-supporting.”
Gloyn said: “Clients need to check with their broker or insurer what the current and likely future cover under their policies will provide. It is also time to lobby MPs and ministers to make them aware just how important this issue is to the commercial world. The focus has been on residential property and now it is time for the business community to make its important voice heard.”
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