The head of Flood Re has said that stakeholders would “consider evidence” from firms that they were struggling to access affordable insurance, amid calls for the scheme to be expanded to cover small businesses.
Brendan McCafferty, chief executive of the government-backed insurance initiative aimed at helping people in flood-risk areas, conceded that it was “self-evident” that businesses were suffering problems in the wake of the recent flooding.
Government ‘willing to consider evidence’
Speaking to This is Money, he said: “Certainly there will be plenty of businesses out there that do suffer problems such as poor availability and affordability of flood insurance. But no stakeholder produced a body of evidence to demonstrate the problem.
“If there is evidence out there of market failure I know that Defra (Department for Environment, Food and Rural Affairs), the government and industry would be willing to consider that evidence.”
Accountancy firm KPMG estimated that the total cost of the recent spate of flooding would top £5bn, with more than £100m of that comprising business costs. It warned, however, that many businesses will have insufficient insurance to cover the damages.
Flood Re, the not-for-profit government-backed scheme launching in April to help households in areas at high risk of flooding to obtain affordable insurance, does not currently include businesses. Companies had failed to demonstrate they were facing problems when the scheme was being drafted, McCafferty added.
A groundswell of opinion
However, calls to extend the initiative to small firms are growing in the wake of storms that have battered much of the north of the country in recent weeks.
The Federation of Small Businesses has warned that failure to do so will lead to firms trading without insurance because they can’t get cover or due to unaffordable premiums.