13-07-2007
Flood-affected businesses warned of insurance changes
The flooding in the north of England has impacted not only residents but also businesses and insurance companies. Businesses are now being warned to brace themselves for the financial fall out.
Clement Booth, chairman of Allianz UK, suggests that the floods have been a wake-up call for the industry. He is warning businesses to be aware that the effects may force insurers to examine the price of insurance premiums in flood zones.
Businesses in the towns of Uckfield and Lewes will find this particularly bad news – residents and businesses found themselves submerged in over 7 ft of water when the river Uck burst its banks in October 2000.
In the light of the recent weather conditions, many business owners feel that the continually increasing insurance premiums are threatening their stability, possibly more so than the flood threat itself.
Sue Field, manager of Fur, Feather 'N' Fins, in Cliffe High Street, Lewes, found her business underwater during the floods of 2000.
She said: "We did everything we could to protect our building from further flooding. We've had all our electrics isolated and big pumps fitted, the whole lot.
"We spent thousands and they still put up the premiums. It goes up steadily and, of course, it will go up again because of what's happened up north.
"Understandably a lot of businesses don't have insurance now because they just can't afford it.
"If it gets too high you just couldn't afford to stay in business so there's a lot of smaller businesses that can't pay the premiums, they just pray it doesn't flood."
The insurance industry is handling claims from 7,000 businesses in the North, following the June flooding. It estimates the cost to the industry being in the region of £1.5 billion.
Although there has been talk of insurers withdrawing cover from certain areas to avoid the risk, a spokeswoman from the Association of British Insurers said: "Our members are fully committed to the industry's Statement of Principles, in which insurance companies undertake to continue to insure their customers as long as the Government continues to invest adequately in flood defences.
"The recent floods have not altered that commitment and we were delighted that the Government recently announced a higher level of investment in flood defences."
Businesses may not find this a comfort though as they await further increases in their premiums and are forced to decide whether it is worth paying up or selling up.
Mr Booth said: "Flooding in the UK, we believe, is right up there as a major world-class risk."
He said it was too early to say how much the cost of cover for commercial and industrial properties would increase by.
Find low-cost business insurance from leading providers on SimplyBusiness.co.uk
Compare quotes now!