Flood insurance proposal could lead to hike in premiums for SMEs, says British Property Federation
Thousands of small-to-medium-sized enterprises (SMEs) could be left without affordable flood cover because they are excluded from the proposed Flood Re programme, according to a property owners’ trade body.
The British Property Federation (BPF) said in a statement: “While welcoming the proposed Flood Re agreement between government and the insurance industry, to ensure residential property continues to have access to affordable cover, the BPF believes excluding SMEs – the backbone of the UK economy – from the proposals could lead to large hikes in insurance premiums and even some premises becoming uninsurable.”
The federation argued that SMEs are more vulnerable to flooding than larger businesses, which have contingency plans and greater ability to negotiate cheaper premiums.
Aim of Flood Re
Flood Re is designed to replace the Statement of Principles, an agreement between the UK government and insurers to provide affordable flood cover in high-risk areas, in return for flood defence spending.
The proposal will create a central fund to pay high-risk flood claims, which will be paid for by an annual £10.50 levy on all home insurers.
The new plan is expected to be implemented in summer 2015.
Concern over premiums
BPF chief executive Liz Peace said: “We appreciate that 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 that SMEs find themselves excluded from the proposals.
“SMEs employ more than 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 government extends Flood Re.”
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