Blog25 June 2013

Government and Insurers’ Deal Still Unresolved – Increased Premiums Now ‘High Risk’

Statisticians predict future flood insurance premium levels

The crucial deal between insurers and the Government has yet to be renewed, potentially resulting in more than half a million homeowners and business owners seeing their buildings insurance bills soar by hundreds of pounds.

Currently the number of people paying £500 for their flood insurance premiums stands at 75,000 – but if a new deal is not reached, figures produced by insurance industry statisticians and announced today, predict the number will rise to 650,000. The number of households paying £1,000 will rise to 135,000 from 21,000, and 4,000 households will end up paying over £2,500.

The reason for these record high figures is the insurers no longer having to abide by the ‘Statement of Principles’, which is due to expire at the end of July. Despite the recent extension from the end of June to the end of July, an agreement is still to be reached and the cost predictions are a result of the Government’s “failure to act.”

However despite the remaining month, the impact is already being felt by property owners – both domestic and commercial. After the damaging floods in Calderdale in Yorkshire last year, one firm has seen the cost of excess rise from £500 to a massive £250,000. The danger that faces small businesses in flood-threatened areas is very real.

On the anniversary of the week that marked the beginning of a series of devastating floods, Council leader Tim Swift is quoted in the Yorkshire Post as saying that they are hearing from many businesses who either cannot get insurance, or whose excess is so high that effectively they are not insured anyway.

Because of this, many small businesses are fully aware that another flood will shut them down for good.

According to Cornish Radio Station, PirateFM one local business owner said: “More should be done to find the cause of these floods. Why can’t the river be dredged? Why can’t something practical be done, apart from expecting everybody else now to pay more insurance? We should address the issues elsewhere. There has to be some practical strategies or something put together, that stops this flooding, not just for us, but for all the other areas that have been flooded.”

It is not only businesses that are facing a problem, however. The massive rising costs may mean homeowners find their houses to be unsellable, potentially having a knock-on effect across the whole property market.

At Sykes Pumps, we believe that it is imperative that an agreement is reached sooner rather than later. The economic impact will resonate through markets and communities across the country – not just the areas hit by floods.