New insurance scheme from British Insurance Brokers’ Association offers hope to businesses at risk of flood

5th December 2016

The British Insurance Brokers’ Association (BIBA) has announced the launch of a new commercial insurance scheme for businesses that will also include flood cover for many commercial premises and let properties located in areas at risk from flooding.

BIBA entered into detailed and constructive liaison with insurance market stakeholders including flood risk specialists Landmark, broker Guy Carpenter and scheme provider and managing general agent, R&Q Commercial Risk Services to create the scheme. This co-operation has brought to market an innovative product exclusively for BIBA members that will both help them meet the usual commercial insurance needs of their small and medium sized clients (SMEs) and provide flood cover for many businesses risks that are ineligible for Flood Re, the not for profit scheme launched this year which enables households at risk of flooding to access insurance.

The commercial scheme backed by the A+ rated security of Lloyd’s underwriting capacity uses an advanced mapping facility developed by Landmark which pin-points exactly the location and features of an individual property. Having this degree of specific and detailed risk reflective information allows each individual business or property to have insurance that is based on its own specific risk.

Innovatively, the scheme also offers a high degree of customer choice giving the option to ‘buy-back’ any flood excess that is applied because of the business location meaning customers can choose the amount of risk they want to bear themselves.

Steve White, BIBA Chief Executive said: “BIBA invested time in finding what our members needed to provide to business clients. We have been working closely with Government Ministers and their teams in relation to flood cover for some time. They were as keen as our members for us to find a solution for businesses struggling to access flood insurance. We are delighted that this scheme will now be able to provide protection for many of the businesses that have not been able to buy cover against flood damage.”
Floods Minister, Thérèse Coffey said: “One year after last December’s floods it’s great to see the insurance industry now able to provide affordable flood insurance for small businesses and I particularly welcome BIBA’s emphasis on helping customers adopt flood resilience measures so businesses get back in their properties and open sooner.
“This strongly builds on the Government’s broader commitment to tackle flooding, with £2.5 billion being invested in flood defences until 2021, to better protect 300,000 properties across the country.”
The new product is exclusive to BIBA members and quotes are available from 7 December 2016 and cover from 12 December. As well as including all of the usual insurance covers a business normally requires, it is flexible in its approach to flood cover. Mindful of the Government’s 2016 budget commitment to invest increased revenues from Insurance Premium Tax in improving flood defences, quotations can be offered to many of the businesses that have been affected by flooding or which are at risk of flood. They will be offered both advanced flood mapping and a contemporary approach to underwriting that takes account of any flood resilience or resistance measures that the business has invested in.

Graeme Trudgill, Executive Director at BIBA concluded: “This policy, with state of the art mapping technology sitting behind it, and recognition of resilience and resistance measures already in place, will be simple to use and fair. It brings the ability to cover the majority of SMEs and leasehold and let properties in flood risk areas and for those risks attracting higher excesses an opportunity to buy this back. If a flood does occur, claims cost neutral repairs can be made including resilience measures that will allow business customers to get up and running more quickly if another flood occurs.”

Supporting Quotations

Mapping provider, Landmark Insurance Services
Richard Barnes, Managing Director: “Landmark has been developing risk pricing models and detailed flood reports for residential flood risk for a number of years and it was a natural extension of our expertise to build a property specific flood loss model for the commercial sector. Through access to all the leading flood hazard datasets as well as having expertise in understanding the specific property characteristics we have created an extremely powerful tool that gives underwriters a clear understanding of the property-specific hazard indicators and the expected annual loss due to flooding for a particularly property.”

Federation of Small Businesses
Federation of Small Businesses’ National Chairman, Mike Cherry, said: “FSB has been campaigning for a fairer deal for small businesses at risk of flooding. For those small businesses who currently struggle to secure affordable flood insurance, the BIBA scheme is a welcome first step by the industry. And we are particularly pleased this scheme will recognise and reward investment in flood resilience measures, helping businesses to help themselves. Local businesses are integral to the communities they serve, and their resilience benefits everyone.”

Scheme provider, managing general agent, Randall and Quilter (R&Q)
James Wheddon Head R&Q Commercial Risk Services: “This was a fantastic opportunity for R&Q to be involved, from the outset, in a scheme that will be of particular use to independent insurance brokers who are embedded in their communities and have detailed knowledge of the risks they are placing. We have put together a product that uses innovative solutions and flexible underwriting to approach every risk fairly. As well as offering the choice to buy back any flood excess the underwriting takes account of resilience measures. The launch of this scheme is excellent news for brokers and their customers.”

Lloyd’s of London
Inga Beale, Chief Executive: “This is exactly what the Lloyd’s market is here to do – provide the innovative solutions that businesses need so they can concentrate on what they are good at – delivering for their customers. We understand how important it is to know that should the worst happen, you can be confident there is support available, and this scheme will be do that for many UK businesses.”

The broker, Guy Carpenter
Jon Wood, Managing Director at Guy Carpenter: “Guy Carpenter worked in close collaboration with BIBA and a range of other sector experts during the intensive development process which led to the launch of this innovative insurance scheme. We were able to capitalise on the market-leading flood peril expertise within our team to source the dynamic capacity which underpins it. Working together we have succeeded in creating a robust, flexible and responsive facility that we believe will help to enhance significantly the overall resilience of businesses in the UK.”

Association of British Insurers (ABI)
Huw Evans, Director General: “Insurance offers crucial protection for businesses, their staff and companies in their supply chains. The new BIBA scheme offers businesses at flood risk another valuable option to help them get the protection and peace of mind provided by the right insurance cover. We would encourage owners at flood risk to consider the new BIBA scheme as they shop around to find a policy most suitable for the requirements of their business.”

About Flood Re

Flood Re was launched on a statutory basis on 4 April 2016 to help those households in a flood risk area find affordable home insurance. It was set up after an extensive consultation which identified a specific problem for households. Flood Re is an excellent solution for householders which it is targeting to help. For properties outside its scope in flood risk areas, finding flood insurance continues to be an issue. Those outside of the scope of Flood Re include: businesses – because this would be considered as ‘state- aid’ in contravention of EU rules; most leasehold properties; let properties; charities; and homes built after 2009.