Without action Boris Johnson could be responsible for hikes in flood insurance premiums, says broker
Risk adviser and insurance broker Aon is joining forces with the City Property Association to call upon new London mayor, Boris Johnson, to reveal his plans for preventing a major flood that could cripple the City. Without visible action, the new mayor could be responsible for potential hikes in flood insurance premiums, if not the withdrawal of cover for homes and businesses in London.
The City is mostly situated outside the highest risk areas but its key transport links – trains, tubes and buses – run through high flood risk zones south of the Thames¹. Inadequate flood protections and heavy rain forecast for this summer mean that a serious flood could overwhelm the existing flood defences along the river and the operations of the City would quickly grind to a halt.
As the mayor has ultimate responsibility for planning, Johnson needs to take a fresh look at handling flood risks to protect the income of the City and the homes of residents. He will need to work with the government to guarantee sufficient investment in adequate flood defences. This will ensure they meet the increased risk that has been demonstrated by UK-wide floods over the past few years. With that additional reassurance, insurance companies are more likely to continue to offer affordable cover to property owners in areas of flood risk.
However, if the government does not start investing rapidly in adequate flood defences, insurers could even remove flood cover. Property owners could become more exposed to recovery costs as London follows areas such as Gloucestershire to become another high risk and potentially uninsurable region.
Bill Gloyn, chairman of real estate Europe at Aon Mergers & Acquisitions Group and recently elected president of the City Property Association, said: “Naturally, the mayor has focused on the vote attracting issues of crime, affordable housing and the environment but a major flood would affect thousands of homes and could bring our financial centre to a standstill through the lack of transportation. The disastrous impact of a potential flood on London business demands serious attention and an urgent increase of investment in the flood defence infrastructure that protects our capital.”
“Mr Johnson also needs to be aware that flood disruption will be exploited by other cities keen to undermine the supremacy of London as the world’s leading financial centre. Any major flood in central London would be disastrous for not only the City but for the UK economy as a whole.”