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The evolution of flood cover

It looks as though extreme weather has now become the norm for this time of year. Recently we have seen floods caused by Storm Christoph and we are just emerging from the grip of a cold snap due to Storm Darcy’s easterly winds with temperatures in parts of the UK having fallen to around freezing.

Once again insurers are responding and in respect of the recent flooding, PwC have estimated that losses will range from £80m to £120m. Whilst most businesses and individuals can still obtain insurance cover for flood, we are now finding a growing number who cannot.


Due to the ever-increasing impact of extreme weather and coupled with the advances of technology, insurers are now using flood mapping systems that can pinpoint individual buildings. Unfortunately, for the buildings that fall in a black zone it can be a “computer says no” scenario.   These individuals and businesses either will pay a very large excess (£25,000) or even be unable to obtain flood cover. As you can imagine this can be a very distressing prospect for some people.

Five years ago, a business whose property was in a black flood area would have struggled to obtain cover and had to hope for the best, however we are now finding new solutions are coming into the marketplace. Flood excess policies are now available which can essentially cover the large excesses that are being imposed. This would allow a business to continue to trade without the worry of having to find thousands of pounds before their main policy responds.

Another way to be able to provide cover is to redesign the insurance process altogether. New entrants to the market are now offering parametric solutions rather than traditional insurance. The key difference is that you choose the limit of cover and what the claims trigger will be.   In respect of flood, this would involve setting a certain depth limit, that upon flood waters reaching that limit, a pre-defined payment will be paid. To allow this to happen, a mobile connected sensor would be installed at the property which is then used to monitor the flood situation and provide data as soon as flooding happens.

Normally flood claims can take a long time to settle however using parametric solutions a payment can now be received in days rather than months. During the last floods caused by Storm Christoph a new catastrophe claims record was set by paying out and settling the claim in a record time of just nine hours and 44 minutes.  

Should flood be an issue for you, or you are struggling to get cover, ProAktive are here to help explore all options and you will not be left with “computer says no”.

By Peter Ryder ACII Chartered Insurance Broker


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