Lobby group writes letter calling for national plan

The property industry could face a flooding fiasco if the government does not shore up flood defences and insurance companies withdraw cover for commercial properties in high-risk areas, the British Property Federation has warned.

The BPF has today sent a letter to Sir Michael Pitt, who is conducting a review into the summer 2007 floods, calling for the government to act to avert future flood threats.

The review calls for a Countrywide approach, particularly as the insurance industry has restricted the application of a government-brokered deal for flood insurance coverage to residential property only.

The BPF said this could have a ‘massive impact on small businesses and large commercial centres’, citing the closure of Meadowhall Shopping Centre in Sheffield last summer.

Last November the Association of British Insurers (ABI) and the government agreed a ‘Statement of Principles’ whereby insurers would provide affordable cover in high- risk areas in exchange for ministers’ funding for flood defences.

It followed one of the worst years on record for weather-related incidents. More than 165,000 claims cost the industry £3bn. The ABI says the government is breaching its promises, citing a £200m cut to the Department for Environment, Food and Rural Affairs, so the Statement of Principles will now largely apply to residential property.

Bill Gloyn, chairman of the BPF’s insurance committee and chairman of real estate at AON, said: ‘The government promised over many years to spend money on flood defences and has failed to do so. Ministers have not increased the spending to the level required by the ABI but the figures were calculated before the 2007 chaos.

‘There is no doubt that the circumstances have changed for the worse.’

Liz Peace, chief executive of the BPF, said: ‘This is not simply a case of throwing more money at flood defences. We need someone to develop a countrywide solution and hold their hands up to say “in the short term, this is going to cost a lot more than we’re investing”.’