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BIBA scheme aims to expand UK commercial flood insurance availability

21st March 2017 - Author: Luke Gallin

The British Insurance Brokers’ Association (BIBA) is aiming to expand the availability of flood insurance for small and medium-sized enterprises (SMEs) in flood risk areas not served by the government-backed Flood Re initiative, via a new commercial scheme that could increase the need for reinsurance protection.

Flooded sign image via 89.3KPCCExecutive Director of BIBA, Graeme Trudgill, is to present to the All Party Parliamentary Group (APPG) on Flood Prevention on March 21st, 2017, in order to outline how recent innovations from the broker community facilitate the expansion of flood insurance in flood prone parts of the UK for SMEs.

BIBA is to tell the APPG on Flood Prevention that the commercial scheme, which was launched with MGA, R&Q and that’s available through BIBA members absent the requirement of legislation and that is not funded by a levy, enables flood insurance to reach vulnerable SMEs not served by Flood Re.

The UK’s government-backed flood protection scheme, Flood Re, was implemented in 2016 to expand the availability of affordable flood insurance to residential properties in flood prone areas, but excludes commercial properties, such as SMEs.

The new commercial scheme aims to improve the availability of flood insurance for vulnerable SMEs in the UK with a focus on improving resilience, which, if effective would result in greater demand for reinsurance protection for commercial flood risk in the UK.

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BIBA has reportedly been working with industry experts to secure advanced mapping technology and quality capacity via the specialist Lloyd’s of London insurance and reinsurance marketplace, along with an option to lower the flood excess.

“The scheme aims to provide quotations for the vast majority of SMEs, take into account any flood resistance and resilience measures and for insurers to provide resilient repair as part of the claims solution if a flood occurs,” explains BIBA.

When addressing the APPG on Flood Prevention it’s expected that Trudgill will highlight the importance of flood resilience as well as insurance protection. The more resilient properties are to flood risk the easier the exposure is to insure on more attractive terms, says BIBA.

But he will warn that expectations need to be managed as it will be challenging to provide low cost quotations for the highest risk properties that have previously been flooded, have not been repaired resiliently or where the Environment Agency has not resolved the cause of the flood,” continued BIBA.

Trudgill has identified a number of key actions that the UK government must address to support the improvement of the flood insurance market for SMEs, which includes accreditation of flood defence measures, as per the DEFRA action plan. BIBA feels that accreditation of flood defence measures could assist underwriters in their rating of flood risk.

Trudgill is also expected to call for an increase in DEFRA’s budget for defence and maintenance work in line with the guidelines provided by the Committee on Climate Change, and for the government to roll out a broader system of resilience grants to SMEs.

In fact, a recent BIBA survey reveals that 67% of brokers that responded said it would be easier to place flood insurance risk if their client were able to use a resilience grant.

Furthermore, Trudgill will argue the case for government grants to be available from a single central source as opposed to the local authority, which the organisation says did not work well during the winter flood of 2015.

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