In December 2016, The British Insurance Brokers’ Association (BIBA) announced the launch of a new insurance scheme for its broker member designed to insurer businesses located in high flood risk areas or businesses that have previously flooded.
Following the end of the ABI statement of principles in July 2013 (under which insurers were bound to maintain flood insurance cover for small businesses located in high flood risk areas) many small businesses have found themselves facing significant increases to their flood insurancepremiums and policy excesses. However, more worryingly some insurance companies have since declined to renew some policies leaving many businesses struggling to find insurancecover at all.The BIBA scheme is a provided and managed by Managing General Agent R&Q Commercial Risk Services and is backed by A+ rated Lloyds market insurers. It is the first flood insurance scheme of its kind to use an advanced flood mapping facility which pin-points the exact location of the individual property and then applies detailed flood risk information to generate a bespoke price for the property based on its individual risk of flooding.R&Q offers insurance for a wide range of businesses:
Package policies - for retailers and offices
Property owners – for commercial landlords
Commercial combined – for manufacturing and distribution trades
The scheme takes into account any flood resilience measures made by the business owner, rewarding it with improved premiums and or insurance terms. It is hoped that over time that these rewards will encourage more business owners to invest in flood resilience measures.Flood resilience based repairs are also allowed to a property as long as this is done at no additional cost. With statistics confirming that for every £1 spent on property level resilience that there is a saving of £5 on future damages this seems a prudent move to make, not only enabling the business to return to trading quicker but also reducing the cost of any future claims.Business owners are also allowed the option to influence the cost of their flood insurance cover by allowing a flood excess ‘buy-back’ option which allows them to increase or decrease their policy excess to suit their budget.With the scheme having only been in place for 5 months it’s still early days in it’s development however, it is a significant and positive move forwards for business owners. It’s also a positive step forwards for the insurance market in terms of its search for a more accurate and sustainable way of pricing high flood risk businesses.