With adverse weather conditions and flooding constantly in the headlines, the Environment Agency’s new Flood Risk Report is well-timed. The report can be used once flood protection measures have been installed. As it provides information on flood risk (with and without the measures) it looks set to become a useful aid in negotiations with insurers on flood cover.
The increasing risk of flooding in the UK has caused concern for landowners who are finding their insurance premiums rocketing to levels where, in some cases, insurance is barely affordable. Tenants are sometimes finding that flooding is no longer an ‘insured risk’ as a result. Even where flooding is a specific insurable risk, the lease is bound to be phrased so that it can fall out of the definition if insurance ceases to be available or becomes prohibitively expensive, in which case it will become an uninsured risk and possibly a tenant’s risk.
Increasingly, landowners are having reports produced by surveyors to identify what can be done to reduce the flood risk to their properties in the hope that anything they do will reduce their premiums. This looks to be an upwards trend as the Association of British Insurers’ agreement with the Government, which has helped keep cover available for homes and small businesses (known as the Statement of Principles), is expiring in June 2013. This agreement will not be renewed.
In light of this, the Environment Agency has collaborated with several other organisations to produce a template ‘Flood Risk Report’ designed to be used after property level protection (PLP) measures have been installed. The aim of the report is to give a clear description of PLP measures and what their installation achieves, which is useful for owners, purchasers and tenants alike. It also provides insurers with standardised information to consider when deciding whether to offer insurance and at what price. The report collates information on the flood risk (with and without the PLP measures). The template has been applauded by the Association of British Insurers, the British Insurance Brokers Association and the Royal Institution of Chartered Surveyors.
Although Flood Risk Reports will be prepared by surveyors, they are also significant for lawyers as they crop up on sales and purchases or when helping clients to obtain insurance. The accompanying guidance to the template report suggests that the report should be kept with the title deeds.
With the forthcoming expiry of the Statement of Principles in mind, it remains to be seen whether the new Flood Risk Report provides enough comfort to insurers to reduce premiums and ensure that insurance is relatively accessible. If it does, this will be welcome news for both landowners and tenants, especially if we do see the demise of flooding as an insured risk.