‘Less than 1%’ of businesses struggle to get flood cover, flood minister Rogerson claims

Floods minister Dan Rogerson has insisted that it would be “inappropriate” to include small businesses in the Flood Re programme despite recent calls to include them.

Rogerson was responding in parliament on Monday to questions tabled by shadow business secretary Chuka Umunna about why small businesses are excluded from the planned affordable flood insurance scheme.

Rogerson said: “The Flood Re scheme has been specifically designed to provide affordable flood insurance to domestic policyholders who will also fund it. It would be inappropriate to ask domestic policyholders to subsidise insurance for small businesses.

“The scheme is not suitable for commercial properties. In general, business insurance policies are often bespoke and already priced to risk, as opposed to the household insurance market where a cross-subsidy has historically been in place.”

‘Less than 1%’

He added that a survey of more than 9,000 businesses in England showed that less than 1% of them had found it difficult to obtain property insurance cover in the last year because of the risk of flooding, and that “no business” had been refused cover because of the flooding risk.

Rogerson said:” This view was supported in the consultation on Flood Re and in discussions with other departments.”

He added: “We have held regular discussion with the ABI, representatives of small businesses and other government departments and will continue to work with them as we monitor the insurance market for small businesses and keep the issue under review.”

Small-to-medium-sized enterprises (SMEs) are included in the Statement of Principles, under which insurers agree to extend affordable flooding to the highest risk properties in return for government flood defence spending.

However, Flood Re, which replaces the Statement and is to launch in summer 2015, excludes SMEs, which has proved unpopular with some.

Biba, for example, has been a vocal critic of the SME exclusion and is pushing for SME inclusdion in Flood Re.