Traders are pressing insurers to extend the scope of Flood Re, the not-for-profit fund to help households at high risk to obtain affordable flood insurance, as small business owners hit by the Christmas storms battle to keep their firms alive.
The calls came as a leading accountant said the cost of winter floods across the UK would top £5bn, with about a fifth of the bill falling on those with inadequate or non-existent insurance policies.
Gary Lovatt, the regional chairman of the Federation of Small Businesses in Lancashire and Cumbria, one of the worst hit areas, said: “We need to see Flood Re extended to business and someone else take a hit on the premiums. Otherwise we will see an increase in businesses trading with no insurance, either because they can’t afford it or they can’t get it.”
The scheme, which is due to launch in April, will be a not-for-profit flood reinsurance fund, which is owned by the insurance industry and designed to ensure that domestic UK properties at high risk can obtain affordable cover.
The accountants KPMG said on Monday that around £1bn of the cost of the most recent UK floods would be borne by those with no insurance or policies that would not pay out fully, a view that confirmed the concerns of traders beginning to assess their financial impact.
Paul Protano, the owner of Luca’s Ristorante in Keswick in Cumbria, said he did not know if his business would be able to survive the impact of the latest floods.
His restaurant, which he has owned for 16 years and is located in a listed building beside the river Gretna, was flooded in 2005 and then again more seriously in 2009, with the latter incident resulting in a £400,000 repair bill.
That cost was fully insured, but Protano’s policy has now been changed to include a £5,000 excess, while only allowing him to claim 85p in the pound. Similar reopening costs this time would therefore cost his business £65,000.
He said: “Given where we are, by a river, the question is what the future is going to be? What is the government going to do about the defences? In 2009 we were told it was a once in 100 years event.
“But now down south, Lancashire and Yorkshire are getting flooded. It’s unbelievable. It is one thing it being once in 100 years, but how do you go forward from this?”
When asked about extending Flood Re to include businesses, a spokesman for the Association of British Insurers, said: “We have not been presented with any evidence of large-scale problems in the commercial sector. Most businesses should be able to arrange competitively priced flood insurance through a broker.”
In the Calder valley in West Yorkshire, however, many home and business owners have been unable to get flood insurance since the last serious floods in 2012.
In Hebden Bridge, the popular Trades Club has been uninsured for flooding since. The main venue is on the first floor and stayed dry, but the club’s cellars were flooded again on Boxing Day and the cleanup costs will be considerable. “We are already planning benefit nights to raise the money” said manager Del Bailie.
Up the road on Albert Street, Kim Green was in the same boat. Her vegetarian cafe, Greens, had flooded again, and this time the waters reached the cafe on the raised ground floor rather than just her cellar. “I couldn’t get flood insurance this time. I’m hoping the building insurance might cover some of it, but if not, I’ll have to,” she said, as her staff helped with the cleanup.
Close by in badly hit Mytholmroyd, Anita and Mark Libotte surveyed the wreckage of what was left of their shop, Valley Electronics. When the river Calder burst its banks, the force of the water broke the shop window and rushed in, rising above head height and destroying all their fixtures and fittings.
“Thirty years we’ve had this shop,” said Mark. “We haven’t been able to afford flood insurance since 2012. The companies wanted us to pay eight grand a year and agree to a ten grand excess - £18,000! Who can afford that?”
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