Floods zone MP criticises insurance industry response

Floods zone MP criticises insurance industry response

Tad flood 1

Story via Andrew Bounds of the Financial Times:

 

Insurers have “brought their industry into disrepute” over the handling of claims from flood-stricken businesses in North Yorkshire, many of whom are still suffering four months after December’s inundation, says the local MP.

Nigel Adams, Conservative member for Selby and Ainsty, added that insurers were “ happy to take the premiums but want to wriggle out of their responsibilities”.

He has pressed David Cameron, prime minister, to extend the Flood Re scheme, which subsidises vulnerable households with a levy on the bills of all, to SMEs.

“Some can’t get insurance now and when they can their premiums are being hiked to unaffordable levels. We should not be treating small businesses any different to householders,” Mr Adams said.

Some 5,000 companies were affected by the floods in December and January with many still not back in their own premises. Total damage was around £1.3bn. Around 2.4m properties are vulnerable to flooding, according to the Environment Agency and the frequency is growing.

Some in the particularly badly hit town of Tadcaster, have given up on insurance altogether. Paula Marr has had to move her Genesis Hair Design salon twice since the floods. She owns her premises but cannot renew her contents insurance so has decided to try to floodproof the building.

She received a £5,000 resilience grant from the local council. She has installed a flood-proof floor, plasterboard walls that can be easily replaced and metal barriers on the doors to stop water entering. “I am putting money aside in a flood fund. If it happens again, I will just move everything out and pay for the repairs from my own pocket.”

Devine Meats was open within days of the December 29 floods but its problems since are typical of many small businesses swamped not just by water but insurance claims, finding new premises and holding on to customers.

Zoe Devine, co-owner, is still fighting the insurers for the £70,000 cost of the floods and trade has dropped 25 per cent, partly because the road bridge linking two halves of the town was swept away, with just a temporary footbridge in its place.

“At every turn you are made too feel you have to prove yourself to the insurers even after photographic evidence,” she said.

Mr Cameron has said: “We are looking specifically . . . to make sure small businesses can get the insurance they need.” But the government favours a commercial scheme being worked on by the British Insurance Brokers’ Association.

Graeme Trudgill, BIBA’s executive director, said: “We understand there are no proposals for government intervention on SME flood insurance”.

The Association of British Insurers defended the industry’s response. Some 82 per cent of claims had been settled, it said. “We cannot just hand over money. We have to assess claims. It can take months to get a business back to normal,” it said.

It said a Flood Re scheme was “not appropriate”. “You could have a lossmaking café subsidising a successful restaurant just because it is by a river.”