Following the news that negotiations between insurers and MPs have broken down, JLT Speciality Limited today warns that although the Statement of Principles has only ever related to residential and SME business, the change in underwriting policy could well flow into commercial insurance.

Bill Gloyn, partner European real estate, JLT, speaking at an RICS flood seminar in York today, 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.

"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 FloodRe to build up reserves until it can be self-supporting," Gloyn adds

What is clear is that something needs to be done quickly if the lack of flood insurance after June 2013 is not going to be the catalyst for further economic woe in many areas of the UK.

Gloyn concludes: "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."

Share Story: